NTT DATA Corporation (9613.T): BCG Matrix [Dec-2025 Updated]

NTT DATA's portfolio pits capital-hungry Stars-global data centers, AI platforms and booming SAP services-against steady Cash Cows in Japan, finance and public systems that bankroll aggressive expansion, while Question Marks in North America, space computing and private 5G demand risky bets and scaling, and Dogs in legacy telecom and licensing signal pruning; how management reallocates cash toward AI and hyperscale infrastructure versus trimming underperformers will determine whether growth ambitions translate into durable profit.

NTT DATA Corporation (9613.T) - BCG Matrix Analysis: Stars

Stars

NTT DATA's Stars are business units exhibiting high market growth and strong relative market share, driving company-wide expansion and margin improvement. The primary Stars are: Global Data Centers, SAP Business Solutions (NTT DATA Business Solutions), and Generative/Agentic AI services (tsuzumi AI and partnerships). These units combine rapid top-line growth, sizable capital allocation, and strategic positioning in high-growth markets such as AI infrastructure, cloud services, and enterprise AI solutions.

Global Data Centers division leads with aggressive expansion, reflecting a 20% average annual growth rate and a dominant market position as the world's third-largest data center provider as of December 2025. Capital commitments exceed $10.0 billion through 2027, with 10 new facilities opened in 2024 adding 370MW of capacity. Total investments in FY2024 reached ¥413.0 billion. Future capacity is forecasted to exceed 1,500MW globally, with strategic land acquisitions in Milan, Tokyo, and Johor Bahru to secure supply in high-demand regions. The division supports AI deployments exceeding 200MW and integrates liquid-cooled systems to meet AI power-density requirements.

SAP Business Solutions (NTT DATA Business Solutions) delivered record financial performance for FY ending March 2025: revenue grew 14.7% to €1.85 billion, EBIT rose to €109.9 million (a 35.9% YoY increase), and cloud subscription sales increased 49.5% to €191.9 million. EBITA margin improved to 7.5% from 6.4%, demonstrating margin expansion driven by higher-margin consulting and managed services. The unit serves over 6,500 clients with 60% of revenue generated internationally, reinforcing its strong relative market share in the SME and mid-market SAP ecosystem.

Generative AI and Agentic AI services accelerate digital transformation and represent a high-growth Star category. The tsuzumi AI platform achieved more than 260 partnerships and secured 10 major enterprise clients by late 2024. A strategic partnership with Databricks (January 2025) targets $200 million in AI-related revenue over five years. The July 2025 partnership with Mistral AI expands access to secure, enterprise-grade models for regulated industries. FY2025 management policy prioritizes AI investments to capture a meaningful share of the global AI market and to achieve a consolidated operating profit margin target of 10% by monetizing high-value AI consulting, automation, and platform services.

Key Star characteristics and strategic imperatives:

• High-capex commitment to secure supply-side advantage (>$10B through 2027 for data centers; ¥413.0B invested in FY2024).
• Accelerated revenue and margin expansion in SAP Business Solutions with cloud-led growth (14.7% revenue growth; 7.5% EBITA margin).
• AI platform and partnerships designed to scale high-margin services and capture incremental enterprise spend (tsuzumi AI: 260+ partners; $200M Databricks revenue target).
• Technology differentiation (liquid cooling, AI-ready infrastructure) enabling premium pricing and large-scale AI deployments (>200MW support).
• Global footprint expansion to high-demand markets to sustain >20% CAGR in target segments and exceed 1,500MW capacity.

Investment allocation and performance indicators to monitor for Stars:

• Capital expenditures vs. capacity addition (e.g., $10B+ capex through 2027 vs. projected >1,500MW capacity).
• Revenue growth and margin progression in SAP Business Solutions (targeting continued double-digit growth and improved EBITA margin).
• AI revenue trajectory and contract wins tied to strategic partnerships (Databricks, Mistral AI) and tsuzumi AI adoption rates.
• Utilization and power density metrics for data centers (MW in operation, AI-specific MW allocated, PUE improvements with liquid cooling).
• Return on invested capital (ROIC) for large-scale data center projects and time-to-profitability for AI platform investments.

NTT DATA Corporation (9613.T) - BCG Matrix Analysis: Cash Cows

Cash Cows

Japan Segment maintains market leadership and steady cash flow. NTT DATA remains the number one provider in Japan's IT services market, reporting 36 consecutive years of revenue growth as of May 2025. For the fiscal year ending March 2025, the Japan Segment generated 1,933.2 billion yen in net sales, marking a 10.0% increase driven by public and financial sectors. Operating profit for this segment rose by 9.9% to 205.2 billion yen, providing the stable capital necessary for global expansion. The segment's mature market position is supported by deep-rooted relationships with central government ministries and major financial institutions. With a consistent operating margin and low relative market growth, Japan serves as the primary cash generator for the group's high-capex investments.

Financial Business Unit delivers high-volume recurring revenue. The Financial business within the Japan Segment recorded net sales of approximately 79.5 billion yen with a steady operating profit margin of 10.6% in FY2024. This unit benefits from long-term contracts for mission-critical systems in Japan's banking and insurance sectors, ensuring predictable cash inflows. Despite a mature market environment, the unit saw an 11.3% increase in sales, demonstrating its resilience and ability to capture incremental digital updates. The high ROI from these established systems allows NTT DATA to fund riskier ventures in emerging technologies and overseas markets. Its role as a reliable pillar is critical for maintaining the group's overall financial soundness and dividend payments.

• Net sales (Financial BU, FY2024): 79.5 billion yen
• Operating profit margin: 10.6%
• Sales growth (latest period): +11.3%
• Revenue model: Long-term contracts, high recurring revenue
• Strategic role: Fund innovation and international expansion

Public and Social Infrastructure business provides stable government contracts. This business unit achieved a substantial 21.2% increase in sales to 108.3 billion yen for the fiscal year ended March 2025. It maintains a dominant market share in Japan's public sector IT, providing essential services to government agencies and social infrastructure providers. The operating profit margin for this unit stands at a healthy 13.4%, reflecting the efficiency of its large-scale system integration projects. These long-term government engagements provide a defensive buffer against global economic volatility and currency fluctuations. The steady performance of this unit supports the group's target of achieving a 10% consolidated operating profit margin.

• Net sales (Public & Social Infrastructure, FY Mar 2025): 108.3 billion yen
• Sales growth: +21.2%
• Operating profit margin: 13.4%
• Market characteristics: Dominant share in public sector, long contract durations
• Risk profile: Low cyclicality, defensive cash flows

NTT DATA Corporation (9613.T) - BCG Matrix Analysis: Question Marks

Dogs (Question Marks)

The North America regional unit faces profitability challenges despite the region representing approximately 40% of the global IT market. NTT DATA's Overseas Segment net sales rose to ¥2,750.9 billion, but operating profit in North America declined by 13.4% year-on-year due to structural transformation costs and integration expenses associated with M&A and local delivery model changes. Management has set an EBITA margin target of 10% for the region, driven by a new operating model that consolidates delivery centers, rationalizes overlapping functions, and rebalances onshore/offshore staffing.

Key quantitative drivers and near-term targets for North America:

• Overseas Segment net sales: ¥2,750.9 billion (latest reported period).
• North America operating profit decline: -13.4% year-on-year.
• Target EBITA margin: 10% (regional target to achieve within the transformation timeline).
• Sales investment: 30 Cisco-specialized hires planned by January 2025 to win multinational accounts.
• Expected timeline to margin stabilization: 12-24 months contingent on synergies realization and headcount productivity.

Space Computing and Communications joint venture (Space Compass Corporation) targets emerging frontiers by combining NTT DATA's systems-integration expertise with SKY Perfect JSAT's space communications assets. Established to develop space-based computing, low-latency satellite connectivity, and integrated terrestrial-space service bundles, the JV is at an R&D-intensive stage with negligible revenue contribution as of late 2025. Projected market growth for space-integrated IT services varies by source but can exceed double-digit CAGR in niche enterprise segments; however, commercialization faces technical, regulatory, and certification hurdles.

Illustrative R&D and financial posture for Space Compass (estimated):

The Global Technology Services (GTS) unit is pushing Edge connectivity and private 5G initiatives as part of a one-stop-shop digital portfolio. The global networking life-cycle services market is projected to grow at 7.1% CAGR to an estimated $55.4 billion by 2028. NTT DATA's private 5G market share is currently formative; adoption among enterprise clients is gradual because of high initial CAPEX and the need for vertical-specific use cases (manufacturing, logistics, healthcare).

Current status and commercial metrics for GTS private 5G and Edge offerings:

Strategic uncertainties that keep these units in the Question Marks / Dogs region of the BCG matrix:

• High market growth potential but unclear relative market share and profitability trajectories in North America, Space Compass, and private 5G.
• Large upfront investment requirements (R&D and CAPEX) with long payback periods and potential for stranded costs if adoption lags.
• Integration hurdles across acquired entities and joint ventures that compress near-term margins (e.g., structural transformation costs causing -13.4% operating profit in North America).
• Dependence on partnerships (e.g., SKY Perfect JSAT, Cisco) and parent-group assets to de-risk technical execution and customer acquisition.

Quantitative KPIs to monitor for reclassification from Question Mark to Star or decision to divest/harvest:

Recommended operational levers under consideration:

• Accelerate go-to-market with 30 specialized sales hires in North America focused on multinational accounts and Cisco-integrated offers.
• Prioritize vertical use cases for private 5G (manufacturing automation, ports, healthcare campuses) to shorten sales cycles and justify CAPEX.
• Phase R&D spend for Space Compass with stage-gates tied to regulatory milestones and pilot revenue triggers.
• Track conversion rates from pilot to paid deployment and apply strict profitability gates before broad rollouts.

NTT DATA Corporation (9613.T) - BCG Matrix Analysis: Dogs

Dogs - Legacy Mobile and Fixed-line Communications services continue to decline. Revenue from traditional mobile and fixed-line communications services at the parent NTT Group level has shown a steady year-on-year decline through February 2025, negatively impacting NTT DATA's legacy integration projects tied to older telecommunications infrastructure. Operating income attributable to these traditional segments decreased by ¥87,000,000,000 in Q3 FY2024, indicating a substantially shrinking market for hardware-centric integration services.

Shift dynamics: the move toward software-defined networking (SDN), network function virtualization (NFV), and cloud-native architectures has rendered many legacy hardware-dependent services and integration offerings obsolete. NTT DATA is actively streamlining non-core telecom integration assets and reducing headcount and capital expenditure in legacy programs to reallocate resources to digital transformation (DX), cloud migration, and managed services.

Dogs - Traditional Software Licensing business experiences structural contraction. Revenue from traditional software licenses at NTT DATA Business Solutions declined by 9.9% to €12.9 million in H1 FY2024, amid a wider market shift toward SaaS and cloud subscription models, which expanded by over 50% in the same timeframe. The legacy license business now contributes a shrinking portion of total revenues and exhibits low growth potential.

• H1 FY2024 traditional license revenue: €12.9 million (down 9.9% YoY)
• Market growth in SaaS/cloud subscriptions: >50% YoY (industry aggregate, H1 FY2024)
• Maintenance/support burden: ongoing fixed-cost servicing across legacy installs, reducing margins
• Migration posture: prioritized lift-and-shift and refactoring programs to transition customers to recurring cloud platforms

Dogs - Regional units with low profitability in EMEAL and APAC markets. Certain overseas regional units in NTT DATA's Overseas Segment have failed to meet profitability targets, contributing to a decline in consolidated overseas operating profit. While data center and SAP practices perform well, other regional IT services in parts of Europe, Middle East, Africa & Latin America (EMEAL) and Asia-Pacific (APAC) face intense local competition, rising labor costs, and price pressure leading to thin margins.

• EMEAL transformation charge: ¥7,200,000,000 required in FY2025 to address structural inefficiencies
• Overseas operating profit trend: decline in FY2024-FY2025 (percentage negative contribution to consolidated overseas EBIT)
• Market characteristics: saturated local markets, low differentiation, high customer price sensitivity
• Management actions: evaluation for consolidation, carve-outs, or divestment of underperforming units

Risk implications for NTT DATA's BCG portfolio: legacy telecom and traditional licensing businesses behave like Dogs-low growth markets with low relative market share-consuming managerial attention and capital while delivering limited returns. Continued divestment, migration to cloud platforms, consolidation of unprofitable regional units, and redeployment of resources into Stars and Question Marks (cloud, AI, cybersecurity, managed services) are apparent strategic responses underway.