IT Industry News – March 2017

A Little History of March in previous years

In March 2012, there was some activity with a couple of (then) young companies receiving significant capital — Appirio ($60 million) and Hootsuite ($20 million). Cisco made a couple of acquisitions, paying a whopping $5 billion for video software and content company NDS Group in addition to a smaller network management buy, ClearAccess. NEC paid $450 million for the information management business of Convergys and Avaya paid $230 million for an Israeli videoconferencing and telepresence company Radvision. Other companies on the acquisition trail were DELL, EMC, SafeNet, Avnet and The Utility Company. Four years ago, March 2013 saw some of the "usual suspects" making acquisitions, but there were no billion dollar deals announced. Oracle continued its move into the telco space with the purchase of Tekelec; Google bought the small Toronto University-based company DNNresearch in the machine learning vertical; Microsoft sold Atlas Advertiser Suite to Facebook; and Yahoo bought Summly. In March 2014, Facebook made a somewhat surprising $2 billion acquisition of virtual reality company Oculus VR. Intel also expanded its horizons with the $150 million acquisition of smart watch maker, Basis Science. SAP added to its purchasing software suite with the acquisition of Fieldglass and TELUS made a couple of buys, Enode, a management consulting company out of Quebec and Med Access, an addition in British Columbia, to their healthcare division. March 2015 saw some significant M&A activity with HP paying $3 billion for Aruba Networks; Lexmark paying $1 billion for customer management software company Kofax; eCommerce company Rakuten paid $410 million for ebook marketplace Overdrive; Cheetah Mobile paid $58 million for mobile ad networkMobPartner; TeraGo Networks paid $33 million for cloud provider RackForce; IBM bought natural language and image processing company AlchemyAPI; and in the cable TV world Charter Communications paid $10.4 billion for Bright House Networks. Last year, in March 2016, we saw the $3 billion sale of Dell Services to NTT, a direct result of Dell’s restructuring following the recent purchase of EMC. IBM was out bolstering its services business with a couple of acquisitions; the first was Optevia, a UK-based integrator focused on Microsoft Dynamics; and the second was Bluewolf Group, a global Salesforce consulting partner. Montreal-based Yellow Pages picked up Toronto-based Juice Mobile, primarily for its mobile marketing capability. Another Toronto company, Influitive, raised some cash ($8.2 million) and bought a couple of mobile app companies, Ironark Software and Triggerfox; and Netsuite bought IOity solutions, a cloud-based manufacturing software company.

Which brings us back to the present

In March 2017, the major acquisition in the headlines is Intel’s purchase of Israeli computer vision company, Mobileye, for a hefty $15.3 billion. HPE bought storage solution provider, Nimble, for $1 billion. DeskConnect, the startup that developed the Workflow app, has been acquired by Apple who will offer the app for free. Amazon Web Services, a public cloud infrastructure provider, acquired Thinkbox Software, a company that provides software for managing media rendering workloads. Mozilla acquired Pocket, a startup that developed an app for saving articles and other content.

In other tech news, Statistics Canada released a report highlighting Canadian participation in the sharing economy, i.e. peer-to-peer services, and its role in the Canadian economy.

Another story that took headlines last month was that US corporate information, including work email addresses and phone numbers, was leaked from a 52-gigabyte database owned by Dun & Bradstreet.

In this Issue:

> General Interest
> Merger & Acquisition Activity
> Primary Sources


> GENERAL INTEREST

General

Peer-to-peer (P2P) services such as Uber and AirBnB are becoming an important part of the Canadian economy, according to a study conducted by Statistics Canada. In just one year, Canadians spent $241 million on P2P ride services and $1.1 billion on private accommodation services. P2P services form what has been deemed the sharing economy, which is mainly stimulated by Canadians between the age of 25 and 34 located in urban centers in Ontario, Quebec, Alberta and British Columbia.

It was reported that millions of records from a commercial corporate database, including work email addresses and phone numbers, owned by Dun & Bradstreet have been leaked. The database contained employee records from the US Department of Defense and the Postal Service. Dun & Bradstreet reported that its own systems were not breached or exposed and that most of the leaked data had been sold to thousands of other firms. According to Dun & Bradstreet, the information was "generally publicly-available business data, used for sales and marketing purposes."

The economy – Canada

Staffing Industry Analysts (on behalf of the Association of Canadian Search, Employment and Staffing Services) reports the Canadian staffing index fell 7% to a reading of 93 in February.

The Globe and Mail reported Canada’s Minister of Innovation, Science, and Economic Development and the Minister of Employment, Workforce Development and Labor announced the launch of a new "Global Talent" pilot stream for the temporary foreign worker program to attract skilled workers to come to Canada.

Statistics Canada reported that Canada added 15,300 jobs in February, all of which were full-time. Unemployment decreased to 6.6% with the total number of employed Canadians at 18.3 million.

According to Statistics Canada, Canadian real GDP rose 0.6% in the fourth quarter of 2016. The increase in real GDP fuels projections from the Conference Board of Canada of healthy, but moderate, growth in 2017 while remaining cautious in their economic outlook.

In a study conducted by Manpower Group, only 13% of Canadian employers plan to increase staff while the vast majority (82%) anticipate no change in staff levels in for the second quarter. A moderate hiring climate has been created as Canadian companies await the economic impacts of the shifting political climate in the US.

The economy – US

According to TechServe Alliance, the number of IT jobs in the US rose by 0.3% in February to nearly 5.3 million jobs, while engineering jobs rose by 0.2%.

The US Commerce Department reported that US real GDP grew at an annual rate of 2.1% in the fourth quarter. Bloomberg reported that real GDP outperformed the forecast of a 2% advance in the fourth quarter.

The Conference Board reported that the US Leading Economic Index rose to a reading of 131.39 (2010=100), an increase of 3.1% year-over-year. Also, according to the Conference Board, the US Consumer Confidence Index increased to 125.6 (1985=100) in March, which is the highest it has been since December 2000.

In their National Employment Report, ADP indicated US private-sector employment rose by 298,000 jobs in February, 64% of which were service-providing jobs while 36% were goods-producing jobs. Mid-size business came out on top adding 122,000 jobs, with small business adding 104,000 with large business only adding 72,000 jobs.

According to Manpower Group’s Manpower Employment Outlook Survey, 22% of US employers plan to increase staff contributing to the strongest second-quarter outlook since 2009. Among the industries reporting the strongest hiring intentions are professional and business services at a projection of 19%.

The Economic Outlook Survey released by the American Institute of CPAs highlights an overall positive outlook for the US economy with more than 69% of CPA executives optimistic about the 12-month forecast. The strongest hiring sector is projected to be professional services, which increased to 3.9% up from 2.5% in the last quarter of 2016.

The Institute for Supply Management released their Nonmanufacturing Index indicating the most significant expansion in US nonmanufacturing economic activity since October 2015. In February, the index increased to 57.6 and the employment portion increased to 55.2.

The economy – Outside North America

According to online recruitment firm, Vietnamworks, the demand for IT resources in Vietnam has doubled from 2013 to 2016. 81% of IT companies in Vietnam plan to increase annual salaries by anywhere from 6% to 20%. It is projected that Vietnam will need approximately 400,000 IT engineers by the end of 2018.

Eurostat published the following data on job vacancy rates for the fourth quarter of 2016: EA19 at 1.7% and EU28 at 1.8%. Czech Republic (3.0%), Belgium (2.9%), Germany (2.6%) and the United Kingdom (2.5%) had the highest job vacancy rates.

Germany expects 350,000 new jobs to be created in 2017 according to the German Chamber of Industry and Commerce economic report. The health sector should see 120,000 new jobs and temporary workers and educational providers could see 100,000 new jobs to meet the demand for language courses for refugees.

Reuters reported that Spain plans to create more than 500,000 jobs this year and anticipates that faster job creation will push their unemployment rate below 17%. Economic growth could top 2.5% annually for the next two to four years in Spain.

According to Morgan McKinley’s London Employment Monitor, the number of jobs available in London has fallen by 17% in February with a 12% decrease in the number of professionals seeking jobs. This decrease has been sparked by the initiation of Article 50 from the EU Referendum.

As official Brexit negotiations begin, the number of EU citizens looking for jobs in the UK has fallen by 18% according to Business Insider.

A new study by Lee Hecht Harrison|Penna (part of the Adecco Group) in the UK indicates 36% of employees view work in negative terms. The employees surveyed associated work with being unhappy and causing them stress or angst.

The Office for National Statistics reports that in 2016, an estimated 137 million working days were lost in the UK because of illness or injury. 34 million work days were lost due to illness while 30.8 million days were lost due to musculoskeletal issues and 15.8 million days lost due to mental health issues.

The Ministry of Manpower released data indicating a small increase in the annual average unemployment rate in Singapore from 1.9% up to 2.1% in 2016. The Ministry’s focus is to maximize job quality in new growth areas and by re-designing existing jobs.

Research conducted by Robert Half has uncovered a skills shortage in Singapore’s financial services sector. 40% of CFOs in Singapore point to the current shortage in skilled professionals as the main factor impacting the financial services sector. 34% of CFOs project Big Data analytics and compliance pressure will both have a large impact on the financial services sector in Singapore.

According to the Australian Bureau of Statistics, the unemployment rate in Australia is now up to 5.9%, seeing a decrease in seasonally-adjusted employment and part-time employment.  

The Millennium Post reported that 11 million jobs would be created in China as the Chinese Premier aims to keep the unemployment rate within 4.5%.

RTT News reported a slight decrease in Japan’s unemployment rate from 3.1% down to 3.0%.

The Gulf Cooperation Council (GCC) projects a stabilization of hiring activity over the next six months according to a survey conducted by NaukriGulf. Employers expect attrition rates to remain stable or decrease while 49% of recruiters expect the creation of new jobs mainly for intermediate level roles.

Argentina experienced a significant decrease in their unemployment rate in the fourth quarter of 2016 where it fell from 8.5% down to 7.6%. According to the data collected by the National Institute of Statistics and Censuses (Indec) the decrease in unemployment has actually been caused by a decline in the number of people actively looking for work by almost 150,000.

According to the Rio Times, Brazil’s unemployment rate increased for the 22nd consecutive month as 41,000 positions were closed in January.


> MERGER & ACQUISITION ACTIVITY

It is interesting to note, based on my sources that over the last few months, there has been a noticeable decline in Mergers & Acquisitions in the technology space.  Recent articles suggest this might change in the coming months.

Intel Acquiring Mobileye
Intel has announced it will purchase Mobileye, a computer vision firm specializing in autonomous automobiles, for a hefty $15.3 billion. Mobileye is an Israeli-based computer vision firm that develops the visual technology in automobile driving assistance systems. In 2016, Intel, BMW and Mobileye began collaborating on the production of self-driving automobiles. This is a strategic move for Intel to enter into the autonomous vehicle space where self-driving cars will require a sophisticated computer to operate.

HPE Acquires Nimble Storage
San Jose-based storage solution provider, Nimble Storage, has been acquired by HPE for a price tag of $1 billion. With the acquisition, HPE plans to provide customers with a full range of flash storage solutions, which involves adding Nimble’s InfoSight Predictive Analytics platform to the HPE storage platform. HPE has identified a number of key customer benefits that will result from the new combines portfolio of storage solutions.

Apple to Acquire DeskConnect
Apple has acquired DeskConnect, the San Francisco startup that developed the iOS app Workflow, for an undisclosed amount. Workflow, an app that resembles Apple’s own Automator, will now be offered for free for iOS users. In 2015, Apple awarded DeskConnect’s Workflow app with an Apple Design Award. 

Thinkbox Software Acquired by Amazon Web Services
Amazon Web Services (AWS) has acquired Thinkbox Software, based out of Winnipeg and Los Angeles, for an undisclosed amount. Thinkbox provides software for managing media rendering workloads and by coupling this software with cloud infrastructure, AWS is looking to enhance the experience of running large processing jobs in its cloud.

Mozilla Acquires Pocket
Mozilla has acquired San-Francisco-based Pocket, the startup that developed an app for saving articles and other web content. Mozilla’s goal in acquiring Pocket is to offer it as a new product alongside Firefox to promote the discovery and accessibility of high quality web content.


> 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/