Does Bridgei2i Acquisition Signal Consolidation Analysis Services Industry

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IT giant Accenture has acquired AI and analytics firm Bridgei2i. Founded in 2011, Bridgei2i specializes in data-driven digital business transformation by combining AI, consulting services and advanced analytics.

Accenture’s latest buyout comes on top of recent analytics acquisitions including companies like Analytics8, based in Australia, Spain, Pragsis Bidoop, Mudano in the UK and Byte Prophecy in India, among others .

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The analytics industry as a whole is in turmoil with large-scale acquisitions and mergers. Some examples include the acquisition of Enquero by Genpact, the Cognizant-Servian agreement, the acquisition of Appsummer by InMobi, etc. With such massive acquisitions in recent years, is it correct to assume that the industry is consolidating the analytics services industry?

Major acquisitions in the analytics industry

Accenture hopes to add more than 800 highly skilled professionals to Accenture’s applied intelligence practice, increase its capabilities in data science, ML and artificial intelligence. Accenture cited one of its own internal studies in support of the deal. According to his research, companies that make strategic investments in emerging technologies like AI, cloud and analytics are expected to experience five times the revenue growth of companies that don’t.

Speaking in particular of the past two years, when the whole world practically came to a standstill, companies continued to make high value acquisitions. Some of the major transactions in the analytics industry include:

Capgemini-Advectas: In February 2020, Capgemini announced that it had signed an agreement to acquire Sweden-headquartered Advectas, a leading business intelligence and analytics company. Advectas joins Capgemini’s global Insights & Data business line, helping the company meet growing customer demand for business intelligence and data analysis services across the region.

Cognizant-Servian: Earlier this year, Cognizant announced that it will acquire Sydney-based analytics firm Servian to enhance its digital portfolio. A specialist in data analytics, cloud and AI, Servian would also help Cognizant grow its business in Australia and New Zealand.

Genpact-Enquero: Genpact acquired Enquero, a company that provides engineering and data analysis services. This acquisition would help Genpact develop its data analysis team and improve its capabilities to accelerate the digital transformation of its customers.

Infogain-Absolutdata: Digital platform and software service provider Infogain acquired Absolutdata earlier this year. This acquisition gave Infogain access to Absolutdata’s NAVIK AI platform and other new verticals. This acquisition should also help Infogain to strengthen its presence in areas such as consumer goods, telecommunications and pharmaceuticals.

Market consolidation?

This is a general trend that is seen across all industries as it matures. Through multiple mergers and acquisitions, most industries move through a “consolidation lifecycle”, as seen even in the data analytics industry.

According to a study of 1,345 mergers and acquisitions over 13 years, once an industry is formed, it goes through four stages of consolidation. Often times, this cycle is so obvious that companies are able to plot where they are in the cycle with fairly high accuracy.

The study found that it takes 25 years for the industry to pass four significant stages of consolidation. This period is expected to be further reduced in the future. Research has suggested that every company in the industry undergoing this transformation must either go through these stages or disappear, which makes it very important for companies to understand where the industry is heading.

Credit: Harvard Business Review

These four steps are:

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Opening: This is usually the stage where a single start-up emerges from a newly deregulated or privatized industry. This 100% industry concentration is rapidly declining, and the combined market share of the largest companies drops to 30-10% as competitors emerge.

Climb: The next step is scaling. Here, the main players start to emerge and quickly buy out competitors and form empires. The study indicates that the three main players in this stage begin to hold 15 to 45% of the market with the consolidation of the industry.

To concentrate: After step 2 consolidation, companies begin to focus on expanding their core businesses and aggressively outperform the competition. At this point, the top three companies typically control 35-70% of the market. This stage can also have 5 to 12 major players.

Balance and alliance: At this stage, the top three companies claim 70 to 90% of the market. Large companies can even form alliances with their peers when growth plateau, and complacency driven by their own dominance can set in. At this point, companies are looking for new ways to develop their core business.

Based on this study, it appears that the data analytics services industry is in the process of scaling up. Some of the major players at this point include Mu Sigma Analytics and Fractal Analytics. While these are companies whose primary focus is data analytics, larger companies like IBM, Accenture and others are diversifying and making their mark in this area as well.

Data analytics is one of the most exciting and fast growing industries today. According to the market research, the global data analytics market size is expected to reach $ 132,903.8, registering a CAGR of 28.9% from 2016 to 2026.

For emerging companies in this field, one of two avenues is expected: acquire or be acquired. Both options offer a good strategy for accelerating growth and expanding capabilities. This seems to be all the more true as there are rumors about mid-sized analytics companies in India looking to be taken over.

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