IT Industry News – September 2018

September 2018 saw some big deals and some familiar names with Adobe’s $4.5 million purchase of Marketo being the big deal of the month. Not a true tech play but Sirius XM paid $3.6 billion for Pandora, and with digital/media/tech convergence it seemed like a fit. There has been some data centre news lately, driven by the cloud and Digital Realty is expanding its footprint with the $1.8 billion purchase of Brazil’s Ascenty. SS&C continues on its acquisition path and growth in the financial services world with the $1.5 billion acquisition of Intralinks. Vonage paid $300 million for contact centre as a service company NewVoiceMedia; Microsoft was adding to its AI portfolio buying Lobe; Intel bought a startup, NetSpeed to help with its IoT chips; Cognizant added to its Salesforce capabilities with the Advanced Technology Group buy; Infosys also added Salesforce capability in Europe, buying Fluido; and Slack is adding an AI driven email client to its portfolio with the purchase of Astro.

Other companies in the news were Facebook for announcing its first Asian datacenter, to be opened in Singapore; and Verizon is in cost cutting mode, starting with voluntary retirements, but more to come!

Not surprisingly, the US economy continues to hum along, with CDG growth rate of 4.2%, strong hiring outlooks and all indicators showing positive. The only negatives appear to be a growing skills shortage, but that is echoed around the world. Canada lost jobs in August after a couple of months of growth, and GDP growth is half of the US rate. The OECD suggests that unemployment rates are steady in OECD countries, and one outlook says 43 of 44 countries are planning to add jobs.

An interesting report from South Korea highlights the growing phenomena of senior citizens working because the social systems are not strong. We can expect to see more of that here in North America too, because people are living longer, are more active and the extra income will be needed!

In this Issue:

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


> GENERAL INTEREST

General

The rise of artificial intelligence is expected to create 133 million new jobs by 2022 compared to the 75 million that will be displaced, according to a global study released by the World Economic Forum. The report, The Future of Jobs 2018, also found that by 2025, more than half of all current workplace tasks will be performed by machines as opposed to 29% today.

Do Canadian federal employees take privacy problems seriously? Maybe not, if the latest annual report from the country’s privacy commissioner is any guide. The report notes that officially it received 286 data breach reports in the last fiscal year. However, the government told Parliament it had suffered many more.

The job indicators in Canada

Ontario announced the minimum wage will remain at C$14 an hour rather than rising to C$15 as planned by the previous Liberal government.

The Canadian staffing index, which measures staffing activity in Canada, was unchanged in August on a year-over-year basis at a reading of 114. The Canadian Staffing Index measures the hours of labour performed by a sampling of temporary and contract workers in the staffing industry. Staffing Industry Analysts produces the index on behalf of the Association of Canadian Search, Employment and Staffing Services.

Canada’s economy is chugging along despite trade uncertainty, according to the RBC Economic Outlook quarterly. Consumer spending and business sentiment remain high, and there are signs of a modest firming in wage gains. RBC projects real GDP growth of 2.1% in 2018, slowing slightly to 2.0% in 2019.

Canadian employers report cautiously optimistic hiring plans for the final quarter of 2018, according to the fourth-quarter Employment Outlook Survey by Manpower. Hiring prospects remain relatively stable when compared with the previous quarter, up one percentage point, and increased by four percentage points from the Q4 2017 forecast

Following two months of increases, the number of jobs in Canada fell by 51,600 in August when compared to July for a total of 18.6 million jobs, according to seasonally adjusted numbers released by Statistics Canada. The unemployment rate rose to 6.0% from 5.8% in July.

The job indicators in the US

US real GDP grew at an annual rate of 4.2% in the second quarter, according to the third estimate of GDP growth from the US Commerce Department. The new estimate is unchanged from the previous estimate.

US employers reported their strongest average annual hiring outlook in the last decade, according to the fourth-quarter Manpower Employment Outlook Survey. Some 22% of US employer respondents plan to increase staff in the fourth quarter — up from 21% in the year-ago quarter — while those planning to decrease fell to 5% from 6% in the year-ago quarter.

The ASA Staffing Index four-week moving average bounced back to a rounded value of 100, exceeding 99 for the third consecutive month.

The Conference Board’s consumer confidence index increased in September following a large improvement in August. The index rose to a reading of 138.4 (1985=100), up from 134.7 in August. This is close to an 18-year high and not far from the all-time high of 144.7 reached in 2000.

The Conference Board’s US Leading Economic Index rose 0.4% in August from July to a reading of 111.2 (2016 = 100), following a 0.7% increase in July and a 0.5% increase in June.

In an indication of holiday season hiring plans, UPS plans to hire 100,000 people for the holidays, up about 5,000 from last year; FedEx will also hire 5,000 more than last year; and Target will hire 20% more people (20,000) increase from last year’s plans. Looks like lots of opportunity for seasonal work in the US!

The number of IT jobs in the US remained flat in August from July, holding at a total of more than 5.3 million, the TechServe Alliance announced. The group attributes this entirely to a lack of resources, not jobs!

The TechServe Alliance also measures engineering employment, which edged up by 0.09% in August from July. Engineering employment increased 2.12% on a year-over-year basis, an increase of 54,200 engineering workers.

Candidates turn down more job offers now than they did one year ago, according to a survey by Express Employment Professionals. Forty percent of respondents said applicants choose not to accept a job offer because the company was “not the perfect fit.” Low pay was a factor for 28%, while 16% said both “lack of transportation” and “lack of advancement” were key factors.

The Conference Board’s US Employment Trends Index rose 6.9% year-over-year in August to a reading of 110.88, up from a downwardly revised reading of 109.58 in July. It was the largest increase in more than six years

US private-sector employment rose by 163,000 jobs in August from July, the lowest gain since October 2017, according to the ADP National Employment Report. The total of jobs added in July was also revised down to 217,000 from 218,000; however, it remained the strongest hiring since February.

Economic activity in the US nonmanufacturing sector accelerated in August, according to the Institute for Supply Management’s nonmanufacturing index. ISM’s nonmanufacturing index rose to a reading of 58.5 in August from a reading of 55.7 in July. Readings above 50 generally indicate improving conditions. The employment portion of the index edged up in August to 56.7 from July’s reading of 56.1.

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. Emerson released the results of its fourth annual STEM survey of 2,000 Americans. 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

Economic activity in the US manufacturing sector accelerated in August at a faster rate than in July, according to the Institute for Supply Management’s manufacturing index. ISM’s manufacturing index rose in August to a reading of 61.3 from July’s reading of 58.1. Readings above 50 generally indicate improving conditions.

The rate of job creation in the service economy during September was the strongest since May 2015. Meanwhile, manufacturing jobs numbers expanded, but at the weakest pace in 13 months.
Even with the job creation, overall US private-sector output growth moderated in September, according to the report. East coast storms were considered a factor in these numbers.

The job indicators outside North America

Employers around the world are intending to increase their workforce in the fourth quarter of 2018, with 43 of 44 countries reporting positive hiring outlooks, according to ManpowerGroup’s latest Employment Outlook Survey.

The OECD reported the overall unemployment rate at 5.3% in July 2018, stable compared to the previous month. Across all OECD countries, 33.5 million people were unemployed, down from 33.8 million in June 2018.

The job vacancy rate in the euro area (EA19) was 2.1% in the second quarter of 2018, up from 1.9% in the second quarter of 2017. In the EU28, the job vacancy rate was 2.2% in the second quarter of 2018, up from 2.0% in the second quarter of 2017, according to figures published by Eurostat.

Employment in the euro area increased by 1.5% while employment in the EU28 rose by 1.4% in the second quarter of 2018 compared with the same quarter of the previous year, according to seasonally-adjusted data from Eurostat. Eurostat published its unemployment data earlier this month for July with the Euro area unemployment rate at 8.2% and the EU28 unemployment rate at 6.8%.

Employers’ confidence in the prospects for the UK economy declined further in September. The balance of those seeing a positive outlook as opposed to a negative one was a net -5, a decrease of 4 points from August 2018 and the lowest since March 2018.

The number of jobs available in London fell by 33% in August when compared to a year ago, according to the London Employment. At the same time there was an 8% decrease in professionals seeking jobs.

The availability of professional jobs in Ireland decreased by 2.5% in August, as compared to the same time last year.

The French government announced that it is planning a budget that aims to cut taxes and rein in spending which includes the axing of 4,100 public sector jobs. The pillar of the 2019 budget will be a combined €20 billion of tax cuts for businesses and €6 billion in tax relief for households, including a gradual end to an annual housing tax. Macron has faced opposition over his labour law reforms which make it easier to fire people as well as his reforms to cut costs by limiting special employment rights for rail-workers. According to Eurostat, France’s unemployment rate stood at 9.2% in July.

Spain‘s construction sector employed more than 1.2 million professionals in the second quarter of 2018, an increase of 7.2% from the same period last year and the highest figure since the second quarter of 2012.

The number of companies in Portugal that plan to hire new employees has increased from 41% in 2017 to 52% this year, according to research from consulting group Mercer. The research also found that 45% of organisations expect to maintain the same number of employees, with 2% pointing to a reduction.

South Africa lost 69,000 jobs in the second quarter of this year compared to the first, according to Statistics South Africa. The quarter also saw GDP shrink 0.7%, the second consecutive quarter of negative GDP and hence indicative of a recession.

Job vacancies in Australia rose 19.3% year-over-year in August, and it appears vacancies are becoming harder to fill according to the Australian Bureau of Statistics.

Australia‘s talent mismatch between the skills jobseekers possess and those employers want has increased for the fifth consecutive year, according to a report from Hays published in collaboration with Oxford Economics. Australia’s increase to 5.7 on the overall Hays Skills Index, up from 2017’s 5.5 and the highest since 2012’s peak of 5.9, shows increased pressure in the job market. This means it’s harder to secure the right talent now than it was last year.

Australia‘s seasonally adjusted jobless rate declined by 0.2% in August when compared to the same period last year, according to data from the Australian Bureau of Statistics. Unemployment increased by 5,800 to 708,800 in August.

Online advertised job vacancies in New Zealand rose by 7.4% in August year-on-year, according to the New Zealand Ministry of Business Innovation and Employment’s Jobs Online monthly report.

The employment rate of senior citizens in South Korea has been rising steadily as they seek jobs to avoid falling through the country’s weak social safety net. The number of people aged 65 years or older reached 7.38 million in 2018, accounting for 14.3% of the country’s total population. Additionally, 45.5% of those aged between 65 and 69 worked in 2017, compared to employment rates of 44.6% in 2015 and 41.1% in 2010.

Reuters reports that job growth in South Korea will remain weak for the rest of this year with the country’s finance minister Kim Dong-yeon stating that a boost in fiscal spending won’t be enough to quickly offset employment losses in service industries and the private sector. South Korea’s unemployment rate rose to 4.2% in August, the highest since 2010.

The majority of Singaporean IT leaders (93%) are concerned that IT talent in Singapore is insufficient for the implementation of Smart Nation, the government initiative that aims to harness the power of networks, data and info-comm technologies to create a better future. IT leaders are optimistic regarding the outcome of Smart Nation initiatives as 92% of Chief Information Officers believe that the government’s Smart Nation initiatives will positively impact the local IT employment market. Additionally, 60% expect an increase in IT job opportunities and 53% predict an increase in average salaries.

Singapore’s labour market continued to improve in the first half of 2018 as total employment grew, more job vacancies became available, and layoffs declined.

The unemployment rate in Taiwan saw a slight decline of 0.02% to 3.87% in August 2018, when compared to the same period last year, according to the latest manpower survey results from the Directorate-General Budget, Accounting and Statistics.

Hong Kong’s seasonally adjusted unemployment rate stood at 2.8% for the period from June to August 2018, same as that of the previous period from May to July.

Malaysia‘s jobless rate stood at 3.4% in July, down slightly from 3.5% in the same period last year, according to data from Statistics Malaysia.

China‘s job market remained stable in August, with the unemployment rate at a relatively low level. In August, the surveyed unemployment rate in urban areas was 5%, down 0.1% from August last year and down 0.1% from the level during the same period last year. The urban surveyed unemployment rate in 31 major cities was 4.9%, unchanged from the same period last year and down 0.1% from July.

The unemployment rate in the Philippines declined to 5.4% in July from 5.6% a year ago.


> COMPANY NEWS

Verizon is looking to trim costs by about $10 billion, starting with its workforce. The carrier offered early-retirement buyouts to thousands of employees, including all management employees, according to a report by The Wall Street Journal. Front-line sales employees were excluded from the offer. Verizon has about 153,100 employees worldwide today, a number that has decreased from 155,400 employees at the beginning of 2018. The report said that Verizon’s cost-cutting effort won’t stop with employment, however. The plan also includes network build-out and virtualization plans.

Facebook revealed plans to open a 170,000-square-meter server hub in Singapore within four years. This will be its first Asian datacenter. Facebook currently counts at least six datacenters in the U.S., and its only other international datacenters are in Sweden and Ireland, though it is currently in the process of building a second Scandinavian hub in Denmark, which is expected to open sometime in 2020.


> MERGER & ACQUISITION ACTIVITY

Adobe Paying $4.5 Billion for Marketo

Adobe, already one of the world’s largest software companies and a leader in digital document and digital experience, is planning to become an even bigger part of enterprise digital transformation moves with its planned acquisition of Marketo. With the acquisition, Adobe, with reported fiscal 2017 revenue of $7.3 billion and a workforce of over 19,000, will have access to Marketo’s marketing technology ecosystem of more than 500 partners and over 65,000 members.

Sirius XM Paying $3.6 Billion for Pandora

Automobile-focused satellite radio company SiriusXM has announced plans to acquire Pandora in an all-stock deal worth $3.6 billion. The deal comes a little more than a year after SiriusXM invested $480 million in Pandora for a 15 percent stake in the company, though rumors at the time suggested SiriusXM had wanted to acquire the company outright.

Digital Realty Paying $1.8 Billion for Data Center Company Ascenty

Digital Realty is continuing its data center expansion charge with the acquisition of Brazil’s leading data center provider, Ascenty, for $1.8 billion.

SS&C Paying $1.5 Billion for Intralinks

SS&C Technologies Holdings is buying Intralinks Holdings for $1.5 billion in cash and stock, increasing its power as a solution provider to the financial vertical.

Vonage Paying $350 Million for Newvoicemedia

Vonage is buying NewVoiceMedia, a privately-owned Contact-Center-as-a-Service company, for $350 million. Holmdel, N.J.-based Vonage offers cloud-based voice services for consumers and businesses. Over the last year, the company has been doubling down on Contact Center as a Service (CCaaS) as a way to go after more midmarket and enterprise business.

Microsoft Buys AI Startup Lobe

Microsoft nabbed its third artificial intelligence startup of the year — an acquisition spree aimed at empowering partners to build intelligent applications. Lobe, based in San Francisco, offers AI development capabilities through a visual interface that requires no coding. The platform can be used by developers without data science expertise to build and train deep learning models, and then embed them directly into custom apps.

Intel Buys Netspeed

Intel has acquired a startup founded by a former employee that will help the company accelerate design of specialized chips for the Internet of Things and other applications.

Cognizant Buying Advanced Technology Group

Cognizant plans to acquire its fourth company over the past five months with the move to buy Salesforce consulting specialist Advanced Technology Group. Founded in 2000, ATG provides revenue management consulting and implementation services focused on the Salesforce platform. The Overland Park, Kan.-based solution provider has large specialized teams around configure, price, quote (CPQ), contract life-cycle management and billing for multiple technology platforms, as well as expertise in automated cloud-based quote-to-cash solutions

Infosys Buying Fluido

Infosys unveiled a plan to acquire a Salesforce Platinum partner in Europe that will give the company a dominating presence in the Nordic region.

Slack Buying Astro

Slack, the cloud-based collaboration tool used by more than eight million people across thousands of companies, is folding an email client into its ever-expanding software portfolio. The San Francisco company has purchased Astro, a messaging startup that leverages artificial intelligence (AI) to supercharge inboxes.

Kaseya Buying Rapidfire Tools

Kaseya, the IT infrastructure management technology developer, has bought RapidFire Tools, developer of a suite of IT assessment, threat detection, and compliance tools. Dublin, Ireland-based Kaseya plans to integrate the security and compliance tools of Atlanta-based RapidFire Tools into its MSP-focused IT Complete suite of management solutions.

Ciena Buying Donriver

Ciena Corp. is set to acquire service provider software specialist DonRiver to enhance the company’s Adaptive Network vision through closed-loop automation.

Medopad Buying Sherbit

Medopad, a U.K. health technology startup that leverages machine learning to connect patients with a range of health care professionals, has announced its expansion into the U.S. with its acquisition of San Francisco-based Sherbit.

Tailwind Capital Buys Core BTS

Core BTS, a Madison, Wis. solution provider focused on networking, collaboration, security and data center solutions, was acquired by Tailwind Capital, a New York-based private equity firm.

West Corp Buying INXPO

West Corp. announced Thursday that it’s buying webcasting and online events provider INXPO, which marks the company’s fifth acquisition this year. West provides high quality voice and data services. INXPO is a secure and scalable video platform that has powered thousands of digital events.

Accountabilt Buying Clearpointe

AccountabilIT acquired solution provider ClearPointe in a move to create a comprehensive and advanced IT company to meet the demands of the market. ClearPointe is a Little Rock, Ark.- based solution provider that specializes in cloud-based transformation and migrations, as well as managed services.

Intervision Buys Infiniti Consulting Group

Solution provider and MSP InterVision has made its second acquisition this year of one of its peers, this time acquiring a small cloud services provider with a strong background in working with hyper-scale clouds.


> 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/