The WITCH Report: H1 2018 in review
Uptick in M & A, lower growth rates, steady margins, leadership exits
Our mid-year review of 11 publicly held global technology consulting firms indicates weak organic growth for most firms relative to the overall growth rate of their companies, with Wipro being the most challenged in the group. The drag on overall growth and margins arising from the ill-timed HPS acquisition continues to be a problem for the firm. The recent departure of Wipro’s head of the healthcare business follows a series of quarters of low growth, and it will remain to be seen what the next few quarters look like.
Among the WITCH Group companies, Cognizant remains the largest player in healthcare by revenues, however HCL has shown the highest growth rates, outperforming the peer group as well as overall company growth rate significantly. HCL has shown steady growth in healthcare overall the past few quarters. HCL’s Mode 1, Mode 2 and Mode 3 strategy has seen the company shift in the direction of IP-led business.
M & A activity continues to be robust, with both tactical acquisitions and industry consolidation playing out. Cognizant’s acquisition of Bolder Healthcare, a revenue cycle management firm, is the latest in a series of healthcare-focused acquisitions for the company. Other notable transactions include HCL’s acquisition of C3i Solutions from Merck, Atos’ $ 3.4 billion acquisition of Syntel, and DXC’s acquisition of Molina Medicaid Solutions, and Capgemini’s acquisition of LiquidHub.
Besides Wipro, Infosys and Atos have seen leadership departures with new heads yet to be named at the time of writing.
Among the other large global firms, DXC seems to have gained significant traction in healthcare, based on reported transactions. IBM’s Watson Health business seems to be the most challenged, based on media reports.
The overall healthcare technology market demand environment seems to be holding up, based on the performance of the companies covered in this report. As the market for traditional services such as infrastructure management and outsourced applications support falls into decline, healthcare consulting firms are focusing on emerging opportunities in cloud, AI, automation and digital with varying degrees of progress over the past few quarters. We have included detailed financial analysis in this report for all the major firms and a special analysis of Wipro's HPS acquisition as well as Cognizant's M & A activity in healthcare.
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