The skills Deloitte looks for when it acquires IT service providers

Deloitte Consulting just sealed its fourteenth acquisition in three years by closing a deal that adds HashedIn Technologies Private Limited to its expanding portfolio of cloud consulting services. The deal comes at a time when, despite the recent economic downturn brought on by the COVID-19 pandemic, merger and acquisition activity among IT service providers is at an all-time high.

Ranjit Bawa, cloud leader and principal at Deloitte Consulting LLP, explained to VentureBeat what forces are driving merger and acquisition activity among providers of IT services, even as enterprise IT organizations continue to increase the rate at which they grow their digital business transformation initiatives.

VentureBeat: What capabilities does HashedIn Technologies bring to the Deloitte services portfolio that you might not have already had?

Ranjit Bawa: They have deep software engineering skills that are quite unique and significantly add to our portfolio. The industry is also moving towards more agile delivery models around pods. It’s one integrated team that is cross-functional in nature. They align to a particular product offering, and they work towards that outcome. Getting 700 people that largely deliver to pods is a big step up in our overall capabilities. We work with the big banks, big pharma companies, or the big manufacturing giants, so this is really attractive for them.

VentureBeat: Are more services engagements being tied specifically to a business outcome versus time and labor?

Bawa: Most certainly, for all of the reasons you would expect. Not only does it create a more shared accountability model that is good for everybody, it also creates all the incentives to be more creative in terms of how to get to the answer the solution, be more efficient, create reusable intellectual property, and move to more of a Lego block architecture that we’re all aspiring towards, as opposed to Play-Doh, where everything is bespoke and custom built.

VentureBeat: Do you think that there’s something of an arms race underway for talent in the cloud space in general and software engineering in particular? Is that driving merger and acquisition activity involving smaller IT services providers?

Bawa: Yes. People have been anticipating that a lot of the boutiques that have mushroomed over the last few years will start to converge and come together. A number of macro-economic factors late last year further accelerated that path. There’s clearly an ongoing acceleration towards consolidation that’s happening because of talent. There’s also a lot of private equity funds and others exiting investments because they are concerned about tax implications. I think that may also have fueled some of the acceleration.

VentureBeat: Do you think skills will become a bigger issue as organizations transition to cloud-native technologies such as Kubernetes, containers, and serverless computing frameworks?

Bawa: Most certainly. That’s driven a lot of the demand. We’re running big training programs as well as the Deloitte Cloud Institute, but that’s often not enough.

VentureBeat: How do you perceive cloud computing will evolve from here?

Bawa: This year we will have some healthy debate about what the right equilibrium between hybrid and multi-cloud platforms of choice is. I think we will hopefully get to the bottom of that this year.

VentureBeat: Do you think Deloitte will be acquiring more of these types of boutique firms going forward?

Bawa: We have a very deliberate strategy for inorganic growth. In the last three years, we have acquired 14 or so boutiques across the world in the cloud space. But in certain areas where we think we need to either bolster what we have or accelerate, we will always be on the lookout for attractive options.

VentureBeat: Are organizations launching new digital business transformation initiatives in the cloud, or simply accelerating existing efforts?

Bawa: It’s probably a combination. There are new projects that are dropping all the time that are more centered around business use cases, and then there’s more fundamental stuff that was underway that’s been quite accelerated. The first one we often think about is tech for business, and the second is more tech for tech. The tech for business is emerging all the time as net new. The tech for tech has always been there.

VentureBeat: Do you think organizations have a greater appreciation for the value of data?

Bawa: A lot has been written about data and being able to do amazing things with data, and monetize it. But I think it really hit home in the last year because of new operating models and working styles. I think technology is also in a better place, not just in terms of capturing the data and processing it, but also the security aspects. People are a lot more comfortable in terms of being able to mask the data, manage privacy, and handle regulatory requirements.

VentureBeat: Do you think that that’s going to be the foundation for a lot of the work that we’re seeing around AI?

Bawa: If you’d asked me this question a year ago, I would have said it’s out there but probably still not mature. Today, AI use cases are emerging all the time. I don’t think it’s going to be this one big thing. It’s kind of more infiltrating through everything we are doing.

VentureBeat: How do you think various IT disciplines will come together to drive this? People are talking about Data Ops, machine learning operations [MLOps], and DevOps. Does all this need to converge?

Bawa: We are converging it. The most compelling convergence is around use cases, which is really where all of this comes together to bring to life a particular business opportunity or business need. You can’t serve the client or the use case effectively or economically if operationally it’s too complex. So those are forcing all these disparate islands of capabilities into one integrated way [that] serves the clients’ needs.

VentureBeat: What ultimately will differentiate Deloitte?

Bawa: I think where we really stand out is at the intersection of deep domain expertise — the intersection of deep industry expertise and what new digital technologies can do for you.