IT Industry News – August 2018

August 2018 saw a fair amount of M&A activity — a lot of smaller deals, a few significant moves and some recognizable names out buying companies. The big deal of the month saw Cisco pay $2.35 billion for access security company Duo Security. In other deals, VMWare paid $500 million for cloud management company CloudHealth; and HP splashed out $500 million for Europe’s largest print provider, Apogee. Apple snapped up Augmented reality startup Akonia; Accenture made two small acquisitions in the digital space, Mindtribe and Pillar Technology; Intel picked up a small AI company Vertex.Ai and Vonage paid $35 million for video company TokBox.

Apple was also in the news because it became the first public company to reach a $1 trillion valuation, and they were quickly followed by Amazon.

General job indicators were good in Canada and even better in the US, which continues to see strong job growth. There were several reports indicating a growing skills gap for key roles, particularly in tech, both in Canada and the US. Elsewhere around the world job indicators were relatively strong, with a few exceptions due to Brexit or other external factors. Of course Canadians continue to watch the unfolding sagas of NAFTA negotiations and the bungled oil pipeline, concerned about what that might do to our economy.

On a final note, “digital” continues to be hot, with Canadian firms expected to spend more than $16 billion on digital tech and services this year.

In this Issue:

> General Interest
> Company News
> Merger & Acquisition Activity
> Primary Sources


> GENERAL INTEREST

Canadian companies are going to be spending more than $16-billion this year on digital transformation technologies and services, which is about 20% higher than the year before, according to new research from the IDC Canada.

In another example of how employees can defeat the best security strategies, a researcher has discovered Canadian and British government staffers misconfigured some of their web-based Trello project management software and exposed details of software bugs and security plans, as well as passwords for servers and other sensitive information.

Nearly a quarter, or 23%, of UK professionals, admit to spending up to 21 hours each month on personal activities such as texting and internet shopping during their work time, according to survey data from job site CV-Library. This is the equivalent of 2.8 full working days lost every month, or seven weeks each year. They spend their time Texting or using instant messaging (42%); Browsing social media (25.2%); Replying to personal emails (23.1%); Online shopping (17.2%); Making phone calls to friends or family (10.1%).

“Flexible work schedule” topped the list of most important nonhealth benefits, according to a survey by Express Employment Professionals. The survey found 18% of workers consider a flexible work schedule to be the most important nonhealth benefit. It was followed by “generous/unlimited” vacation time at 13%, opportunities to work from home at 12%, access to training/certification classes at 10% and a casual dress code at 10%.

The majority of Canadian tech leaders – 93% – say they have made a bad hire, according to a new report from Robert Half Technology. This report comes at a time when tech employment is growing four times faster than overall Canadian employment and 60 per cent of Canadian tech hiring managers are planning to expand their teams, according to statistics from Robert Half. The human resource consulting firm also predicts a shortage of Canadian tech workers by the year 2020.

The job indicators in Canada

Employment in Canada rose by 11,600 jobs in July from June, according to the ADP Canada National Employment Report. Additionally, results from June were revised upward to a gain of 22,000 jobs from the previously reported loss of 10,500 jobs.

The Canadian staffing index, which measures staffing activity in Canada, rose 6% in July on a year-over-year basis to a reading of 113. The index also rose 6% on a month-over-month basis in July.

The number of jobs in Canada rose by 54,100 in July when compared to June, for a total of 18.7 million jobs. The unemployment rate fell to 5.8% in July from 6.0% in June. However, the job gains came in part-time employment, with the number of part-time jobs rising by 82,000. That offset a loss of 28,000 full-time jobs in July.

The rate of job vacancies in Canada rose to 3.1% in the second quarter, the Canadian Federation of Independent Business reported. It was the highest rate since the group began tracking the number in 2004. An estimated 397,400 jobs have sat vacant for at least four months.

Lack of applicants, experience and hard skills are key reasons 41% of Canadian employers struggle to fill open positions, according to ManpowerGroup’s 2018 talent shortage survey. Skilled trades are the hardest jobs to fill in Canada, according to the research, followed by sales representatives and drivers. Most of the jobs where demand is growing are mid-skilled roles that require post-secondary training, yet not always a full university degree.

The job indicators in the US

US private-sector employment rose by 219,000 jobs in July from June, the strongest hiring since February, according to the ADP National Employment Report. The total of jobs added in June was also revised up to 181,000 from 177,000.

Economic activity in the US manufacturing sector accelerated in July at a slower rate than in June, according to the Institute for Supply Management’s manufacturing index, released today. ISM’s manufacturing index fell in July to a reading of 58.1 from June’s reading of 60.2. Readings above 50 generally indicate improving conditions. The employment portion of the index rose in July to 56.5 from June’s reading of 56.0, representing growth in employment for the 22nd consecutive month. Of the 18 manufacturing industries, 13 reported increased employment and two reported decreased employment: Primary metals; and plastics and rubber products.

The Conference Board’s US Employment Trends Index rose 5.4% year over year in July to a reading of 109.89. Growth in the index, which measures eight labor market indicators, remains robust.

Economic activity in the US nonmanufacturing sector decelerated in July, according to the Institute for Supply Management’s nonmanufacturing index released today. ISM’s nonmanufacturing index fell 3.4 percentage points in July to a reading of 55.7 from June’s reading of 59.1. Readings above 50 generally indicate improving conditions. However, the employment portion of the index rose in July to 56.1 from June’s reading of 53.6. Twelve industries reported increased employment, and four industries reported decreased employment.

The US four-week moving average of initial claims for unemployment insurance fell to 214,500 last week, down 3,500 from the previous week’s unrevised average according to the US Department of Labor.

Economists lowered their forecast for the US unemployment rate, and they have upgraded the number of new jobs expected. The economists now expect the unemployment rate to average 3.8% in this quarter, down from the previous forecast of 3.9%. In addition, they lowered their unemployment rate forecasts for the fourth quarter and the first quarter of next year to 3.7% from 3.8%. And they forecast the jobless rate for the second and third quarters of next year to be 3.6%. They also raised projections for job growth this year to 194,800 per month based on an annual-average level for this year. The previous forecast had it at 185,900. Projected monthly job gains were also raised to 167,800 for next year from the previous estimate of 160,800.

The TechServe Alliance announced the number of IT jobs in the US edged up 0.06% in July from June to a total of more than 5.3 million. Despite strong demand for talent in high-demand IT skill sets, IT job growth continues to underperform the overall job market due to an acute talent shortage, according to the group, which serves as the national trade association of the IT and engineering staffing and solution industry. On a year-over-year basis, IT employment rose by 0.73% in July, an increase of 38,600 IT workers.

The TechServe Alliance also measures engineering employment, which rose by 0.21% in July from June. Engineering employment increased 2.41% on a year-over-year basis, an increase of 61,300 engineering workers.

The Conference Board’s US Leading Economic Index rose 0.6% in July to a reading of 110.7 (2016 = 100), following a 0.5% increase in June, and a 0.1% increase in May.

The US economy looks strong as real gross domestic product grew at the fastest rate in almost four years last quarter, and consumer confidence in August hit the highest level since 2000. US real GDP grew at an annual rate of 4.2% in the second quarter, according to the second estimate of GDP growth released by the US Commerce Department.

“Consumer confidence increased to its highest level since October 2000 (Index, 135.8), following a modest improvement in July,” said Lynn Franco, director of economic indicators at The Conference Board. “Consumers’ assessment of current business and labor market conditions improved further. Expectations, which had declined in June and July, bounced back in August and continue to suggest solid economic growth for the remainder of 2018. Overall, these historically high confidence levels should continue to support healthy consumer spending in the near-term.”

The shortage of workers in science, technology, engineering and math is at a crisis level, according to two out of five Americans surveyed by Emerson, a St. Louis-based firm that manufactures products and provides engineering services. The company also pointed to research by the national association of manufacturing and Deloitte that found the US will need to fill 3.5 million stem jobs by 2025, but as many as 2 million will go unfilled because of difficulty finding people with the skills in demand.

The job indicators outside Canada and the US

Japan’s unemployment rate fell to 2.5% in July, when compared to the same period last year, according to data from Statistics Japan. Data also found that the number of unemployed persons in July 2018 was 1.72 million, a decrease of 190,000 or 9.9% from the previous year.

The number of jobs for IT professionals in Northern Ireland has risen by over 40% since this time last year reports Irish News citing data from NIJobs.com. Sam McIlveen, general manager of NIJobs.com, commented, “We now have over 1,000 jobs from businesses across NI on our site. Vacancies have risen across many industries, but IT is leading the pack.”

The number of professional job vacancies available in July 2018 in Ireland increased by 13% when compared to the same month a year ago, according to the latest Morgan McKinley Ireland employment monitor. At the same time, the monitor found that the number of professionals seeking new jobs fell by 9.7% in July 2018, when compared to July 2017.

The unemployment rate in Finland stood at 6.5% in July, down from 7.5% in the same period last year, according to data from statistics Finland. At the same time, the employment rate rose to 74.1%, up from 72.0% in the same period last year.

Technology companies across Asia-Pacific are reporting more optimistic hiring plans, according to new data from Radford, a division of global professional services firm Aon. The data found that the percentage of technology companies reporting ‘aggressive’ hiring plans — defined as actively planning and recruiting for organisational growth — increased in Q2 2018 from the prior quarter in six out of eight key markets in Asia-Pacific.

France’s unemployment rate stood at 9.2% in the second quarter of 2018. Over the year, the unemployment rate decreased by 0.3%, according to data from INSEE (National Institute of Statistics and Economic Studies). INSEE also showed that 5.8% of the employed persons were underemployed, defined as those who have a part-time job and wish to work more. The 5.8% figure was a decrease of 0.2% when compared to last year.

Mexico‘s economy contracted at an annualized rate of 0.4% in the second quarter following the first-quarter’s growth of 4.6%, according to a Mexico Economic Update. Recent data, including data on jobs, was relatively weak. Employment in the Mexican formal sector — jobs with government benefits and pensions — fell at an annualized rate of 1.4% in June. It was the first month since the 2009 recession that job growth was negative. However, the number of jobs was up 4.0% year-over-year. The report also noted that retail sales surged, and the peso gained strength against the dollar.

The seasonally-adjusted jobless rate in Australia fell to 5.3% in July, down 0.3% from the same period last year, and the lowest level seen since 2012, according to data from the Australian Bureau of Statistics.

New Zealand’s labour market remained stable during the June 2018 quarter, with the unemployment rate remaining close to the nine-year low (4.4%) seen last quarter, according to the latest Labour Market scorecard from the Ministry of Business Innovation and Employment.

Malaysia‘s unemployment rate stood at 3.4% in the first quarter of 2018. This figure puts Malaysia in the category of a full employment nation.

The number of jobs available in London fell by 41% in July compared to a year ago, according to the London Employment Monitor report by recruitment firm Morgan McKinley. London also saw a 30% decrease in professionals seeking jobs year over year.

The registered unemployment rate in Switzerland stood at 2.4% in July 2018, down from 3.0% in the same period last year, according to data from the State Secretariat for Economic Affairs (SECO).


> COMPANY NEWS

In August Apple became the first publicly traded company to be valued at $1 Trillion. There had been predictions that either Apple or Amazon would reach this milestone, and Apple reached it first … Amazon have since also reached that milestone!

Symantec said it plans to take a series of cost reduction actions over the next nine months to address residual costs that remain after the platform security vendor’s divestitures last year. The Mountain View, Calif.-based company said that its board of directors has approved $50 million in restructuring expenses in connection with a plan to reduce Symantec’s global headcount by up to approximately 8% (approximately 880 people).


> MERGER & ACQUISITION ACTIVITY

Cisco Paying $2.35 Billion for Duo Security

Cisco Systems has struck a deal to acquire Duo Security in a $2.35 billion cash deal that clears a new path for the networking behemoth into the market for unified access security and multifactor authentication. Privately held Duo Security is based in Ann Arbor, Mich. Its cloud-based solution verifies the identity of users and the health of their devices before granting them access to applications. Cisco intends to integrate Duo’s solution with its cloud security platforms with an eye toward helping customers connect securely to any application over any networked device, a Cisco spokesman said in a statement.

Apple Buys Augmented Reality Startup Akonia

Of course, Apple is working on new products in its $5 billion headquarters and research labs. The company wouldn’t be as successful as it is if Apple CEO Tim Cook and his executive team weren’t constantly planning for three and five years into the future and asking themselves what computers could look like. It seems like the company has decided it will launch a pair of smartglasses that can impose digital information onto the real world through its advanced lenses. Hence the recent acquisition of a small Colorado based company, Akonia Holographics.

VMWare Buys CloudHealth for $500 Million

VMware announced at its VMworld customer conference in Las Vegas that it’s acquiring Boston-based CloudHealth Technologies. They did not disclose the terms of the deal, but Reuters is reporting the price is $500 million. CloudHealth provides VMware with a crucial multi-cloud management platform that works across AWS, Microsoft Azure and Google Cloud Platform, giving customers a way to manage cloud cost, usage, security and performance from a single interface.

HP Paying $500 Million for Apogee

HP has agreed to buy the UK’s Apogee – Europe’s largest print provider – in a deal that values Apogee at £380 million. HP said the acquisition furthers its plan to “disrupt the $55 billion A3 copier market and builds on its printing strategy”. The deal comes after Apogee itself snapped up four companies in a venture capital-fueled growth drive over the past 24 months.

Vonage Pays $35 Million for TokBox

Vonage is digging deep into the video and WebRTC market with the acquisition of programmable video services specialist TokBox for $35 million. The purchase of San Francisco-based TokBox makes Vonage a formidable player in the video market with plans to leverage the technology to boost Vonage’s Nexmo Communications Platform-as-a-Service (CPaaS) offering.

Accenture Buys Mindtribe and Pillar Technology

Accenture’s unveiling this week of two small acquisitions, one a done deal and the other planned, highlighted the system integrator’s growing push to grab a big slice of the market as customers implement digital transformation strategies. Accenture acquired Mindtribe, a San Francisco-based hardware engineering company that counts among its customer base such industry giants as Apple, Google, Tesla, Lyft, Adobe, Ferrari, and NASA. The integrator also agreed to acquire Pillar Technology, a Columbus, Ohio-based software development company with a focus on rapid and agile development of embedded software developed for smart and connected systems such as autonomous vehicles.

Intel Buys Vertex.Ai

Intel has acquired a small artificial intelligence startup called Vertex.Ai that will give the company a boost in developing deep learning software tools. The semiconductor giant has made several moves in the past few years in attempt to become a big player in AI applications. This includes acquisitions of structured ASIC maker eASIC, reprogrammable chip maker Altera, autonomous vehicle software maker Mobileye, computer vision provider Movidius, and AI chip maker Nervana Systems. The company has also put an emphasis on developing its own AI tools, including the OpenVINO toolkit.

ScanSource Buys Canpango

Milwaukee-based Salesforce solution and consulting firm Canpango LLC has been acquired by Greenville, South Carolina-based ScanSource Inc. Canpango offers professional services such as Salesforce solution configuration and implementation, business process consulting, training and education, application development, data migration and reporting for an international client base.

Arlington Capital Partners Buys Federal Arm of Black Box

Solutions provider Black Box has sold off its federal government IT services business to private equity firm Arlington Capital Partners, which plans to create a new company called called Tyto Athene from the former division. Black Box, which has been trying to address severe liquidity issues, said it is looking at other alternatives including selling other assets to address those issues.

Zscalar Buys AI Arm of TrustPath

Zscaler has purchased the development team and artificial intelligence and machine-learning technology of TrustPath, a cybersecurity startup still in stealth mode. The San Jose, Calif.-based cloud security startup said Santa Clara, Calif.-based TrustPath has developed AI-based algorithms through machine learning to identify new threats, resulting in enhanced security efficacy and accelerated incident response.

F12.net Buys Apps on Tap and Paradigm Network Solutions

Canadian MSP, F12.net, this week unveiled the latest in a string of acquisitions as part of its plan to become a nationwide provider of managed services to what it sees as an underserved small and midsize-business market. F12.net has acquired two small North York, Ontario-based MSPs as part of its geographical expansion, giving it a larger presence in the Toronto region. The company currently serves customers from Vancouver to Toronto. The two companies are Apps on Tap and Paradigm Network Solutions.

Pure Storage Buys StorReduce

Fast-growing all-flash storage vendor Pure Storage unveiled the acquisition of StorReduce, a small developer of software for deduplicating, managing and migrating data. StorReduce develops cloud-first software that provides deduplication and data connection and migration to cloud-based or on-premises infrastructure, Giancarlo said. It deduplicates any type of file or object, but stores it in an object environment, he said.

Comodo CA Buys CodeGuard

Comodo CA has purchased early-stage startup CodeGuard to help customers protect their websites from malware through backup, maintenance and disaster recovery capabilities. The Roseland, N.J.-based company said its acquisition of Atlanta-based CodeGuard will help customers with both malware identification and removal as well as dealing with a down or defaced website, according to Michael Fowler, Comodo CA’s president of partners and channels.

CloudReach Buying Relus Cloud

International cloud services consultancy Cloudreach has agreed to buy Relus Cloud in a deal that will create a powerhouse in the Amazon Web Services channel that spans the Atlantic. London-headquartered Cloudreach already has a strong North American presence, including an office not far from Relus headquarters outside Atlanta. With the acquisition, the Amazon and Google partner aims to extend that U.S. practice headquartered in New York City, while adding expertise around data, analytics, and machine learning.

Advantix Buying TeraNova’s Managed Mobility Practice

Two solution providers are joining forces to launch a first-of-its-kind mobility and Internet of Things company for fellow solution providers looking to break into the emerging field. Advantix Solutions Group, which offers telecom auditing and mobility management, has acquired TeraNova Consulting Group’s managed mobility business, the two companies said Wednesday. The combination will create a third company — called iXtera — focused on mobility and Internet of Things solutions.

Computex Buys Synetra

Computex Technology Solutions has expanded its Cisco technology and managed services practice with the acquisition of Synetra Inc. a Dallas-based MSP. The deal brings the $170 million Houston-headquartered Computex – one of Cisco’s top enterprise partners – additional Cisco technology talent, MSP muscle and expanded geographic reach in Texas particularly for its mainstay oil and gas customers.

Nutanix Buys Frame

Red-hot hyper-converged pioneer Nutanix plans to acquire cloud-based desktop and application delivery specialist Mainframe2, known as Frame, in a move to enhance its multi-cloud solutions and deliver Desktop-as-a-Service (DaaS) to customers. Frame will enable Nutanix to make DaaS available within its Nutanix Xi Cloud Services, which will support one-click desktop instances on Amazon Web Services and Microsoft Azure.

Avenu Buying Conduent’s Government Software Business

Conduent is continuing to shed parts of its business as part of a planned divestiture with the latest portion going to Avenu Insights & Analytics. Florham Park, N.J.-based business process services firm said it would sell its Local and Municipal Constituent Government Software Solutions business for an undisclosed amount to edge closer to cutting $1 billion in revenue associated with non-core assets.

Cox Buying Rapidscale

Cox business is expanding its managed services and cloud portfolio with the acquisition of RapidScale. RapidScale’s cloud solutions include backup, server and desktop. Cox says its business unit has surpassed $2 billion in annual revenue. Recent years have seen the company develop security capabilities and other IT-based services. It acquired managed network provider Blueprint RF last year.

Onica Buys TriNumbus

Canada’s first Amazon Web Services (AWS) premier consulting partner, TriNimbus Technologies, has been acquired by a similar-looking firm from the U.S. Onica sees this acquisition as a means to access business associated with Amazon’s ongoing investments in Canada, combined with its interest in building its second headquarters in Toronto, served as a strong indication of where the growth potential was located.

Kontran Buys Inocybe Technologies

Looking to become a full solution provider of open source hardware and software, Germany-based Kontron acquired Inocybe Technologies, a leading open networking technology provider in Montreal.


> PRIMARY SOURCES:

IT World Canada – http://www.itworldcanada.com/
TechRepublic –  http://www.techrepublic.com/
ZDNet – http://www.zdnet.com/
Information Week – http://www.informationweek.com/
Staffing Industry Analysts – http://www.staffingindustry.com/