Tag: Corporate-COVID-19

TCS, Infosys and Wipro First in Line for Spoils of a COVID Wipeout | In the News

Cash rich IT services providers Tata Consultancy Services, Infosys and Wipro are likely to go on an acquisition spree, as companies will be available at discounted valuations due to the coronavirus crisis. The three companies collectively have cash reserves of more than $13 billion, a substantial firepower in a downturn which could help them buy smaller rivals in niche segments.

The prized assets will be platforms and patent-led products, according to Peter Bendor-Samuel, the chief executive of US-based IT advisory and research firm Everest Group.

What Is Your Post-COVID-19 M&A Strategy | Blog

The International Monetary Fund has recently confirmed what most of us already know – we have entered a recession. Given the evolving COVID-19 situation, in the short-term, organizations are doing their best just to implement business continuity plans and keep the lights on. At this point, they simply don’t have the bandwidth to take a forward-looking view.

However, now – or at least very soon – maybe the best time to be bold – to consider the opportunity to slingshot through and out of the recession with a strong M&A strategy.

Increasing acquisition activity

As part of our technology research over the past few years, we’ve analyzed innovative firms (which we call Trailblazers) to identify high potential start-ups based on their growth stories, innovation, and the impact they have created in the market.

More recently, we’ve seen an uptick in M&A activity across the IT services market as organizations have sought exponential inorganic growth to expand their geographic footprints and/or fill gaps across their services portfolios. (See the exhibit below.)

timeline of acquisitions of high potential start ups presented by everest group 1

How we expect the recession to impact this activity

Although this has been an acquisition-rich industry in recent years, everything is completely different now – the post COVID-19 market is clearly headed straight into recession, or worse. If previous recessions are any indication, M&A activity is likely to take a hit. While we believe M&A activity in the immediate aftermath of the pandemic will be subdued, we also believe there will be some interesting opportunities for those willing to invest some thinking and strategizing.

Is now the right time for you to consider M&As?

As the world adjusts to the next normal following the pandemic, some specific technologies/tools are likely to see a surge in adoption, including cloud, collaboration and CX, network and security, IoT and edge, to name a few. These technologies will play an important role in ensuring business resiliency and serving a distributed and remote workforce.

Within this context, a well-planned acquisition strategy can enable competitive advantage for those organizations willing – and able – to take a bold approach. We believe this segment-specific activity will be further fueled by:

  • Lower valuations: Most start-ups take a relationship-based selling approach, with about 80% of their revenue coming from a few high-value, large clients or markets. As the recession deepens, start-ups that are highly dependent on a few clients and markets will struggle to survive, lowering their valuation and increasing their propensity to be acquired. The lower cost of capital and the impact of the financial stimulus are also going to provide acquirers an impetus to re-examine their M&A playbooks. One such example is Magic Leap, which is looking at opportunities to be acquired as the hardware sector faces threats from the COVID-19 crisis, the impending recession, and the trade war between the US and China. Cash-rich organizations (PE/VC firms, service providers, and BigTech companies) are already looking at leveraging their balance sheets amidst this downturn
  • An opportunity to fill portfolio gaps: As growth across IT services is expected to soften for the foreseeable future, now may be the time – and the price may be right – for organizations to augment their capabilities, expand their addressable market, and increase their top line

We are already seeing interest from acquiring firms focused on cloud services (AWS, Azure, GCP), enterprise platform adoption (capabilities in ServiceNow and Salesforce), network services, and security, to name a few. As we approach the fallout from the pandemic, a range of investors will be eyeing the technology sector for M&A opportunities, and we believe there will be a lot of activity. Picking the right segment bets and timing these initiatives will be crucial.

What is your post-COVID-19 M&A Strategy? Please write to us at [email protected] and [email protected].

Growing at a Steady 9% Pace, IT Services in Life Sciences Drives Advancements in Pharmaceuticals, Medical Devices, Supply Chain | Press Release

Nearly $4.5 billion of life sciences IT services deal up for grabs over 2020-2021

Speed to market is the primary focus of biopharmaceutical and medical device firms when it comes to their investment in life sciences IT services (ITS), a market which is expected to grow at a steady 9% compound annual growth rate (CAGR) through 2025, according to Everest Group.

Nearly $4.5 billion of life sciences IT services deal are up for grabs over 2020-2021. Everest Group research shows that these deals will be led by digital initiatives such as artificial-intelligence-assisted drug discovery, leveraging real-world data (RWD) and real-world evidence (RWE) to make clinical trials more accurate, industry 4.0 to automate manufacturing, and responsive supply chains.

Everest Group reports that although biopharmaceutical companies and medical device firms have traditionally devoted the largest share of their ITS investments to manufacturing (31% share) and sales and marketing (25% share), research and development (R&D) has become the fastest growing segment of life sciences ITS expenditures. ITS investments in clinical/device trials and drug discovery/device product development are expected to grow at rates of 15% and 12% respectively through 2025.

“Rising drug prices have become a major concern for healthcare payers, governments and patients, especially since drug and device efficacy and outcomes have not been improving in line with the increasing prices,” explained Nitish Mittal, vice president at Everest Group. “As life sciences firms face pushback on pricing as well as pressure from competitive forces, they can and will look to the IT services landscape for innovative platforms and solutions for R&D functions. As a result, we expect the life sciences R&D segments to witness a healthy growth in demand for IT services in the 12-15% range, compared to an 8-9% growth rate for the life sciences ITS market as a whole.”

Digital transformation has been identified as a strategic imperative by many life sciences enterprises, with particularly emphasis on leveraging enormous amounts of health data now available from electronic health records (EHR), clinical trials, wearables, health apps, genomic sequencing, social media and many other sources. Enterprises are looking at AI-driven systems to leverage this RWD. For example, about 60% of biopharmaceutical companies currently use machine learning to analyze RWD; 95% expect to use it in the future.

ITS providers are significantly ramping up their digital capabilities to cater to this need. Everest Group predicts that numerous high-growth segments in the life sciences ITS market will exceed 10% CAGR from 2020 to 2025, including the following:

  • Clinical trials management (13-15%): Top demand themes will be pharmacovigilance (PV) automation, pragmatic trials using real-world data (RWD) and real-world evidence (RWE), and virtual trials enablement.
  • Personalized and efficient drug discovery (14-16%): Top demand themes will be genomics data analysis and drug repurposing solutions.
  • Patient engagement (16-18%): Top demand themes will be digital therapeutics and Software as a Medical Device (SaMD), including mobile apps, patient portals and smart devices. Patient monitoring and health interventions will be top demand themes as well.
  • Omni-channel marketing support (10-12%): Top demand themes will be customer analytics to measure success of different marketing channels, and customer cohort segmentation and engagement through customized digital marketing campaigns.

Everest Group shares these findings and more in its recently published report, Life Sciences State of the Market – Key Trends, Service Provider Performance in 2019, and Outlook for 2020. This report examines the global 2019 life sciences ITS service provider landscape and covers themes expected to garner greater interest in 2020. It analyzes key market trends and provides a snapshot of all the life sciences IT services PEAK Matrix® assessments carried out in 2019.

***Download a complimentary abstract of the report***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

# # #

Covid-19 Propels Healthcare Providers to Accelerate Shift to Telehealth and Digital-First Models—Everest Group | Press Release

Surge in telehealth necessitates investments in analytics, automation, IoT, and cloud infrastructure to enable distributed and scalable care models

Healthcare providers, historically slow to pursue digital transformation, are being forced to jump on the digital bandwagon. According to Everest Group, the surge in telehealth to meet the demands being placed on the healthcare ecosystem by COVID-19 will accelerate healthcare providers’ investment in digital technologies.

Prior to the coronavirus pandemic, Everest Group predicted that healthcare providers would increase spending on digital IT services by more than 15% by 2025. The firm now expects higher investment and a shorter timeline.

“The digital adoption levels in the healthcare provider market had been relatively low, but healthcare response to COVID-19 will accelerate digital adoption,” said Chunky Satija, practice director at Everest Group. “The pandemic is a forcing function, necessitating that healthcare providers future-proof their technology estate—led by investment in analytics, automation, IoT, and cloud infrastructure—to enable distributed and scalable care models such as telehealth and telemedicine.”

Healthcare providers historically have been mired down by their legacy and disintegrated IT systems and by regulations that have had the unfortunate consequence of incentivizing them to maintain the status quo. But that’s not an option anymore, particularly as healthcare providers scramble to meet the unprecedented needs of a world disrupted by the COVID-19 pandemic.

Today’s new models of healthcare delivery, including telemedicine and telehealth, offer great potential for enabling remote healthcare management and better access to care, both during the current crisis and henceforth. However, these new models of care delivery require more widespread digital adoption. Automation, analytics and IoT are the biggest areas of opportunity.

Other opportunities likely to emerge in the healthcare provider space in 2020 include the following:

  • Data monetization. The emergence of a data exchange platform is likely to spur revenue generation for companies holding data assets.
  • Cloud adoption to improve clinical data handling. The use of cloud-based platforms for management of disparate data sources allows for seamless collaboration across multiple stakeholders.
  • Rising stringency of healthcare policies. Due to regulatory changes (such as CMS hospital price transparency requirements recently announced and effective January 1, 2021), providers must establish efficient channels and methods to disclose cost and price-sharing information to patients.

Everest Group shares these findings in its recently published report, Healthcare Provider State of the Market – Trends, Service Provider Performance in 2019, and Outlook for 2020. This report examines existing trends in the healthcare provider space and how they are impacting providers’ decisions. It also provides a snapshot of the PEAK Matrix® healthcare assessments that Everest Group carried out in 2019.

The report includes an overview of the marketplace pressures impacting the strategic decisions of healthcare providers, such as:

  1. BigTech claiming space in healthcare. BigTechs such as Amazon, Apple, Facebook and Google are invading the healthcare market, bringing technologically advanced solutions that aim to drastically improve overall physician and patient experience.
  2. Providers adopting value-based care (VBC). The shift to align healthcare provider incentives with quality of care and health outcomes of patients requires an unprecedented level of data sharing and usage.
  3. The advent of business models of coexistence. To improve patient outcomes and reduce costs, hospitals and health systems are joining forces, providers are partnering with payers, and accountable care organizations (ACOs) are on the rise. These new business models require integration of infrastructure, data and IT management and spur uptake of technologies such as IoT for remote healthcare, analytics to guide interventions, and mobility for intuitive patient portals and information exchange.
  4. Rise in consumerism. Patients increasingly expect healthcare to be delivered as a digital service, but also expect their healthcare information be secure and protected.

***Download a complimentary abstract of the report***

About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. Our clients include leading global enterprises, service providers, and investors. Through our research-informed insights and deep experience, we guide clients in their journeys to achieve heightened operational and financial performance, accelerated value delivery, and high-impact business outcomes. Details and in-depth content are available at http://www.everestgrp.com.

COVID-19 Brings Opportunities To American Businesses | Blog

The COVID-19 pandemic came upon us so quickly. In just three months, the US went from a boom economy to threatening recession and businesses closing nationwide. CEOs now ask Everest Group for advice on how they should address their business issues because of the pandemic. What should they do right now to maintain business continuity? How can they ensure third-party services continuity? And how they can position their businesses for recovery – and even find opportunities for competitive advantage – when we come out on the other side of the COVID-19 pandemic?

Read my blog in Forbes

Visit our COVID-19 resource center to access all our COVD-19 related insights.

Are You Prepared for a New Normal? | Blog

This is the fifth in a series of blogs that explores a range of topics related to these issues and will naturally evolve as events unfold and facts reveal themselves. The blogs are in no way intended to provide scientific or health expertise, but rather focus on the implications and options for service delivery organizations.

These insights are based on our ongoing interactions with organizations operating in impacted areas, our expertise in global service delivery, and our previous experience with clients facing challenges from the SARS, MERS, and Zika viruses, as well as other unique risk situations.

A month ago the equity markets were hitting all-time highs, but as I write this, the Dow Jones Industrial Average is down about 30%, largely due to the actions being taken to control the spread of COVID-19. Simply put, many enterprises are shutting down and pulling back – preserving cash, cancelling projects, delaying investments, and freezing hiring and/or laying off employees. We are truly living in unprecedented times.

However, through the confusion and panic, leading enterprises are demonstrating their preparedness in this difficult business environment, putting their leadership and digital business models on display. Amazon is pivoting quickly, responding to the crisis by not accepting new inventory to their warehouses other than medical and household staples, extending delivery hours and quickly hiring 100,000 additional employees to meet demand, while raising employee wages by $2/hour through April.

Other lessons from a less dominant company includes a Chinese cosmetics company, Lin Qingxuan, which was forced to close 40% of its stores in China (and 100% in Wuhan) during the peak of the crisis. The company quickly redeployed sales resources to their online presence to influence customers and drive online sales, resulting in 200% sales growth over prior year sales for the same period according to Harvard Business Review. In another example, luxury brand LVMH, which owns Louis Vuitton and Fendi, has repurposed its perfume manufacturing lines to make hand sanitizer, a move that may win the hearts of consumers as the crisis diminishes.

Clearly, this crisis demonstrates just how quickly consumer and business demands can change. If your business model is not designed to absorb these impacts, you most likely have been severely affected.  Leading enterprises are already planning for the end of this crisis. China is seeing a dramatic decrease in the number of new COVID-19 cases, factories are reopening, workers are returning to their jobs, and companies such as Dow Inc. are actually seeing increasing demand for goods in China.

If you were one of the companies on the outside looking in, now is the time to act so that the next crisis does not catch you on your heels. To fortify your business model, start by doing the following:

  • Review the alignment of your business strategy, business model, and core processes. The evolution of many enterprises focused on one area – such as client interactions – while overlooking other processes – such as such as manufacturing, supply chain, distribution, or accounting. The entire value chain must work in harmony when facing dramatic shifts in the business environment.
  • Develop your perspective of the “new normal,” and quickly make adjustments. Do your customers still want to do business with you in the manner they did before the crisis, or will they expect a new normal? Do you really understand your customers’ buying behaviors? This crisis may have a significant impact on how you conduct business in the future as you learn new habits such as remote work, virtual collaboration, enhanced e-commerce, and improved visible business tracking.
  • Understand what drives your value – outsource everything else to more capable providers. Dedicated outsourcing providers invest in their core business and strive to offer world-class services so that you can focus on your core value drivers. While outsourcing will drive cost efficiencies, you should expect it also to drive quality, flexibility, and agility of non-core processes that can better enable your business model.
  • Review the alignment of strategic third parties to your business model. Many enterprises do not understand the value of a vendor management organization (VMO) until a strategic partner fails them. A VMO ensures alignment to the business model and selection of the right providers and suppliers to ensure they can move at the speed that your business model requires.
  • Ensure your organization structure is aligned to your business model. To deploy as quickly and decisively as Amazon, Lin Qingxuan, and LVMH, you must have an organization that is innovative, empowered, aligned, and prepared. If your organization structures have not evolved as your customers have, you may want to review the reporting structures, spans and layers, and internal governance models to be certain you can address quickly changing business environments.

While this crisis has not yet peaked in many parts of the world, it is not too early to begin planning for a recovery and the new normal. Leading companies are monitoring the situation while also pushing forward with transformation and cost saving plans, incorporating changes with new learnings. This is not the first time we have been here, and it certainly will not be the last. Now is the time to not panic, but be bold and forge ahead.

Visit our COVID-19 resource center to access all our COVD-19 related insights.

How can we engage?

Please let us know how we can help you on your journey.

Contact Us

"*" indicates required fields

Please review our Privacy Notice and check the box below to consent to the use of Personal Data that you provide.