The number of buyers in technology services continues to grow; in Q1 2019 there were 152 different acquirors across a range of buyer groups (marketing communications, IT / consulting services, data services providers, VARs and BPOs). All these buyer groups, which we track in our technology services indices, are pursuing capabilities that they do not currently possess at an ever faster rate, driven by new and disruptive technologies (cloud, AI, automation) and clients demanding end-to-end services from a single provider.
The technology services subsectors we track in this market overview have been reclassified to reflect the significant volume of transactions across the enterprise from customer engagement to applications to infrastructure. In the last 12 months, Results International has advised on high-value transactions across all of these disruptive subsectors (performance marketing, data & analytics, software development, automation, cloud services etc.).
Welcome to the Q1 2019 edition of our Technology Services Perspective – Results International’s quarterly market update of the technology services sector.
The subsectors we track include (i) Customer Engagement (marketing & eCommerce, website UX and performance marketing), (ii) Applications (key vendor systems integrators, software development, data & analytics and mobile), (iii) Infrastructure (managed services, automation, cloud services and VARs), (iv) AI and (v) cybersecurity services. Separately, we cover the broader marketing services market (beyond the customer engagement categories mentioned above) in our quarterly infographics which you can find here and security software in our quarterly CyberScope which you can find here.
Highlights in the quarter:
- RI Global Technology Services Indices have recovered to 2018 highs after a difficult end to the year.
- Ongoing data generation and the resulting opportunity for machine learning and AI technologies continue to transform the marketing agency landscape, creating substantial opportunities for companies able to capitalise on these trends. In January, Results International advised Planning-Inc—a predictive analytics and data marketing business—on its sale to Next Fifteen, exemplifying the importance of technology and data-driven skills for marketing communications.
- Large IT consultancies continue to make significant investments in digital transformation, which now accounts for a fifth of the global consulting market, and growing. Accenture bolstered its position as a top strategic acquiror as it kicked off the year with five acquisitions in the quarter, spanning the technology services ecosystem, including Storm Digital, a Dutch web agency, ?What If!, a London-based product innovation company, and Orbium, a Switzerland-based financial services software development player.
- Dentsu was the second most acquisitive company in the quarter making four acquisitions including Redder, a Vietnam-based integrated creative, digital and PR agency. This reflects Dentsu’s ongoing strategy to expand its presence in the Asia-Pacific and follows hot on the heels of its acquisition of Singapore-based performance marketing company Happy Marketer in February. Results International acted as exclusive financial advisor to Redder.
- DXC acquired Luxoft for c.$2 billion, in the quarter’s largest disclosed transaction, to offer an end-to-end value proposition to its customers. The acquisition combines DXC’s expertise in IT infrastructure and integration with Luxoft’s digital engineering capabilities.
- Private equity investors continued to vie aggressively with strategic counterparts and prove an exciting partner for market leading and differentiated businesses seeking to support their clients’ digital transformation growth. In March, Results International advised Livingbridge—a leading UK private equity investor—on its investment in Brainlabs, a tech-enabled data-led performance marketing agency.
The technology services sector is incredibly active with a wide buyer universe, and the outlook is exciting. As such, now is a good time to be contemplating fundraising, exit, or growth through acquisition in the space – if you are, please do get in touch.Read Less