M&A activity in IT services is set to take a new direction in 2017. Here, I reflect on M&A activity by the largest IT services vendors in 2016, with its emphasis on mega deals, and look ahead to 2017, which is set to be the year of digital & security tuck-in acquisitions. Large M&As in 2016: IT Conglomerates and Defense Firms Divest IT Services Arms Large-scale M&am[...]

  Here I take a quick look at IT services markets in 2017 against the backdrop of widespread political uncertainty, with predictions for how IT services spending will be impacted. Political Uncertainties in U.S., U.K., Germany, France 2017 is starting out as a year of political uncertainty, with lack of visibility in the U.S. on the Trump administration’s plans, in the U.K.[...]

  I recently talked with T-Systems about its digital strategy, and here I take a look at the organization’s Digital Division, and specifically at its Internet of Things (IoT) initiatives. Digital transformation is a strategic offering for T-Systems’ parent Deutsche Telekom group (DTAG). The company set up its Digital Division in 2015 with the intention of aggregating exp[...]

Dell Services is a strategic acquisition, though an expensive one Yesterday, NTT DATA Inc. closed its acquisition of Dell Services, seven months after its initial announcement. The acquired entity, now called NTT DATA Services on an interim basis, has some obvious benefits. For example, it: More than doubles NTT DATA Inc.’s revenues from $1.7bn to over $4bn Significantly s[...]

  Cigniti, and its subsidiary Gallop, recently launched Migrate 2 Selenium (M2S), a migration tool that reengineers automated test cases (test scripts) from software testing COTS such as HPE UFT, to open source software such as Selenium. The non-digital world uses commercial testing products Migrate 2 Selenium is not just another accelerator. We think the intention behind M2S, in[...]

  NIIT Technologies is undergoing significant change with its software and software product testing services, reflecting the impact of agile projects for building digital applications. We recently spoke with the head of their CoE for Agile and DevOps to find out more. NIIT Tech Embedding Testing Work in Agile Development Activities The iterative nature of agile requires test[...]

  In recent years, the software development life cycle has become increasingly automated as IT service vendors seek to drive greater efficiencies in software development and maintenance, and increase their ability to scale. This is true for testing as well as for wider software development support. Initially, as elsewhere, the increasing automation of testing was based on the develo[...]

We recently talked to Diederik Vos and René Gawron, respectively CEO and CFO of SQS, to reflect on SQS’ financial H1 2016 performance and on strategic initiatives. Service Mix Transformation Impacts Revenue Growth in H1 2016 On the surface, the performance of SQS in H1 2016 was mixed: revenues were up 10.9% y/y but flat at constant currency/perimeter (CC/CP); and an adjusted PBT[...]

To most non-testing experts, software testing services are a dull but necessary activity, whose main driver for growth has been the creation of testing factories in India. And yes, there is a significant element of this. At NelsonHall, we continue to be surprised by software testing service providers’ ever expanding service portfolio, the level of investment in proprietary accelerators t[...]

NelsonHall has reported previously on how Tech Mahindra is developing its performance engineering capabilities through its Tech Mahindra Performance Engineering (TMPE) practice. TMPE has transitioned its services portfolio from performance testing initially to performance engineering, shift-left, and production (see here), helping client organizations to take performance into account at the so[...]

In an earlier blog, we described how Tech Mahindra had expanded its performance engineering testing to embrace the Internet of Things (IoT), and here we take a look at how the company is handling another area of non-functional testing: software security testing. Tech Mahindra provides security services through its Cyber Security practice, a horizontal line of business. The practice has a headco[...]

Earlier this year Virtusa acquired Polaris, now rebranded as VirtusaPolaris. Polaris was a mid-sized (~$300m revenue) ADM pure-play (it had spun off its Intellect software product unit in 2014) specializing in BFSI sectors (95% of revenues, NelsonHall estimate), in particular treasury and capital markets (~52% of revenues in Q4 FY 2016, the period ending March 31, 2016), corporate banking (~19%) a[...]

Four years ago, at the time of the London 2012 Olympics and Paralympic Games, NelsonHall reported on the work Atos does for the International Olympic Committee (IOC) though its Major Events unit. See our previous commentary here. This week we visited its center in Barcelona to get an update on the work it is doing for the Rio Games starting next month, The Olympic Games remain a fantastic o[...]

NelsonHall recently attended a cloud computing event hosted by IBM, its first such event in Europe since it introduced a new segment structure at its investor briefing in February. With this new structure in place, plus the recent addition of revenue disclosures for cloud from each segment, we were interested in the extent to which IBM is combining its relevant cloud capab[...]

Mindtree recently briefed NelsonHall on its work in testing automation, in particular on its Dynamic Test Engineering Platform (DTEP) IP which the company launched in 2015. With DTEP, Mindtree is centralizing access to several IPs and accelerators and hosting them on the cloud or on premise. DTEP, which automates the testing life cycle, includes several elements: Test support services i.e. d[...]

Infosys has briefed NelsonHall on several automation testing initiatives based on analytics, AI/machine learning and robotics. The software testing services industry continues to impress with its level of investment in IP and automation. Gone are the days when testing service vendors were talking about their testing frameworks and set of standalone accelerators and test case repositories. [...]

NelsonHall recently had a discussion with the head of the Integrated Engineering Services (IES) unit of Tech Mahindra regarding its 2016 acquisition of Pininfarina (along with parent company Mahindra & Mahindra). Turin-based Pininfarina is an icon in the world of automotive design, having serviced the likes of Ferrari for 80 years. It is a company of relatively limited size (€87m in 2015 [...]

Accenture recently briefed NelsonHall on its new Omni-Channel Testing Platform (OCTP), an accelerator that sits at the intersection of Accenture’s Digital and Testing businesses. This is a reflection of the fact that software testing services are no longer confined to custom applications and COTS, but are now well integrated into the digital world, a process that started some three to four y[...]

In December 2015, we published two blogs about M&A activity in the IT services industry in 2015 (here are the links for Part 1 and Part 2). This blog examines M&A activity in IT services in Q1 2016 and sets our expectations for the rest of this year. In short, 2016 started off with a bang, with two very large IT services acquisitions announced in the first [...]

Sopra Steria announced recently its 2015 results (click here for more information on the recent results). The results contained a number of surprises. Our key take-aways from the results are discussed below. Strong Financial Performance in French Operations in Spite of Merger Credit is due to Sopra Steria’s management in managing the rapid turnaround of Steria France in spite of i[...]