Datacom success under the radar

With more than 6500 employees, annual revenue of $1.29 billion, and a roll call of global partners including Microsoft and Google, Datacom might be the most under-the-radar company in the southern hemisphere.

Datacom is New Zealand’s biggest tech company, dwarfing the likes of Xero, Gallagher Group, and Fisher & Paykel Appliances, according to the latest edition of the technology industry bible the TIN (Technology Investor Network) Report.

The Christchurch-founded company, which traces its roots back to 1965, operates in more than 50 countries, with offices in North America, Europe, and Southeast Asia.

But what does it do? And will this national champion head to foreign shores?

Low margins, lean structure

Datacom designs and handles IT systems for corporate and public sector clients, and also offers a consulting service. It is best known in the tech sector for providing payroll services and financial sector IT systems.

All that led to a post-tax profit of $42 million in the year ended in March.

It also runs data-storage centres and outsourced contact centre services, and has a growing cybersecurity division.

Datacom developed systems you might have already used, including ASB’s online banking platform. It also counts Fonterra, Fletcher Building and Zespri as big clients.

In the public sector, Datacom minds the IT systems of the Ministry of Business, Innovation and Employment and the Ministry of Social Development.

New Zealand makes up 56 per cent of revenue; Australia is its next biggest market.

TIN managing director Greg Shanahan says Datacom is a ‘‘low margin’’ business that operates with a lean structure to keep down costs. ‘‘In typical Kiwi fashion, it’s a very egalitarian company.’’

A family business

Datacom is majority-owned by the Holdsworth family, whose figurehead, John, was instrumental in transforming the company in the 1990s. John stepped down in 2012.

The Holdsworths’ investment company, Evander Management, owns a 53.98 per cent stake in the company, and John’s son, Simon, is deputy chairman.

While investors are unable to snap up the company’s shares on the NZX, most New Zealanders have an indirect stake in the business. The New Zealand Super Fund bought out New Zealand Post’s stake in 2012.

‘‘In typical Kiwi fashion, it’s a very egalitarian company.’’ Greg Shanahan TIN managing director

Global and long-term outlook

Vernon Kay, Datacom’s managing director in New Zealand, says the company is increasingly global in its outlook, but ‘‘doesn’t see an end to growth’’ at home.

The business recently won its first major contracts in the United States, an area where it hopes to expand and take on established US players like IBM. It is also growing in Asia, partnering with Microsoft to sell services in the Malaysian market.

Would the business consider floating on the stockmarket, or heading offshore? Not according to Kay, who says a private structure is a perfect fit for the business.

‘‘We benefit from the ability to think long-term with our current ownership structure,’’ Kay said. ‘‘And that’s one of the main reasons for our success. I don’t imagine there will be any change in that.’’

Datacom’s growth comes as experts predict the tech sector is close to overtaking dairy as New Zealand’s biggest export industry. Kay welcomes this prospect.

‘‘With our access to green power, the technology sector is a much more sustainable industry in the long term.’’