Telstra has combined its Services Solutions division and the Kaz Group to create the largest Australian-owned ITC company.
The merger would play to each company's strengths and allow the new entity to go to market with a much increased scale, former Kaz CEO and joint-managing director of the new entity, Peter Kazacos, said.
"The organisation is now 4200 people strong with revenue of a $1 billion plus. It is a formidable force," he said. "Kaz was building an IT company but was very small on the communications side, while Telstra was significant on that side but was small on IT. The idea of combining the two is that you get a force that is big in both."
The size of the new entity also meant it now stacked up well against multinational competitors such as IBM and EDS, Kazacos said.
"We believe the combined operations are not only equal but better than a lot of our multinational competitors," he said. "Our goal will be to win more contracts in that mid and top-tier space."
By using Telstra's direct and indirect channel, Kaz also gained the opportunity to sell more offerings into the SME space.
"The increase in broadband and IT telephony and the ability to deliver services that bundle data and voice applications with integration is the reason we joined forces," Kazacos said.
"We are the largest provider of desktop services in the country and our belief is that we can create a packaged offering that will be suitable at the lower end. We are also now looking at more utilities computing and the collaboration and messaging space."
Locally, Kaz would look to expand geographically into Queensland, as well as into both new and existing market verticals.
"From an IT space we are already in almost every vertical, but in our BPO offering we are not and are not as deep in some as we could be," he said.
"Telstra brings us significant e-business leverage in insurance, but we will also push into health and existing verticals like education and defence."
Despite having to share managing directorial duties with Telstra Services Solutions managing director, Mike Foster, Kazacos had no concerns over the future independence of Kaz.
"This organisation will be independent in terms of the way it operates as we have our own financial, legal and HR, but we still want to leverage Telstra for its ability to provide us with a financial backbone," he said.
"Mike is focusing his efforts more on the sales operational areas whereas I am more in innovation and venture opportunities."