IT Industry News – September 2017

Five years ago in September 2012, Infosys increased its management consultancy capability with the $330 million purchase of Lodestone. Lenovo bought Stoneware, a software company focused on the cloud, and Ericsson bought ConceptWave. A couple of interesting investment moves saw Microsoft invest in Klout and Silicon Valley VC Chameth Palihapitiya invest in Xtreme Labs. Four years ago, in September 2013, Blackberry announced a quarterly loss of almost $1 million and laid off 4,500 people. Microsoft bought Nokia’s devices and services unit for more than $7 billion. Ebay paid $800 million for payment platform Braintree; Synnex bought IBM’s customer care division for $505 million; Rogers added to its data centre capacity with the $161 million purchase of Pivot Data Centres; Extreme Networks bought Entersys Networks for $180 million; and Manitoba Telephone Systems bought Epic Information Systems. September 2014 saw some big deals announced, including Microsoft’s $2.5 billion purchase of gaming company Minecraft, Lenovo’s $2.1 billion purchase of IBM’s x86 server business and Cognizant’s $2.7 billion purchase of healthcare company, Trizetto Corp. Hootsuite had an injection of cash and bought two companies, social telephony company Zeetl and social media marketing platform Brightkit. Google also made two acquisitions, biotech company Lift Labs and desktop polling company Polar. There were plenty more deals announced, including Yahoo’s $8 million purchase of cloud-based document hosting company Bookpad; Cisco’s purchase of private cloud company Metacloud; SAP’s purchase of expense software company Concur; Blackberry’s purchase of virtual identity software startup Movirtu and Red Hat’s purchase of mobile app company FeedHenry. Two years ago, in September 2015, there was a fair bit of M&A activity but no blockbuster deals. Microsoft was very active, closing three deals, Adxstudio which provides web-based solutions for Dynamics CRM; app developer Double Labs; and cloud security firm Adallom. Accenture picked up the cloud services company Cloud Sherpas; IBM added cloud software startup StrongLoop; Netsuite paid $200 million for cloud-based marketing company Bronto Software; and Blackberry paid $425 million for competitor Good Technology. Hardware company Konica Minolta bought IT Weapons; Qualcomm bought medical device and data management company Capsule Technologie; Networking and storage company Barracuda Networks bought online backup and disaster recovery company Intronis; and Compugen bought some of the assets of another Canadian company Metafore. Last year, in September 2016, Tech Data paid $2.6 billion for the technology solutions group of Avnet, and HP made the biggest printer acquisition to date, paying $1.05 billion for Samsung’s printer business. Other deals saw Google pay $625 million for Apogee, and restaurant company Subway bought online order taking software company Avanti Commerce. One investment that caught our eye in the staffing world saw Accenture invest in crowdtesting company Applause.

Which brings us back to the present

September 2017 saw Google splash out $1.1 billion to acquire HTC’s pixel team, strengthening its own smartphone capabilities. In an interesting move, IKEA bought gig economy company TaskRabbit, so perhaps you won’t need to put that furniture together yourself in the future! HPE bought Cloud Technology Partners, presumably to strengthen its capabilities in that area and possibly access new clients. Finally, Edmonton company F12.net bought Vancouver’s ONDeck Systems as it pursues its goal to be a National IT Service Provider.

HPE was also in the news, announcing yet another round of layoffs, this time 5,000 people before the year ends. Equifax hit the news, retroactively announcing a huge cyber breach affecting 143 million customers which has since cost the CEO, CIO and CISO their jobs. CareerBuilder also announced 120 layoffs, as part of consolidation following multiple acquisitions and now a new owner. IBM continues to take heat for the Phoenix Project, which is the Canadian Federal Government’s pay system and has been a huge mess.

The Canadian economy has been performing well, with 22,000 jobs added in August and 374,000 jobs created in the last year. However, storm clouds are gathering with huge new minimum wage hikes coming, non-business friendly changes to labour laws, carbon taxes and new Federal Tax legislation that will impact professionals and business owners. Some observers suggest that we might face a Government induced recession in 2018.

Elsewhere, the US economy continues to perform well and the Trump administration is proposing tax cuts for business, which should create even more opportunity and possibly threaten Canada’s economy as Canadian businesses face tax hikes. Worldwide, generally economies and job prospects are improving. Even Greece improved its unemployment rate 2% over the last year, from 23% to 21%.

There were a few indicators of how our changing world will impact jobs with one report suggesting 4 million jobs in the UK will be replaced by robots in the next ten years. Another 700,000 low skilled IT jobs will be lost to automation in the next five years.

In this Issue:

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


> GENERAL INTEREST

General

Four million jobs in the UK’s private sector could be replaced by robots over the next decade, reports The Guardian with survey data from YouGov for the Royal Society of Arts. The poll predicts a loss of 15% of jobs by 2027. Jobs in finance and accounting, transport and distribution and in media, marketing and advertising are most likely to be automated in the next decade.

Approximately 700,000 low-skilled IT and BPO jobs in India will be lost because of automation by 2022, according to research from US-based research firm HfS Research. The report shows that due to a rise in adoption of automation and artificial intelligence, the number of low skilled workers in India’s IT and BPO service sectors could fall from 2.4 million in 2016 to 1.7 million in 2022; however, the report predicts that medium and high skilled jobs will see a rise during the same period.

The job indicators in Canada

The Canadian staffing index, which measures staffing activity in Canada, rose 7% in August from July to a reading of 114, and on a year-over-year basis, the index was up 4% in August.

Canada added 22,200 jobs in August from July, as gains in part-time work offset a loss of full-time jobs, according to seasonally adjusted numbers released by Statistics Canada. The number of part-time jobs rose by 110,400 in August while full-time jobs fell by 88,100. Total employment in Canada was more than 18.4 million in August. The unemployment rate edged down to 6.2% from 6.3% in July. While not a particularly strong result by itself, today’s report brings the total number of new jobs created over the last year to a "staggering" 374,000, The Conference Board of Canada said in a statement. And despite the drop in full time employment this month, almost 60% of the new positions created over the last year have been full-time jobs.

The job indicators in the US

US real GDP grew at an annual rate of 3.1% in the second quarter, according to the third estimate of GDP growth released by the US Commerce Department. The new estimate is up from the previous estimate that pegged growth at 3.0%.

The American Staffing Association’s staffing index rose to a reading of 97.26 in the week of Sept. 11 to Sept. 17, surpassing a value of 97 for the first time this year.

Economists surveyed by the National Association for Business Economics maintained their growth projections for the US economy in 2017, the association announced today. The median forecast calls real GDP growth of 2.2% for 2017, increasing to 2.4% for 2018. Both these forecasts are unchanged from the June 2017 estimates.

ManpowerGroup Inc.’s new Employment Outlook Survey found 21% of US employers plan to add staff in the upcoming fourth quarter. The percentage is down from 24% who said they planned to add staff in the third-quarter survey and 22% in the second quarter. The fourth-quarter survey also found 6% plan to decrease staff, 71% expect no change in staff and 2% are undecided about their hiring intentions.

For the first time since the Great Recession, more than half of the banks in the US plan to increase total employment during the coming year, according to findings from the Crowe Horwath LLP 2016 Financial Institutions Compensation Survey. Forty-two percent of respondents said employment would increase through normal growth and 13% through expansion.

The summer showed no slowdown of job creation, as hiring across the US rose 7.2% year-over-year in August, according to the September LinkedIn Workforce Report. Throughout the summer, hiring stayed consistently strong with no signs of weakening, nor of further acceleration since July.

IT and engineering job growth strengthened in August, according to the TechServe Alliance, a national trade association of the IT and engineering staffing and solutions industry. "Reversing a recent downward trend line, the rate of both IT and engineering job growth increased in August," TechServe Alliance CEO Mark Roberts said. The number of IT jobs in the US edged up 0.1% in August from July to more than 5.3 million. Engineering employment growth edged up 0.2% in August from July to almost 2.6 million jobs.

Worker confidence in the second quarter fell in the US to a 12-month low, staffing provider Yoh and HRO Today magazine reported in their quarterly Worker Confidence index. The index fell to a level of 99.7 from a reading of 107.6 in the first quarter.

Economic activity in the US nonmanufacturing sector expanded in August at a faster rate than in July, according to the Institute for Supply Management’s nonmanufacturing index, released today. ISM’s nonmanufacturing index rose in August to a reading of 55.3 from July’s reading of 53.9, which was the weakest pace in almost a year.

Economic activity in the manufacturing sector expanded in August at a faster pace than in July, according to the Institute for Supply Management’s purchasing manager’s index for US manufacturing. August’s index reading registered 58.8, up from July’s reading of 56.3.

Computer and information research scientists, heavy and tractor-trailer truck drivers, and sales engineers remain among the top two hardest-to-fill jobs by sector, according to the American Staffing Association’s second-quarter skills gap index. The index tracks hard-to-fill occupations in the US. New to the list of 170 hardest-to-fill jobs since the last report are audiologists, podiatrists, and electronic home entertainment equipment installers and repairers.

The job indicators outside North America

The world economy has picked up momentum, as expanding investment, employment and trade support synchronised growth across most countries, according to the Organisation for Economic Co-operation and Development’s latest Interim Economic Outlook. The OECD projects that the global economy will grow by 3.5% this year and 3.7% in 2018, with industrial production and trade picking up and further acceleration in the rebound of technology spending.

Employers worldwide have reported optimistic hiring prospects for Q4 2017 and added that there are no negative employment outlooks reported for the first time since 2009 according to the latest ManpowerGroup Employment Outlook Survey. The report, which surveyed more than 59,000 employers across 43 countries and territories, showed that hiring confidence is strongest in Japan, Taiwan, Costa Rica, India and Hungary. Furthermore, hiring has strengthened in 23 countries and territories, is unchanged in seven and declined in 13 when compared to Q3 2017.

The number of job vacancies in Australia reached 201,300 for the quarter ending in September, up 3.9% compared to the previous quarter ending in May, according to figures from the Australian Bureau of Statistics. The unemployment rate is expected to be 5.4% by the end of the year. Earlier figures from ABS showed that the unemployment rate in August stood at 5.6%.

Australia’s jobless rate remained at 5.6% for the third consecutive month in August 2017, according to figures from the Australian Bureau of Statistics.

The number of persons employed increased by 1.6% in the euro area EA19 and by 1.5% in the EU28 in the second quarter of 2017 compared with the same quarter last year, according to seasonally adjusted figures from Eurostat, the statistical office of the European Union.

Employment in Germany rose by 1.5% in the second quarter compared to the same quarter last year according to figures from the Institute for Labour Market and Professional Research (IAB). The figures also showed that Germany’s labour force worked a total of 14.2 billion hours in the second quarter, which was 0.4% less than the same period last year.

The jobless rate in Greece fell to 21.1% in the second quarter of 2017, down from 23.1% during the same period last year, according to figures from the Hellenic Statistical Authority.

By 2022, nearly 37% of India’s workforce would be in jobs demanding radically different skill sets, according to a report from the Federation of Indian Chambers of Commerce & Industry (Ficci) and India-based Nasscom (National Association of Software and Services Companies). The report, ‘Future of Skills and Jobs in India’, also states that 9% of the workforce would be deployed in new jobs that do not exist today. The report highlights the impact that various primary forces such as globalization, demographics, and Industry 4.0/exponential technologies, are expected to have on the key sectors of the economy.

India’s GDP growth decelerated to a 5.7% year-over-year rate in the April to June quarter from 6.1% in the preceding quarter, according to the Government’s Ministry of Statistics and Programme Implementation. This is the slowest pace of economic growth since the January to March quarter in 2014.

The number of professional job vacancies in Ireland decreased by 3% in August compared to the same month a year ago, according to the latest Morgan McKinley Ireland Monthly Employment Monitor.

The jobless rate in Malaysia for July stood at 3.5%, no change compared to the same period last year, according to figures from the Department of Statistics Malaysia.

Approximately 40% of firms in Poland intend to recruit staff in the next quarter of 2017 to increase or maintain employment levels according to the latest Job Market Barometer.

Singapore’s Minister for Trade and Industry S Iswaran has unveiled a plan to create up to 2,100 new jobs for professionals, managers, executives and technicians (PMETs) in Singapore’s electronics manufacturing sector by 2020. Singapore faces a shrinking workforce as well as slower progress than its Asian neighbours in getting more people into the labour market, according to a study by Oxford Economics. As a result, Singapore faces a massive decline in its working age population growth by 2036. The report said Singapore’s labour supply will shrink by 1.7% in the 10 years through 2026, and by 2.5% in the following decade, after accounting for changes to the participation rate. According to Oxford Economics, Singapore will be the worst hit out of a dozen economies in the report, even though Japan recorded the biggest workforce decline over the past ten years.

Switzerland’s unemployment rate remained 3.0% in August, unchanged from the previous month, according to data from the Regional Employment Services Centers (RAV) and State Secretariat for Economic Affairs (SECO).

Thailand’s jobless rate rose in the second quarter to 1.22% from 1.08% in the same period last year according to figures from the National Economic and Social Development Board.

The seasonally adjusted unemployment rate in Taiwan stood at 3.76% in August, down from 3.95% in the same period last year, according to figures from the Directorate-General Budget, Accounting and Statistics of Taiwan.

UK companies are hiring more students overall this year with apprenticeship growth outpacing that of graduate jobs, according to survey data from the Institute of Student Employers (formerly the Association of Graduate Recruiters). The survey reports that employers increased graduate hiring by 1% to 20,614 graduates this year while the number of apprentices grew by 19% to 11,016.

Approximately 10,000 finance jobs will be shifted out of the UK or created overseas in the next few years if the UK is denied access to Europe’s single market, according to survey data from Reuters.

The unemployment rate in Vietnam stood at 2.26% in the second quarter of the year, the lowest level in five quarters according to data from the Ministry of Labor, Invalids and Social Affairs.


> COMPANY NEWS

Hewlett Packard Enterprise is set to announce that it will let 5,000 employees go before the end of the year. As Whitman enters the sixth year of her five-year turnaround plan for the company, selling divisions and jettisoning employees seem to have become the prime tactics in a fight to keep the giant from sliding further into irrelevance. Bloomberg noted that earlier this month, HPE’s CFO said the company is hoping to find $1.5 billion in savings.

Equifax Inc. announced that it had been the victim of a cybersecurity breach that may affect approximately 143 million consumers, including some Canadians. The majority of information accessed in the breach included names, social security numbers, birth dates, addresses, some driver’s license numbers, and the credit card numbers for approximately 209,000 U.S. consumers, and dispute documents with personal identifying information for approximately 182,000 U.S. consumers. Equifax only reported the breach in September while the unauthorized access occurred between mid-May and July 2017. Since the announcement CEO Richard Smith, the CIO and CISO have left the company.

Since IBM Corp. was hired to implement the Phoenix payroll system for the federal government in June 2011, the contract has been amended 39 times and increased in cost to $189 million, according to a CBC News investigation. Since launching in February 2016, there have been numerous problems in federal employees receiving their pay as expected. More than 1,000 glitches in the system required that 28 computer scientists be shifted to the Phoenix program to help IBM address those.

CareerBuilder laid off 120 employees, or 4% of its global workforce. The report follows CareerBuilder’s acquisition by an investment group last month.


> MERGER & ACQUISITION ACTIVITY

Google Acquires HTC’s Pixel Team for $1.1 billion

HTC employees, including many who are working on Pixel smartphones, will join the Alphabet company. In return, Google will pay HTC $1.1 billion in cash. In a separate deal, Google will also gain a non-exclusive license for HTC intellectual property, though terms of that IP agreement were not disclosed. HTC claims the deal does three things for the Taiwanese company: supports its continued branded smartphone strategy, enables a more streamlined product portfolio, and gives it greater operational efficiency and financial flexibility.

Ikea has Bought TaskRabbit

Ikea Group has bought TaskRabbit, and while the price of the deal could not be determined, the contract labour marketplace company has raised about $50 million since it was founded nine years ago. Sources added that TaskRabbit will become an independent subsidiary within Ikea and that CEO Stacy Brown-Philpot and its staff would remain

HPE’s Latest Acquisition to Boost Hybrid IT Offerings

Hewlett Packard Enterprise announced that it will be acquiring born-in-the-cloud services company Cloud Technology Partners (CTP) to strengthen its hybrid IT services. CTP is a cloud agnostic managed service provider (MSP) that offers consulting, design, and operational advisory services for cloud environments such as Amazon Web Services, Microsoft Azure, Google Cloud, and OpenStack.

F12.net Buys OnDeck Systems

F12.net Inc. of Edmonton has bought OnDeck Systems Inc. of Courtenay, B.C. OnDeck is a noted IT service provider on Vancouver Island. The addition of OnDeck advances F12’s reach into the B.C. market. The company has embarked on an aggressive accelerated growth plan with the goal to become a nationwide IT services provider.


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