Details of the three-year plan
As for the details of our three-year plan, we are focusing on basic delivery and cost metrics. There are a couple of important things happening in this business. It’s a big focus on improving the profitability of the data business.
A significant shift to offshore support is expected, resulting in a significant increase in low-cost support, but a relatively modest increase in headcount.
A 10% improvement in gross margin is significant, which would require a 30% increase in productivity. (The number of routers/FTE in the first year was 207; in the third year, 272).
The larger the scale, the less leverage you have over non-personnel costs, and the percentage of non-personnel costs increases over time. The gross profit margin has improved by 10 percentage points. This 10-point improvement in gross margin is despite the fact that we assume a decline in average unit cost due to increased competition and commoditization.
In short, there is a lot going on in the data business.
It continues to grow despite pricing pressures, and the number of units under management has increased by about 30 percent in three years.
The pressure to increase productivity is going to be huge in this business.
The move to move work offshore will determine whether this business can achieve its profitability metrics.
Without this massive move to offshore support, it will be difficult for an offering of this size to achieve a 30% increase in productivity. This is a very aggressive offering plan. However, I believe it can be done.