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Analyst Relations Newsletter Q4 2019: Key Highlights from Custom Research

Key highlights from recent custom research projects

Case #1: Advised a leading IT service provider on its future skills strategy for next-generation IT services delivery

The client was looking for guidance on its future skills investment decisions to help time its skills development to meet market needs. We defined a detailed skills landscape/taxonomy comprising 1,100+ hard IT skills across three time horizons – one year, three years, and five years) and industries (including financial services, retail, manufacturing) to ensure that talent development efforts are aligned with the market requirements.

As part of the project, we helped the client model skills premiums for emerging and niche/specialist skills by factoring in the impact of market demand and supply. We benchmarked the availability of emerging and niche skills among key competitors and assessed skill-building initiatives planned or currently underway among competitors to suggest best practices in this space.

Our detailed assessment and recommendations helped the client craft a differentiated strategy for skills development.

Case #2: Supported one of the largest U.S.-based financial services firms to future-proof talent and skills strategy against technology disruption

The client was looking for industry data and peer insights to develop a skills outlook for the IT services sector and define an optimal vendor strategy for its global delivery partners. To ensure a robust, future-proof analysis, the client was seeking insights on demand and supply of niche/specialist skills (such as AI, IoT, blockchain, and AWS) across multiple geographies, including Australia, India, Germany, the UK, and the US in the context of financial services industry.

We identified key skills likely to be critical in the future across multiple work areas and assessed the reskilling potential for these skills. We supported our work with a deep-dive analysis on the demand-supply gap for these skills across two-time horizons – 12 to 18 months and three to five years – to help the bank define an optimum strategy for sourcing high demand-low supply skills. We provided recommendations on how to address gaps in the current talent strategy and support future growth and supplemented that information with emerging talent management practices relevant to the needed skill sets.

What’s Your Company’s Digital Ethics Score? | Blog

I marvelled at the passion demonstrated by the London Extinction Rebellion activists while I attempted to make my way to the Digital Agenda Power & Responsibility Summit at the British Library on 9 October.

During the Summit itself – while listening to presentations delivered by eminent speakers including Matt Warman MP, Minister for Digital and Broadband at DCMS; Sana Khareghani, Head of UK Government Office for AI; Russell Haworth, CEO, Nominet; Cheryl Stevens MBE, Deputy Director for Trust & Identity at DWP; Jacqueline de Rojas CBE, President, techUK; and Caroline Criado Perez OBE, award-winning author of Invisible Woman and activist – it struck me that consumer disillusionment with unethical applications of technology could lead to its own type of activism in the form of product and service boycotts.

Read my blog on Digital Agenda

Rising Cyber Security Threats in Manufacturing | In the News

Manufacturing shop floors may look futuristic these days, with industrial robots, wireless connectivity and large-data operations driving efficiencies.

“The threat has now become very apparent to the manufacturing sector, which faces risks from the malevolent hacking of their IoT investments to the intellectual IP theft from China and other rogue states,” said Peter Bendor-Samuel, chief executive officer, Everest Group, an IT advisory and research firm.

Read more in ETCIO

HCL’s Sankalp Acquisition: Reflections of a Dynamic Industry

In September, HCL Technologies announced its acquisition of the semiconductor engineering services firm Sankalp Semiconductor in an all-cash deal worth US$25 million, with Sankalp operating as a 100 percent subsidiary of HCL. While this is not a particularly large acquisition, it impacts a key market player, and it highlights a couple of key trends in the semiconductor engineering services market.

What the acquisition means for HCL

The acquisition impacts HCL in a few important ways:

Enhanced semiconductor engineering capabilities

The recent acquisition by HCL is a strategic move to cement its position in semiconductor chip engineering services by strengthening its existing digital design services and expanding into the analog and mixed-signal space.

Both HCL and Sankalp Semiconductor provide chip engineering services in the pre-silicon and post-silicon segments of the value chain (See Figure 1). But while HCL’s chip engineering expertise lies in digital design, Sankalp has strong capabilities in analog and mixed-signal circuit design as well.

And HCL will be gaining experience. Sankalp has more than 5,000 person-years of experience in semiconductor engineering services and covers the digital, analog, and mixed-signal domains through its 1,000+ engineers based in India and Canada. In analog and mixed-signal design alone, the company has more than 1,500 person-years of experience and has delivered more than 500 projects.

Increased revenue

Though HCL is a major player in engineering services, its acquisition of Sankalp Semiconductor, which reported revenues of ~US$20 million in FY2019, will be a nice boost to its semiconductor engineering services top line.

Increased market access

Sankalp will strengthen HCL’s play in specific market segments including automotive, consumer, IoT, medical electronics, networking, and wireless.

Key outsourcing segments of the semiconductor industry value chain

How the acquisition reflects industry trends

HCL’s acquisition of Sankalp is the latest in a series of acquisitions that have taken place in the semiconductor engineering services industry over the past few years. As shown in the graphic below, in 2015, Aricent acquired the Bengaluru-based semiconductor services firm SmartPlay Technologies Pvt Ltd before itself being acquired by Altran in 2017, which was – in turn – acquired by Capgemini in 2019. Cyient Europe Ltd acquired custom analog and mixed-signal circuits design company Ansem N.V, and L&TTS acquired Bengaluru-based Graphene Semiconductor.

timeline

All of these acquisitions reflect an important industry trend that has some specific consequences. There is an increasing focus on semiconductor engineering due to the rise of IoT and smart device applications, as well as a growing demand for greater computing power and device miniaturization.

This trend is driving several outcomes. First, it is forcing semiconductor companies to think about how to reduce time-to-market, as well as how to gain access to engineers with the right kinds of expertise. Many are turning to outsourcing to address these challenges. As a result, we expect outsourcing in this sector to grow at a rate of 10% over the next three years.

Second, it is forcing semiconductor engineering service providers to expand their portfolios to successfully address market needs. That challenge, coupled with the generally fragmented nature of the industry, is likely to result in ongoing merger and acquisition activity.

Ultimately, whether they choose to grow organically or inorganically, semiconductor engineering services firms will want to invest in their capabilities so they can grab a higher share of outsourcing from the ~US$ 470 billion semiconductor industry pie.

 

IT Big 3 to Offer Artificial Intelligence as a Platform | In the News

Indian IT services providers Tata Consultancy Services (TCS), InfosysNSE 0.82 % and WiproNSE 0.93 % are betting on artificial intelligence (AI) platforms to improve delivery of solutions and drive faster growth from clients.

However, it could be a little off the mark to call these solutions AI platforms yet. Technology service providers “are conflating their investments in IP platforms with their investments in AI. For example, Ignio does have a small AI component, but most of the product is not AI but rules-based and procedural,” said Peter Bendor-Samuel, CEO of Everest Group, an IT advisory and research firm.

Read more in Economic Times

 

It-Bpo Road Map Recalibration All Set for Completion in September | In the News

The Information Technology (IT) and Business Process Association of the Philippines (Ibpap) expects to finish next month its review of the industry road map, as it seeks to achieve the goals it set to remain significant in the ever-changing business environment.

“I think the target is within September we should be able to come up with the recalibration of the road map that happened two years ago,” BPAP Chairman Lito Tayag told reporters last week during the fiscal year-ender dinner hosted by Accenture Philippines for the media in Bonifacio Global City, Taguig.

According to him, they are still waiting for the final report of Everest Group, the research and consulting company they contracted.

Read more in Business Mirror

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