Number of deals in Microsoft Azure consulting surging

30 October 2020 4 min. read
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The technology consulting market appears to have turned a corner since the Covid-19 crisis began, currently witnessing a flurry of merger & acquisition (M&A) activity. Microsoft Azure and other cloud platforms appear to be in the spotlight. 

The start of this year was tough on most sectors, and the IT services sector was no different. Investor pockets tightened, and transaction activity all but came to a halt back in March. Come August, the situation has certainly changed, as noted by Mike Harvath, CEO at US-based M&A advisory firm Revenue Rocket Consulting Group, who spoke to TechTarget.

“The market came back with a vengeance” after the first half of this year, according to Harvath, who alluded to the strong uptick in deal activity. Examples abound of big-money deals that have unfolded in recent weeks. Global tech services firm Cognizant acquired Microsoft Azure specialist New Signature in July, adding 500 cloud experts to its team across the US, Canada and the UK.

The firm went on to make two more acquisitions: Atlanta-based software development services firm Tin Roof and Chicago-based 10th Magnitude – also an Azure-specialized consulting firm that took Cognizant’s team of new Azure experts up to 600. In August, Microsoft service provider Core BTS also bolstered its Azure capabilities through the acquisition of Microsoft-focused Blue Chip Consulting Group.

The sudden flurry of major deals is not a major deviation from broader market trends. A recent Boston Consulting Group report noted that M&A activity in general across the globe has resumed normal levels recently, as investors see the timing fit to buy the dip in the market. For Harvath, the same holds true in the tech space.

Number of deals in Microsoft Azure consulting surging

“I think buyers are seeing an accelerating market form a valuation perspective and they want to get in before valuations continue to go up. We are doing a record number of transactions right now, with a record number of people coming into the market,” he said. The trend is plain to see, and signals better times ahead for the tech market.

Azure in focus

Also evident from the deals listed above is the overwhelming focus on Microsoft Azure, which boils down to several factors. For one, Microsoft Azure is among the most popular cloud solutions across the business environment – a position that is only strengthening via ties to global cloud distribution giant Accenture

At the same time, the growing demand is a product of a broader focus on cloud solutions, as businesses across the world look to bolster their remote working capabilities. Advanced cloud solutions allow for a more secure and efficient transition to virtual working – a realization that has lodged with many organisations.

KPMG report from last month revealed that the additional tech spent to enable remote working across the world since the start of this year has amounted to $250 billion – $15 billion per week. Cloud is a big part of these investments, and tech services firms are rushing in to match this demand. Speed is of the essence in such a competitive landscape, which explains why many have chosen to go with inorganic growth.

“It's always faster and cheaper to acquire a business than to grow it from scratch,” explained Harvath. He also pointed out that cloud consulting requires a very special skill set, which is rare to come by in such a high-demand market. Cognizant’s addition of hundreds of cloud specialists in a matter of weeks is an example of how tech firms are dealing with this demand. As other firms take a similar path, tech M&A activity is likely to climb rapidly in the weeks and months to come.