IT Industry News – July 2018

July 2018 was busy in the M&A world, with the biggest deal of the month being a somewhat unlikely $19 billion acquisition of CA Technologies by Broadcom, who are clearly planning to expand beyond the semiconductor world. Solution provider, Atos is paying $3.45 billion for Syntel, creating a large North American presence. Fortive is paying $2 billion for physical resource management software company Accruent, and the last billion dollar deal of the month sees SS&C pay $1.45 billion for investment technology company Eze Software. Other deals saw AT&T buy cybersecurity company Alienvault; Hitachi bought AWS integrator Rean; Intel bought specialty chip maker eASIC Corp; Accenture continued its acquisition spree with the purchase of AI company Kogentix; and Getronics re-entered the North American market with the purchase of Pomeroy.

Other companies in the news included Google, who were fined $5 billion by European anti-trust regulators and Dell announced plans to go public again.

The US economy continues to have strong indicators in almost every category, with a growing concern about skills shortages in the tech space. The Canadian market added jobs, but most of them were public sector jobs and one report shows Canada’s ICT sector as performing poorly versus the other G7 countries. Employment indicators from most countries around the world were generally positive.

Other topics of interest include news that the Facebook group of companies have 2.5 billion people using their services at least once a month; the cost of data breaches to Canadian companies is on the rise; and people with blockchain expertise are amongst the most in demand resources.

That’s it for what was happening in the technology space over the last month.

In this Issue:

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


> GENERAL INTEREST

General

Facebook has revealed that around 2.5 billion people use Facebook, WhatsApp, Instagram, or the company’s instant messaging app, Messenger, at least once per month.

The average cost of data breaches at Canadian companies was $6.11 million, up 5.6% from 2016. The numbers are contained in the annual Ponemon Institute’s International Cost of a Data Breach study, paid for by IBM

Blockchain topped online staffing provider Upwork’s second-quarter list of the 20 fastest-growing skills in the US freelance job market for the second consecutive quarter.

The economy – Canada

“The Logic” revealed the content of a report suggesting Canada’s ICT sector is the smallest in the G7 and is continuing to fall behind other developed nations. The report was prepared in advance of the Digital Industries Economic Strategy Table’s first meeting last Fall. That group was convened by the government to boost Canada’s tech sector. Other worrisome industry trends suggest that since 2011, Canada’s ICT sector has posted slightly weaker annual growth than the total economy; the ICT sector is dominated by small firms (98.6 per cent); average R&D spending fell slightly in the ICT sector between 2008 to 2013 (-0.4 per cent) and 2014 to 2016 (-0.7 per cent); and Canada’s share of the global ICT market is shrinking as exports drop off. Canada ranked 16th out of OECD countries in 2016, down from 11th in 2014.

Employment in Canada rose by 31,800 to a total of more than 18.6 million jobs in June, according to seasonally adjusted numbers released by Statistics Canada. The surge follows two months of little change. Part-time jobs rose by 22,700 in June, while full-time employment posted a gain of 9,100 jobs. On a year-over-year basis, June employment increased by a rounded figure of 214,900 jobs on a gain of 284,100 full-time jobs and a loss of 69,100 part-time jobs. The unemployment rate increased to 6.0% in June from 5.8% in May.

The Canadian economy will expand 1.8% in both 2018 and 2019, a slowdown from 3.0% in 2017, according to The Conference Board of Canada. The export sector will remain on shaky ground over the next term as rising protectionist measures from the US and continued uncertainty surrounding the outcome of the North American Free Trade Agreement renegotiations dominate and undermine the sector’s outlook, according to the latest Canadian Outlook Bulletin. Export growth will be limited to 1.4% this year, weighed down by recently enacted tariffs on softwood lumber, steel and aluminum.

The Canadian staffing index, which measures staffing activity in Canada, fell 4% in June on a year-over-year basis to a reading of 107. The last three months of index readings suggest that growth has leveled off on a year-over-year basis. On a month-over-month basis, the index fell 2% in June.

The economy – USA

The Conference Board’s consumer confidence index increased marginally in July. The index rose to a reading of 127.4 (1985=100) from 127.1 in June.

Economic activity in the US manufacturing sector accelerated in June, according to the Institute for Supply Management’s manufacturing index. ISM’s manufacturing index rose in June to a reading of 60.2 from May’s reading of 58.7.

While IT spending is generally increasing, less than half of IT organizations plan to increase IT staff headcount this year, according to the IT Spending and Staffing Benchmarks 2018/2019 study released by Computer Economics.

US private sector employment rose by 177,000 jobs in June from May with the healthcare/social assistance segment leading the growth, according to the ADP National Employment Report. The healthcare/social assistance segment added 37,000 jobs in June. The total number of private-sector jobs had increase by 189,000 in May and 170,000 in April.

Economic activity in the US nonmanufacturing sector accelerated in June, according to the Institute for Supply Management’s nonmanufacturing index. ISM’s nonmanufacturing index rose 0.5 percentage point in June to a reading of 59.1 from May’s reading of 58.6.

Global CEO confidence edged down in the second quarter, according to The Conference Board. Its measure of CEO confidence decreased to a level of 63, from 65 in the first quarter.

The Conference Board’s Employment Trends Index increased in June after decreasing in May for the first time in six months. The index rose to a reading of 108.94 in June, up from a reading of 107.72 in May. The change represents a 5.2% gain in the index compared with June 2017.

US real gross domestic product grew at an annual rate of 4.1% in the second quarter, the fastest rate in almost four years, according to the “advance” estimate of GDP growth released today by the US Commerce Department. It was the fastest growth since 2014. The department also revised the increase in first-quarter real GDP for the US to 2.2% from the previous estimate of 2.0%.

The Conference Board’s US Leading Economic Index rose 0.5% in June to a reading of 109.8 (2016 = 100), following no change in May, and a 0.4% increase in April.

The US independent workforce — which includes consultants, freelancers, contractors, temporary and on-call workers — will rise to 47.8 million over the next five years, representing a 2.6% annual growth rate, according to MBO Partners’ new 2018 State of Independence in America report.

The number of IT jobs in the US edged up 0.04 in June from May to a total of more than 5.3 million, the TechServe Alliance announced. While IT job growth had historically outperformed the growth rate of the overall workforce, the shortage of IT talent is causing the sector to underperform, according to the group, which serves as the national trade association of the IT and engineering staffing and solution industry.

US economic growth is expected to continue for the next 12 months, according to the July 2018 NABE Business Conditions Survey. Eighty-seven percent of the panelists expect real GDP growth of more than 2% in the coming four quarters, with the majority, 68%, anticipating growth in the range of 2.1% to 3.0%.

The economy – outside North America

Economic growth is picking up and unemployment has reached record lows in some OECD countries with the rate expected to fall further, but wages continue to stagnate, according to the OECD’s Employment Outlook 2018

Approximately 44.7 million people in Germany were employed in May 2018 which was an increase of 597,000, or 1.4%, when compared to May 2017, according to data from the Federal Statistics Office (Destatis). Meanwhile, the number of unemployed in May 2018 decreased by 82,000 people when compared to the previous year. When compared to April 2018, unemployment decreased by 50,000 people to a total of 1.47 million unemployed.

The majority of companies in Portugal are planning to recruit this year, according to the human resources barometer of the Kaizen Institute in Portugal. Data from the Kaizen Institute showed that when it comes to hiring, 73% of companies prioritise recruiting professionals with up to five years’ experience.

The Euro area unemployment stood at 8.3% in June 2018, down from 9.0% in June 2017, while the EU 28 unemployment rate was at 6.9% in June 2018, down from 7.6% in June 2017, according to data from Eurostat, the statistical office of the European Union. Among the member states, the lowest unemployment rates in June 2018 were recorded in the Czech Republic (2.4%) and Germany (3.4%). The highest unemployment rates were observed in Greece (20.2% in April 2018) and Spain (15.2%).

There were 7.52 million new urban jobs created and offered in the first half of the year, up 170,000 from a year earlier, according to the Chinese Ministry of Human Resources and Social Security.

The seasonally-adjusted unemployment rate in Taiwan saw a slight decline to 3.68% in June 2018, down from 3.77% in June 2017, according to the latest manpower survey results from the Directorate-General Budget, Accounting and Statistics.

 A total of 180,000 jobs are expected to be created in South Korea in the second half of 2018, a slowdown from the previous year partly due to industrial restructuring and falling working age population, according to data from the Ministry of Strategy and Finance. The Ministry also announced that annual growth of 2.9% is expected, a slowdown from the previous year. The slowdown is due to weak exports and consumption amid global trade conflicts and high oil prices. Meanwhile, South Korea’s employment rate is expected to improve from 66.6% to 66.9% in the second half of 2018.

More than 500 companies with 50 or more employees moved one or more activities abroad, resulting in a move of over 30,000 jobs between 2014 and 2016, according to data from Statistics Netherlands.

The Swiss unemployment rate stood at 2.4% in March, down from 3.0% in June of last year according to the State Secretariat for Economic Affairs (SECO). In June 2018 there were 106,579 unemployed registered in Switzerland’s regional employment agencies. Compared with the same month last year, unemployment fell by 27,024 people (-20.2%). Unemployment fell by 21,867 persons compared to last year.

In Singapore, total employment (excluding Foreign Domestic Workers) increased in the second quarter of 2018 when compared to the previous year, according to the Ministry of Manpower’s latest Labour Market Report. The Ministry also reported that the seasonally adjusted unemployment rate fell by 0.1% in Q2 2018 to 2.1% when compared to the same period a year ago.

New research from international recruiter Robert Half found that more than 13%, or approximately 340,000 workers based on the number of employed persons in New Zealand, are likely to seek a new job this year. Robert Half’s research also found that more than half, or 58%, of New Zealand employers say they have seen an increase in staff turnover, defined as employees freely resigning, in the past three years with the average turnover currently standing at 13%.

The number of persons employed in India in Fiscal 2017-2018 was 406.2 million, a decrease of 0.1% from the 406.7 million employed in the previous year, according to data from think tank Centre for Monitoring Indian Economy. According to Quartz.com, the CMIE data is a far cry from what the Modi government has claimed, which was that 3.11 million jobs were added between September 2017 and February 2018 based on employee payroll data. CMIE had disputed that with its own 1.8 million figure for 2017. The data still stands in stark contrast to Modi’s 2014 poll promise of creating 10 million jobs every year.

Hong Kong’s seasonally adjusted unemployment rate stood at 2.8% in the period from April to June 2018, same as that for the period from March to May 2018, according to data from the Census and Statistics Department. During the period from April to June 2018, total employment increased by around 4,900 when compared with the period from March to May 2018. Over the same period, the labour force also increased by approximately 5,000.

Malaysia’s jobless rate stood at 3.3% in May, down slightly from 3.4% in the same period last year, according to data from Statistics Malaysia. There were 504,800 unemployed people in May compared with 507,500 a year earlier, a decrease of 0.5%. Meanwhile the number of employed persons increased by 2.8% in May to 14.85 million, when compared to the same month last year.


> COMPANY NEWS

Data centre colocation and network solution provider Cologix Inc. announced the development of a third data centre in Vancouver, bringing the company’s total across Canada to 11. In addition to Vancouver – where Cologix delivers a total of 8 MW – Cologix has data centres in Toronto and Montreal.

Dell announced that it would be listing itself once again on the New York Stock Exchange.  Dell will need to buy back stock associated with its ownership in VMware, so not a done deal yet but likely to happen.

European Union regulators assessed Google a $5 billion penalty for abusing the dominant position of its Android mobile operating system. Anti-trust regulators ruled that Google had inappropriately used Android to force handset makers to include the search giant’s own apps, giving it an unfair advantage over competitors in an attempt to extend its search engine dominance from desktop to mobile. Google was previously hit with a similar ruling by Russian anti-trust officials. In addition to appealing last year’s fine, Google also faces an EU investigation into abuses related to the online advertising market.

F5 Networks is laying off about 230 people and closing a Massachusetts facility as part of its ongoing transition to a multi-cloud application-based strategy. The Seattle, Wash., company announced its latest restructuring effort in a regulatory filing related to its third-quarter earnings. The company continues to hire in certain focus areas, but the cuts are necessary as part of a shift F5 – a legacy load-balancing stalwart – is making toward the cloud, CEO Francois Locoh-Donou said, according to a transcript of the company’s third-quarter earnings conference call.

SS&C Technologies Holdings Inc. has begun to lay off 900 employees after completing its $5.4 billion takeover of DST Systems Inc. two months ago. The job cuts are expected to hit both DST as well as its subsidiaries, and cost SS&C up to $70 million in severance and related expenses.

HTC, the Taiwanese maker of Android smartphones and high-end virtual reality headsets, is laying off 1,500 employees, according to reports by Reuters and other news outlets. The jobs are located in HTC’s Taiwan factories and make up about 23% of the company’s total workforce, which has stood at 6,450, according to Reuters.


> MERGER & ACQUISITION ACTIVITY

Broadcom paying $19 billion for CA Technologies

Semiconductor manufacturer Broadcom Inc. is buying New York City-based software firm CA Technologies for $18.9 billion, in a bid to create what the former calls “one of the world’s leading infrastructure technology companies.” In a statement, Broadcom president and CEO, Hock Tan, called the acquisition “an important building block as we create one of the world’s leading infrastructure technology companies.”

“With its sizeable installed base of customers, CA is uniquely positioned across the growing and fragmented infrastructure software market, and its mainframe and enterprise software franchises will add to our portfolio of mission critical technology businesses,” Tan said. “We intend to continue to strengthen these franchises to meet the growing demand for infrastructure software solutions.”

Atos paying $3.57 billion for Syntel

Atos plans to buy Syntel for $3.57 billion to massively expand the solution provider’s North American footprint and increase its capabilities around financial services. The Paris-based company said its proposed purchase of Troy, Mich.-based Syntel will enhance its offerings around cloud, social media, mobile, analytics, IoT, and automation. These emerging technologies account for roughly 40 percent of Syntel’s $923.8 million in annual sales.

Fortive paying $2 billion for Accruent

Fortive announced today that it has entered into a definitive agreement with Genstar Capital to acquire Accruent, a privately-held, leading provider of physical resource management software for approximately $2 billion in cash. The acquisition is subject to customary closing conditions, including regulatory approvals and will be financed with available cash and proceeds from borrowings. Accruent is a recognized leader in the physical resource management industry, combining deep domain and industry capabilities with an integrated, cloud-based framework that provides insights spanning the full lifecycle of real estate, facilities and asset management. Accruent serves over 10,000 global customers, and assures clients fulfill the mission of their organization by extending the lifecycle of assets, ensuring full compliance and reducing safety risks.

SS&C paying $1.45 billion for Eze Software

Eze Software, a global provider of investment technology announced that SS&C Technologies Holdings, Inc. has entered into a definitive agreement to acquire the company from its previous owner, TPG Capital – the private equity platform of global alternative asset firm TPG. SS&C, a global provider of investment and financial software-enabled services and software for the global financial services and healthcare industries, will acquire Eze from TPG Capital for $1.45 billion. Eze Software provides leading investment technology to power investment operations, maximizing efficiencies across order management, trade execution and analytics, portfolio analytics and modeling, compliance and regulatory reporting, commission management, and portfolio and investor accounting. Its award-winning Eze Investment Suite delivers a seamless investment management experience to buy-side professionals in one cohesive, integrated platform by synchronizing data throughout the trade lifecycle. The born-in-the-cloud Eze Eclipse platform reimagines the entire investment operation in a single solution through a secure web browser interface.

AT&T Buying AlienVault

AT&T has announced plans to acquire cybersecurity company AlienVault. Founded in 2007, AlienVault offers a number of tools for detecting and responding to security threats through its Unified Security Management (USM) platform, while its Open Threat Exchange (OTX) platform serves as an online community where security professionals and researchers can share their latest findings and threat data.

Hitachi buying Rean

Storage and IoT powerhouse Hitachi Vantara plans to acquire Rean Cloud, a global Amazon Web Services systems integrator and MSP with expertise in developing cloud-native applications. The Herndon, Va.-based cloud consultant works with clients in such areas as enterprise cloud transformation, cloud foundation, migration and deployment, operations, and big data services, and has competencies with a variety of vendors in migration, storage, security, big data, and Microsoft workloads. Hitachi Vantara, based in Santa Clara, Calif., last year was formed by combining the Hitachi Data Systems storage and data center infrastructure business, its Hitachi Insight Group IoT business, and its Pentaho big data business into a new combined company aimed at delivering new collaborative data offerings for commercial and industrial enterprises.

Accenture buying Kogentix

Providing customers with data analytics and ways to use big data to drive business was behind Accenture’s purchase of Kogentix, a company that provides AI tools to enterprises. Accenture’s Applied Intelligence Division is the population of a large town, about 20,000. Even so, the 275-employee Kogentix had capabilities Accenture could find nowhere else.

Intel buying eAsic Corp

Intel plans to acquire eASIC Corp., which will operate under Intel’s Programmable Solutions Group, the business unit that was established with Intel’s $16.7 billion acquisition of Altera in 2015. Founded in 1999, eASIC makes specialty chips called structured ASICs, which are supposed to serve as a bridge between reprogrammable FPGAs, or field-programmable gate arrays, and power-efficient ASICs, which stands for application-specific integrated circuits.

Getronics buying Pomeroy

European systems integrator Getronics has acquired MSP heavyweight Pomeroy in a deal that creates a $1.3 billion solution provider, with 9,000 employees and coverage in more than 110 countries. The acquisition marks a return to the North American market for Getronics, which ten years ago sold its North American assets to CompuCom.

Okta buying ScaleFT

Okta has purchased cybersecurity start-up ScaleFT to make it easier for businesses to protect their sensitive data. The San Francisco, Calif.-based identity giant said its acquisition of fellow San Francisco-based ScaleFT will enable customers to more easily validate users, devices, applications and network information and securely grant access to data. Together, Okta said it and ScaleFT will deliver continuous authentication for secure server access for everything from AWS to Secure Shell to Remote Desktop Protocol.

SolarWinds buying Trusted Metrics

SolarWinds has acquired real-time threat monitoring and management provider Trusted Metrics to boost its cybersecurity offerings. The acquisition of Trusted Metrics will allow SolarWinds to offer a new product in the SolarWinds’ mold – powerful, easy to use, and scalable – that is designed to give businesses the ability to more easily protect IT environments and business operations.

Mimecast buys Ataata

Email security specialist Mimecast acquired cybersecurity training start-up, Ataata in a move to offer customers a cloud platform engineered to mitigate risk and reduce employee security errors. Founded in 2016, Ataata has a Software-as-a-Service platform designed to reduce human error in the workplace and help enable organizations to become more security-savvy by changing the security culture of employees.


> 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/