Is Acquisition the Path Forward for APAC MSPs?

A desire to deliver full-stack services and mitigate economic conditions by leveraging pockets of strong growth may kick off a wave of MSP acquisitions and consolidation across the APAC region.

Last week, Atturra completed its acquisition of a high-profile, veteran MSP Somerville. The $16.5 million acquisition was made so that Atturra could develop a managed services offering that combined Somerville’s infrastructure capabilities and Attura’s data and application offering for a full-stack solution.

“Our long-term goal has been to expand beyond our current infrastructure focus and venture into the realm of applications and data,” Somerville CEO Craig Somerville said via a LinkedIn post. “With Atturra’s strong presence in that market, we see an opportunity to create a valuable proposition for our customers.”

Meanwhile, earlier this year, Sydney-based First Focus acquired IT consultancy and MSP eStorm. In March, Singaporean IoT specialist Wireless Logic snapped up LTE and 5G wireless services provider Blue Wireless.

The Hunt for More Growth

The flurry of consolidation activity within the channel may be a response to macroeconomic slowing and a desire to find pockets of strong growth.

Last week, Gartner forecast that worldwide IT spending would grow by 5.5% from 2022 levels, which is below the current inflation rate across much of APAC. However, IT services are showing particularly robust double-digit growth.

 “IT spending will remain strong, even as many countries are projected to have near-flat gross domestic product (GDP) growth and high inflation in 2023,” John-David Lovelock, distinguished VP analyst at Gartner, said in a release. “Prioritisation will be critical as CIOs look to optimise spend while using digital technology to transform the company’s value proposition, revenue, and client interactions.”

For the channel, meeting the customer’s immediate needs across the stack will be integral to winning business. Furthermore, acquisitions will help these organisations continue to post growth beyond inflation, while organic growth is lower.

Consequently, expect more acquisitions within the channel in the coming months.