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Technology Services Perspective – Q2 2019 Market Review

By Jon Tingling 16 Jul 2019

Welcome to the Q2 2019 edition of our Technology Services Perspective – Results International’s quarterly market update of the technology services sector. 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.).

 

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:

  • The number of buyers continues to grow (184, up from 152 in Q1) across a range of buyer groups as they pursue strategically imperative capabilities at an ever faster rate, driven by new and disruptive technologies (cloud, AI, automation, IoT) and clients demanding end-to-end services from a single provider as they accelerate their digital transformation agendas:
    • Two significant and transformative take privates:
      • Finland-based Tieto acquired Norway-based EVRY to create one of the largest technology service providers in the Nordics, which many see as an attempt to fend off competition from Indian bellwethers who are continuing to expand their footprint in the region; and
      • Capgemini’s acquisition of France-based Altran, an engineering and R&D consultancy, to further establish itself as a leader in disruptive technology services
    • Accenture continued to be most acquisitive acquirer as it builds broader capability and scale, acquiring Droga5 (a US-based PR and digital production marketing agency), BRIDGE Energy (a US-based provider of grid modernisation, analytics and security services) and Zielpuls (a Germany-based software development consultancy specialising in smart products for the automotive and medical industries).
    • Marketing challenger brands, S4 and Stagwell, continued to broaden both geographic reach and technical capability through M&A, as:
      • S4’s MediaMonks and MightyHive acquired Biztech, an Australia-based Adobe consultancy and ProgMedia, a Brazil-based programmatic agency respectively; and
      • Stagwell acquired MultiView, a US-based programmatic consultancy with a proprietary technology offering.

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  • Automation remains a key investment theme, as the Robotic Process Automation market matures and moves from automation of isolated tasks to a more integrated offering of Intelligent Automation systems. Hitachi acquired JR Automation’s robotics business unit, a US-based Robotic SI working at the intersection of software integration and physical robotic manufacturing technology, highlighting this trend.
  • Ever increasing demand for AWS, Azure and Google Cloud (among a long tail of other cloud providers), as enterprises are migrating systems off-premise or moving to hybrid models at increasing rates, is driving substantial appetite for complementary service providers. In this quarter alone, j2 Global made four acquisitions along with Deloitte and NTT who each made one, as all look to bolster their cloud services offering.

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.

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Jon Tingling

Associate

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