The WITCH Monthly Monitor
Monthly update on major global IT consulting and services firms in healthcare
July 2019
IT consulting firms are witnessing declining contracts in the healthcare segment due to industry consolidation
Wipro, Infosys, TCS, Cognizant, Atos, and IBM reported results for the quarter ending June 30, 2019. Among the healthcare IT consulting firms – Wipro, Infosys, TCS, Cognizant and HCL – TCS had the highest growth rate (18.1%) for the healthcare and life science (HLS) segment. Burgeoning client wins drove the growth. While Infosys had moderate growth in the HLS segment, it was primarily impacted by spending cutbacks by clients due to revenue pressure in the sector.
Cognizant’s healthcare business witnessed declining revenues two quarters in a row due to industry consolidation and “movement of work to a captive at a large North American client.” The life sciences division delivered strong growth driven by increased adoption of industry-specific platforms.
IBM reported strong performance across their cloud and cognitive software and global business services (GBS). However, the global technology services (GTS) and systems segments witnessed negative growth. The results reflect the company’s strategy to focus on high-value business such as digital and cloud and exit lower-value business in GTS and systems segment. IBM completed the acquisition of Red Hat for $34 billion in July
Atos’ public and health segment continues to be impacted by the decline in contracts in North America. However, the company secured a major multi-year contract in healthcare in North America in July. Atos’ proposal to acquire IDnomic will bolster its position as a major player in digital identity management.
John Muir Health partnered with Optum for non-clinical functions, including IT services and billing. This deal, which is focused on non-clinical functions, pivots from Optum’s usual pattern of acquiring doctor practices, outpatient clinics, surgery centers, and urgent care facilities. Optum expects the new model to lure more health systems like John Muir and become an emerging trend for healthcare providers to collaborate in the future.
Highlights for the month
Wipro
Results for the Quarter ended June 30, 2019, under IFRS
Wipro reported revenue of $2.1 billion with a growth of 5.3% YoY for the quarter ended June 30, 2019. The healthcare segment accounted for $271 million and continues to see softness in growth. The company won three deals in the segment this quarter, and expects them to positively reflect in the second half of the year.
Infosys
Accelerated Double-Digit Growth Of 12.4%; Highest Ever Large Deal TCV At $ 2.7 Bn
Infosys reported revenue of $3.1 billion with a growth of 12.4% YoY and 2.3% QoQ in constant currency for the quarter ended June 30, 2019. The company secured a total of 13 large deals with a total contract value (TCV) of $2.7 billion. Life sciences accounted for $193 million with a growth of 3.8% YoY and 5.5% QoQ. While the company won some important deals in HLS, the growth was impacted due to lower spending by clients due to revenue pressure.
Infosys Completes localization Target For The US, Hires 10,000 Employees
Infosys hired 10,000 employees and set up four innovation hubs in Indianapolis, Raleigh, Hartford, and Phoenix by the end of June quarter. Back in 2017, Infosys set its goal to hire 10,000 American workers and open four innovation hubs by 2019.
TCS
Strong Digital Demand Drives Double-Digit Growth at TCS
TCS reported revenue of $5.48 billion with a growth of 10.6% YoY in constant currency for the quarter ended June 30, 2019. Life sciences and healthcare segment reported a growth of 18.1% YoY driven by a rise in client wins.
Cognizant
Cognizant Reports Second Quarter 2019 results
Cognizant reported revenue of $4.14 billion, with a growth of 3.4% YoY for the quarter ended June 30, 2019. Healthcare accounted for $1,134 million (27.4%) of the revenue, declining by 1.9% YoY, impacted by industry consolidation. However, the life sciences division delivered double-digit growth, driven by large deals and increased adoption of industry-specific platforms.
Cognizant Names Sandra Wynberg To The Board Of Directors
Cognizant appointed Sandra Wijnberg to its board as a new independent director, effective July 16, 2019. Wijnberg was an Executive Advisor to Aquiline Holdings LLC, a registered investment advisory firm.
Cognizant EVP Sumithra Gomatam Quits, Ex-Mphasis CEO Ganesh Ayyar To Replace Her
Gomatam, Executive Vice President and President of digital operations resigns after 24 years in Cognizant. Ganesh Ayyar, the former CEO of Mphasis, replaces Gomatam as the EVP and President of digital operations. This year, between April to May, Cognizant lost four Presidents (in operational roles as business unit head) including Debashis Chatterjee, Prasad Chintamaneni, Gajen Kandiah, and Venkat Krishnaswamy reducing the number of Presidents from eight to four.Venkat Krishnaswamy, who was President of healthcare and life sciences retired in June. Kaushik Bhaumik, who was Global Leader of healthcare resigned in June and was replaced by Jeff Heenan-Jalil, former Wipro healthcare Head.
HCL
HCL Technologies Announces Close Of The Acquisition Of Select IBM Products
HCL Technologies completed the acquisition of select IBM products for security, marketing, commerce, and digital solutions. In December, the company announced its plans to acquire the IP assets of IBM for $1.8 billion. HCL also introduced a new division, HCL Software, to operate the enterprise software product business.
Accenture
Accenture Names Jimmy Etheredge Group Chief Executive — North America
Accenture appointed James Etheredge as Group Chief Executive for North America effective September 1, 2019. He succeeds Julie Sweet, who will become the Chief Executive Officer. Martin Rodgers will succeed Etheredge as Senior Managing Director, US Southeast.
Accenture appointed Julie Sweet as CEO and David Rowland, currently interim CEO, as Executive Chairman, effective September 1, 2019. Julie Sweet is currently the Head of Accenture’s North America division and held several senior leadership roles at Accenture for nearly a decade.
Accenture to expand its innovation hub, add 600 jobs (in consulting, digital, security, and technology), and double its apprenticeship program by 2022 in Chicago. The company will also consolidate all 6,200 Chicago-based employees to the renamed Accenture Tower located at 500 West Madison.
Accenture Federal Services won a five-year, $49 million contract to provide intelligent automation and artificial intelligence (IAAI) services for the U.S. Department of Health and Human Services (HHS) Program Support Center (PSC). As a part of the contract, Accenture will provide piloting, testing, and implementation of advanced technologies such as AI, robotic process automation, natural language processing, and machine learning.
ATOS
The First Half Of 2019 Results
Atos reported revenue of $3,289 million (€2,926 million) for the quarter ended June 30, 2019. The Public & Health segment contributed revenue of $951 million (€846 million) with a negative QoQ growth due to a decline in contracts in North America.
Atos to acquire IDnomic, a provider of digital identity management infrastructure. IDnomic, headquartered in France with presence in the U.S., has expertise in three main domains – protection of digital identities of citizens, corporate employees, and connected objects (IoT) across many industries, including healthcare. The acquisition will enable Atos to become a major cybersecurity player in digital identity management and public key infrastructure (PKI) solutions.
IBM
IBM Reports 2019 Second Quarter results
IBM reported revenue of $19.2 billion, down 4.2% YoY. The revenue for Cloud & Cognitive Software Segment and GBS increased 3.2% and 0.5% YoY, respectively. The revenue for GTS and Systems segment decreased 6.7% and 19% YoY, respectively. The decline in the GTS and Systems segments reflect the company’s strategy to shift away from lower-value business in these segments.
IBM Closes Landmark Acquisition Of Red Hat For $34 Billion; Defines Open, Hybrid Cloud Future
IBM completed the acquisition of Red Hat for $34 billion. Red Hat will operate as a distinct unit and continue to be headed by their current CEO, Jim Whitehurst and operate as part of IBM’s Cloud and Cognitive Software segment. Together, the companies will offer the next-generation hybrid multi-cloud platform.
IBM & Trifacta To Jointly Develop A Data Preparation Tool
IBM and Trifacta to jointly develop a new data preparation tool called InfoSphere Advanced Data Preparation to prepare data for the use of AI and machine learning models. The tool is intended to support customers across manufacturing, healthcare, retail, IoT, and financial services.
NTT Data
NTT Corporation Launches A New Global Technology Services Provider
NTT Corporation launched a new global technology services provider, NTT Ltd., combining 28 companies including NTT Communications, Dimension Data, and NTT Security among others into a single entity. The new enterprise, headquartered in London, will employ over 40,000 employees spread across 70 countries. NTT data will remain a separate entity due to the differentiation in its offerings to customers.
Others
Tech Mahindra Q1’20 PAT Up 6.8% YoY
Tech Mahindra reported revenue of $1,247 million, with a growth of 1.9% YoY for the quarter ended June 30, 2019. The company won a deal with a health insurance organization to provide application portfolio transformation.
Tech Mahindra Acquires Leading Strategic Design consultancy, Mad*Pow
Tech Mahindra acquired Mad*Pow, a provider of design consultancy headquartered in the U.S. The acquisition will strengthen the capabilities in customer experience and digital transformation across design, marketing, and commerce in various industries including healthcare.
Persistent Systems Reports $119.62 Million Revenue For Q1FY20
Persistent Systems reported revenue of $119.62 million with a QoQ growth of 1% and a decline of 3.2% YoY. HLS accounted for 18.9% ($22.6 million) of the revenue.
John Muir Health partners with Optum for IT and billing functions. Optum will manage John Muir’s non-clinical IT systems, analytics, revenue cycle management, purchasing and claims processing, and help advance its clinical and operational performance.
Baring Private Equity Asia to buy CitiusTech
Baring Private Equity Asia to acquire CitiusTech for approximately $1 billion. CitiusTech provides healthcare technology services and solutions to healthcare and life science organizations. The company posted $175 million in revenue in the fiscal year 2019 with the U.S. contributing about 90% of the revenues.
