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Slowing demand for IT services has prompted NTT Verio to close some 25 data centers and lay off 750 of its 3,000 employees.
The decision follows a continuing slump in network services demand. Verio executives said the facility closures and layoffs are aimed at getting Verio to profitability earlier. The company is also aiming to develop a sharper focus on large enterprise customers.
“Like everybody else in the industry right now, were experiencing an economic slowdown,” said Justin Jaschke, NTT Verio chief executive and director. “Partly its a dot-com phenomenon, but the economy in general is sluggish and companies are holding back on IT expenditures. Growth rates have slowed and we need to hold back on expenses to balance that.”
Verio is closing all of its “legacy” data centers and an undetermined number of new data centers. Technical personnel at the facilities and some sales staff will be let go over the course of the year. While old data centers will be largely abandoned, with leased commercial office space returning to landlords, an undetermined number of newer facilities will either be mothballed until the economy recovers or sold off, depending on their individual situations.
With these changes Verio is getting out of secondary markets and focusing on major cities. Verio officials said they will continue to invest, mainly in developing backbone capacity in Europe.
Customers with sites in some of the soon-to-be-closed facilities will be offered a free move into more modern Verio data centers, said company officials.
NTT purchased Verio for $5.5 billion last year, and Verio has reportedly lost $1.3 billion in the past 12 months.