Tech Consulting Giants Were Big on Acquisitions in 2016

December 21, 2016, 3:30 PM UTC
Courtesy of IBM

The list of technologies that can transform how companies do businesses is long and growing longer by the minute. There’s software for customer service, sales, and marketing, and for crunching data to help executives make better decisions.

Corporate customers are expected to spend an astounding $2.1 billion annually on technology by 2019, according to market research firm International Data Corp. The demand by companies for help with installing it all and teaching workers to use it wisely have prompted big technology consulting firms to make dozens of acquisitions of design and strategy agencies in 2016.

Accenture (ACN), IBM (IBM), Cognizant (CTSH), Deloitte and Wipro (WIT) all snapped up smaller firms that can help businesses dream up new business models, test ideas, and install the technology to make those visions reality. For example, in November, Accenture and Cognizant both expanded their digital teams in Europe with the buyouts of London’s Karmarama (which caters to automaker Honda and consumer goods company Unilever) and Amsterdam’s Mirabeau (which counts airlines KLM and AirFrance as customers.)

Gajen Kandiah, president of Cognizant Digital Business, said his organization has added more than 500 anthropologists and behavioral economists over the past six months to help companies envision how technology will change how they do business. Many companies struggle with this step, he suggests. “This is a market that is quite confusing, and not really getting better over time,” he told Fortune.

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From a sheer numbers perspective, Accenture did the most acquisitions among its peers—it bought six boutique creative agencies and software development firms in the second half of 2016 alone. Separate reports from research firms Everest Group, Forrester, and Gartner list Accenture as the largest digital consulting firm based on the sheer number of services is offer related to analytics, cloud services, and other digital technologies. It can handle projects in more than 40 offices worldwide.

Accenture is followed closely by IBM in terms of employees dedicated to this area. IBM has been adding more talent quickly: it acquired three creative design agencies during the span of just one week early in the year, and then bought another in April. As of February, IBM’s consulting unit dedicated to consulting on digital technologies had more than 10,000 employees.

Accenture doesn’t disclose the size of its workforce.

Brian Whipple, senior managing director for Accenture Interactive, an Accenture business that specializes in helping clients with technology for dealing with their customers, said much of the consolidation is being driven by a desire by large companies to regain control over how customers “experience” their products and services.

That could include helping companies create entirely new ways to show off products to customers, such as using augmented reality headsets—which layer digital images onto a “real world” view—without actually taking them on the road. In theory, the data collected about that interaction would be used as part of an ever-changing profile of that individual customer that gives insights into their likes and dislikes.

Websites, mobile apps, and digital marketing videos—and other interactions—are becoming just as important as traditional advertising activities in shaping what consumers think about companies, Whipple said. “It’s just one of about 100 different experiences that a consumer will have with a company.”

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While many technology consulting firms specialize in some of these areas, market researcher Gartner says only a handful of them are capable of advising customers about the full breadth of their digital strategies like their growth plans, cybersecurity, using the Internet of things, evaluating new technologies, and changing corporate culture. Gartner’s list of the best one-stop shops for digital services includes (alphabetically) Atos, Booz Allen Hamilton, Boston Consulting Group, Capgemini, Cognizant, Deloitte Digital, EY, IBM, McKinsey, Orange Business Services, PwC, and Wipro.

Today, services related digital technologies account for nearly 20% of Wipro’s overall revenue. But this portion of Wipro’s business will grow least 30% to 50% over the next three years especially from customers in the financial services, telecommunications, media, and health care sectors, said Rajan Kohli, senior vice president and global head of Wipro Digital. “By definition, the disruption is often tied to consumer habits,” he said.

That opportunity inspired Wipro’s $500 million takeover of cloud services specialist Appirio in October. Appirio CEO Chris Barbin said his company had planned to build its own design team before it agreed to the takeover but now has access to designers through Designit, a Danish design agency that Wipro bought in July 2015. Appirio’s newfound ability to help customers about both cloud software investments and design-centric issues, such as how to make applications and websites easier to navigate, has already helped the combined teams win several deals together, he said.

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