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Was M&A a key story for global IT Services sector in 2022?
Was M&A a key story for global IT Services sector in 2022?

March 6, 2023

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2022 ended amidst the fears of global slowdown however the M&A activity in the IT services sector remained robust with the key focus being on the smaller acquisitions focused on high-growth areas like cloud, engineering and analytics.

Therefore, if we compare the value of acquisitions that happened during the year, it is considerably down compared to last year, however the overall number of transactions have held steady.

Additionally, the two key trends that emerged on the acquisition side:

  1. Most acquisitive firms preferred smaller acquisitions.
  2. Also, while IT services firms remained active in the M&A space, the big change in 2022 was the degree to which management consulting firms started making acquisition in roads in the sector.

Some key acquisitions statistics highlighted by ISG includes:

  • Accenture led the pack again in IT services M&A activity; it closed 29 transactions valued at over $2.3 billion, amounting to nearly 8,000 resources acquired in 2022.
  • Deloitte’s 24 acquisitions last year were primarily IT-services related; it focused on cloud, cybersecurity and AI bolt-on capabilities in 2022.
  • E&Y acquired 16 companies in 2022, with many of those coming out of the Asia-Pacific region; over half were IT services focused, with the rest in the engineering and digital agency sectors.
  • PWC acquired more than 700 FTEs in 2022, three times as many as it acquired in 2021; half of its 13 acquisitions were in Europe, each of which was valued at less than $50 million.
  • Capgemini focused on transactions in EMEA last year with seven of its eight acquisitions coming from the region; valuations of these acquisitions were roughly equal to those in 2021.

Outlook
 
ISG highlighted “As labor markets remain very strong despite nagging inflation and high interest rates. And, while the supply-side disruption of 2022 is improving, there is still exceptionally strong demand for scarce skills in areas like cloud architecture, software engineering and analytics. This makes it tough for enterprises to find the talent they need when they need it, which will continue to drive demand for IT services. And this, in turn, will continue to drive tuck-in-related M&A activity in specific segments and regions, even in the face of a very uncertain macro environment.”
 
We just discussed what the M&A story of the global IT services industry, to know more about the key trends including the M&A story of the Indian technology sector read Strategic Review “Priming for a No Normal Future” Industry Quarterly Review.

Happy Reading!

 

 


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Neha Jain
Senior Analyst

Neha Jain

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