IBM's acquisition of Nordcloud bolsters hybrid credentials in Europe

Fuelled by increased demand as a result of the pandemic and an ongoing shift to hybrid infrastructure, cloud services remained a bright spot in an otherwise troubled market through 2020. In teknowlogy's optimistic market forecasts for 2021 (thankfully the most likely), we can expect to see shoots of growth return to large segments of the market - pushing investment in cloud services even further.

Additionally, Europe is set to become the core battleground for IT Services firms over the next few years - with many of the largest vendors shifting strategies to target opportunities across the continent as they look to develop a new growth engine.

So IBM's recent announcement to boost its European cloud presence with the acquisition of Nordcloud is a smart move. Over the last 12 months, IBM has made its cloud ambitions clear - making strategic overtures to the market, including spinning off legacy infrastructure services that distract from the core mission of becoming a leading light in hybrid cloud.

Bringing in Nordcloud helps on this path - adding operations in 10 European countries alongside a sizeable talent pool with hard-fought cloud skillsets. Nordcloud boasts experience across the leading hyperscale cloud giants - GCP, Azure, and AWS - with a pool of approximately 500 certified professionals. Bringing fresh talent with experience across the popular and rapidly growing hyperscale firms is critical if IBM is to continue to forge a strategy that will drive a clearer wedge between its partner-driven hybrid cloud services business and the more IBM-centric services heritage the firm has recently started to shift away from. The slew of recent acquisitions is geared to speed this process up - boosting IBM's go-to-market in a bid to catch-up to rivals who also doubled-down on the cloud over the past two years.

Outside of this, cloud skills are caught up in one of the hottest talent wars in the tech space, particularly skillsets tied to the major hyperscale giants that have benefited from insatiable enterprise appetite for products and services but are left grappling with the economics of demand constrained by talent shortages. IBM isn't the first to tackle this issue inorganically, with competitors such as Cognizant buying multiple cloud-focused consultancies and boutiques to fill in talent gaps.

To this end, Nordcloud and IBM's combined talent pool are likely to be busy as more enterprises seek partners who can help them modernize and transform applications and infrastructure using hybrid cloud services. Increasingly, this is an approach reliant on high-quality professional services that can help build a coherent migration strategy, including mapping out the most effective way to modernize and optimize applications. Nordcloud boasts deep credentials in this market, with a book of clients that includes UniDays, Husqvarna Group, and Porsche Informatik. The firm has worked on projects ranging from building highly scalable infrastructure for digital businesses to building a cloud-based platform to support IoT services.

IBM's acquisition of Nordcloud follows a series of smaller deals geared to supplement gaps in the firm's service lines and speed up its ongoing transformation in line with the refreshed strategy under CEO Arvind Krishna. Including cloud pioneering fintech, Expertus, and application performance monitoring and observability firm Instana.

As the hybrid cloud market heats up, we can expect to see more M&A activity from the major IT Services players - as they look to out-accelerate rivals and corner competitive talent markets.