BT opens up over Engage IT and Dabs merger

Telco claims integration of Engage IT, Business Direct and Dabs brands is about growth rather than cost-cutting

BT is aiming to create a £1bn reseller and IT services collosus by bringing its Engage IT, Business Direct and Dabs brands under one roof.

Talking exclusively to ChannelWeb, John Thornhill – who is heading up the new £400m business unit – said the decision to integrate the brands was a growth play rather than efficiency drive.

The Engage IT board is now reporting to Thornhill, who will perform a handover with current managing director Martin Balaam over the coming weeks. Thornhill previously headed up Dabs and BT Business Direct.

Thornhill said: "We have aspirations to build an IT services business that is close to £1bn over the next few years. We took the view that to play at that scale we needed to bring together the component parts and maximise their capabilities under one unified organisation."

Thornhill stressed no job losses are expected and said speculation that Balaam will leave the company is premature. No offices will be closed as a result of the integration, except for a telesales location in Bolton whose lease is up for renewal next year, he added.

Thornhill said that the Engage IT, Business Direct and Dabs brands will remain in place for "six to nine months", but the enlarged organisation will "in time need to look at rebranding". This process will be shaped by customer feedback, he said.

Engage IT, which was formed in 2009 through the merger of resellers Lynx and Basilica, specialises in selling high-value solutions to firms with 500 staff or more and has a turnover of roughly £200m. BT Business Direct, which turned over £120m last year, focuses on firms with 75-500 seats, while Dabs has a consumer and SOHO bent.

The three firms have a combined projected turnover for the year to 31 March 2012 of roughly £400m, according to BT.

Thornhill said Engage IT can benefit from Business Direct's logistics clout, while Business Direct can profit from drawing on Engage IT's solutions-based capabilities.

"There is an opportunity to aggregate more of our spend with key distribution partners and work more closely across a broad range of markets with Microsoft, HP and other vendors," added Thornhill.

"We can also use the different capabilities of each organisation to better effect. For instance, Business Direct has a fast-growing network sales capability that we can expand into Engage IT customers. Similarly, Engage IT has a managed desktop and break-fix capability which is potentially very valuable to Business Direct."

BT Engage IT sales director Gary Butters recently left to join Easynet but Thornhill said the emphasis will be on recruitment over the coming months.

"We have recently recruited some senior people from competitors and we expect to do more of that in the next six to nine months as we get the resources in place to build a £1bn business," he said.

"This is almost exclusively about how we can build a structure that helps us to grow in the IT services market. If there are opportunities for synergies and costs savings along the way, I would anticipate these savings will be reinvested in the business to help with our growth."