Hitachi to buy GlobalLogic for $9.6B
reuters.com
reuters.com
Basically in a case of 10k outsourcing corp it is pointless to think about it as a single entity, it's a collection of projects each managed differently, with different expertise and different share of in-house development, from original products to dumb legacy support.
Such big* consulting/outsourcing companies in Eastern Europe(epam, globallogic and the like) have competent engineers.
I can see it especially clearly after moving to the US and having to interview engineers from other big consultancies.
*big - everything with several k employees is considered big in Eastern Europe.
They are not looking for experienced engineers. At least in the Technology Advisory space.
that's correct. i went thur that with Avanade. they teach us some basic about the security system that they implemented for their client and client ask for tech support and guess who they send.
There is - huge spike in demand for talent locally in the last 5-10 years as this business model started becoming popular. Also seeing smaller agencies being acquired by larger ones in some decently sized acquisitions recently.
Initially the local IT sector was undeveloped, there were quite a few good engineers working in really poor condition, the only decent option was relocating to Western Europe.
So there were experienced developers available for cheap, and, compared to India, Central/Eastern Europe is closer to US (some overlap in work hours), usually a much nicer destination to travel to for offshore offices (depending on the country, Croatia for example is a really nice tourist destination, good English level and the culture should be more familiar).
So initially that higher quality talent got absorbed at below market rates (especially for US standards) and there were quite a few success stories and reputation builders. But now as this model expands competition is driving up the price locally as well - there just isn't enough people to outsource - they are starting to scrape bottom of the barrel talent, asses-in-seats, straight out of college Indian code farm model with all the problems that had. Also portals like toptal made it easier to skip these agencies and work directly for clients so now the agencies have to compete with that for talent.
I think the peak for this agency model is behind us and I think the quality has started to drop (there were a few smaller agencies that built their reputation like I described above and had great success, they used availability of local talent to built respectable teams and getting hired there was a resume highlight, sort of like getting hired at FAANG on a local level. Nowadays they are hiring people they would screen out after an initial call and it's selling asses in seats, cashing in on built reputation)
It all does wonders, but it’s not always enough.
The zaibatsu were similarly interwoven with the Japanese state through WW2, when the connections were cut during the US occupation. While Sony, Toyota, Mitsubishi, et al. are very large companies and have the corresponding influence any such large company would have in any developed country, there is no comparison with the dominance of Samsung, Hyundai, and LG of the Korean economy and politics.
Mitsubishi UFJ is Japan's largest bank and the world's second largest bank holding company with ~$2tn of deposits.
Mitsubishi Corp is Japan's largest general trading company, and includes active business lines covering business services, consultancy, infrastructure (airports, railways), asset management and finance, energy trading, primary extraction of metals and minerals, heavy machinery, defense contracts, ships, chemical manufacturing and trading, as well as retail.
Mitsubishi Heavy Industries separately manufacturers airplanes, air-to-air missiles, helicopters, aerospace turbine engines, main battle tanks, nuclear power plants, gas turbines generators, LNG carrying ships, cruise liners, space craft, wind turbines and desalination equipment.
MHI's subsidiaries also include Mitsubishi Chemical (which is Japan's largest chemicals company), Nikon Corporation (cameras, optics etc), and Mitsubishi Motors.
This is nothing like Philips/Airbus etc.
memories of my beloved Mitsubishi Diamond Pro 21" CRT
As supporting evidence... about 10 years ago I was staying at a hostel in Seoul, I went to buy a bar of soap at a convenience shop. I realized as I was getting ready to shower that the soap itself was made by LG!
Probably completely banal for Koreans but to me it was equivalent to Tesla manufacturing basketball shoes, completely left field.
The Sega 32X, Saturn, and Dreamcast used SuperH CPUs. They even made a few supercomputers with SuperH CPUs, I believe the record for most digits of pi was once held by a Hitachi supercomputer. The linux kernel still support SuperH.
so many Global IT houses like IBM, Avanade...etc. is IT outsource/consulting pie so large to feed all these companies?
I’ve been in tech and tech-adjacent companies for over a decade. And not once have I or anyone around me ever thought “we really need some IBM/Hitachi/Avanade products now”.
What value proposition do firms like this actually fill? I’m genuinely curious.
Most of these companies implement COTS software . So if you want to implement Oracle, SAP, Salesforce, Service Now , JIRA or other such enterprise software , you will invite bids from these consulting companies for implementation, support and SLA .
Let's say you are a large Fortune 500 company. A bank perhaps, a large retailer or an oil company. Your net worth rivals Amazon. You do not use AWS or GCP, you host your own data centers, and you have for decades. Now let's say you need another few petabytes of storage with global replication, durability, availability, you need hardware delivered, fibre cables routed, software to tie it all together and someone to call when you run into problems or someone on your backend application team can't figure it out. Or maybe you need Oracle and SAP integrated with Active Directory for your 100,000 employees.
Well, these companies will make that happen. Or many other problems you might have, such as building custom applications, implementing tooling, designing systems, whatever. It's kind of like asking "who employs all these personal chefs?! I've been eating for years and I've never needed a personal chef. I just go to the store, buy some groceries, and make food from the recipes I find online!" The thing is that some people just don't want to deal with all that, and they have enough money to make it someone else's problem who has done it before.
The reality tends to be somewhat messier. I especially disagree with the "personal chef" analogy. A personal chef is an expensive, dedicated, long-term employee - much closer to a full time SWE than to a consultancy. It's more like hiring a catering company for a wedding.
As long as their core business and KPIs remain untouched, and no scalations take place, everything is fine.
If you're not a tech or tech-adjacent firm, and have a nontrivial technology need, you're likely to pick up the phone and call someone who specializes in delivering those solutions.
Think of it like the difference between Instacart having their own software teams and infrastructure to manage shoppers and orders, vs the national grocery chain Instacart operates within calling IBM for an integrated inventory management and point-of-sale system.
There are debates to be had about whether this approach yields good results over the long term (specifically for the inventory management example, you could point to Amazon and to a lesser extent Walmart having such success in part because of their internal software efforts). But if you aren't prepared to reinvent your grocery stores as a friendly frontend for your logistics technology, plenty of firms have solutions to sell you.
Attached to articles about ERP and government contracts failing and going over budget I often see comments like, this isn't rocket science I could code something for them. Obviously not the right fit for everybody, but is it right for some?
Stay close to agencies that have leads at organizations like this because that’s a great way to get hired at a place you’d never expect to be working for (some random Fortune 500 company), and these hiring sprees don’t show up on LinkedIn or job boards. They go straight to the consultancies or agencies (you know, those pesky recruiters you never cared for).
what else do you think manages the massive amount of spinning rust that contains your S3 data? Usually it is storage systems like this.
Oh darn well it is (I worked at one of those consulting companies long time ago). Many people don't realize how much of the software is written by those companies. I personally worked onsite and offsite for two FAANG companies, one health insurance, and one telecom company. I myself was amazed how often projects were pretty critical to their operations, while I was technically not their employee. In case of FAANG companies we signed a paper agreeing we will not publicly say we did anything for them.
I know friends who work the same way for major US banks, credit agencies, energy and retail companies. I have hard time imagining a big company that doesn't buy IT outsourcing (probably government agencies, like military, space, but I'm not sure about their suppliers).
Software is a cost center on their production line that they gladly outsource.
E.g. a company selling water bottles doesn't care how their inventory system looks like, as long as it doesn't affect how many of them get shipped.
I think a lot of SV companies are very dependent on media coverage to get their valuation up. Especially since they don’t have an idea how to make profits.
But maybe it's just my bias too.
The brand was also known for power tools but that's not a part of the company anymore and is being rebranded to Metabo.
The only reason I know that company name is because I think they sold hard drives in the past, and/or showed up on my BIOS screen. So maybe IT people know it too.
I personally knew Hitachi first by their elevators/lifts.
That's in terms of valuation, not revenue. GlobalLogic has barely hit $1 billion in annual revenue. Its FY 2019 revenue was $771 million, according to [1]. It's projecting $1.2 billion for 2021.
It has somewhere around 17,000 - 19,000 employees, which works out to somewhere between $40k to 60k revenue per employee per year. And that's not even profit. (As a completely unfair point of comparison, Google's revenue per employee is upwards of $1m.)
So a $10bn valuation is just ~18,000 people, times ~$55k revenue per person, times a 10x "times-revenue" multiplier for the valuation.
I think a lot of the surprise at unexpected multi-billion valuations comes from the perspective of how big $1bn seems to an average individual. But it's not that big once you do the math for companies with 10,000+ people.
[1] https://www.prnewswire.com/news-releases/hitachi-to-acquire-...
OpenStreetMap Foundation 2018 elections incident
"The OpenStreetMap Membership Working Group released a public report [25] alleging that this was an orchestrated, directed campaign by GlobalLogic to register in mass their Indian subsidiary employees, and suggested an attempt to manipulate the election"
The linked report has way more details: https://openstreetmap.lu/MWGGlobalLogicReport20181226.pdf
One candidate thought that the OSMF shouldn't ever choose who gets to be a member. We respectfully agreed to disagree.
The other candidate, despite being shown all the evidence, thought that there was nothing nefarious, and that asking the OSMF board to investigate was a "witch hunt".
The previous OSMF board chairperson and secretary are no longer active in the OpenStreetMap project.
They have been working on a lot of various iterations of VeinID technology and have launched their own cloud hosted finger vein authentication solution last October and are definitely investing into this market.
This from the article confirms by thinking:
> Past GlobalLogic projects include working with McDonald’s on its customer app and in-store digital ordering system and with chipmaker Qualcomm on a fingerprint recognition system, according to its website.
And here are some resources to the VeinID innovation which has been going on at Hitachi:
https://social-innovation.hitachi/en/case_studies/finger_vei...
https://social-innovation.hitachi/en/case_studies/pbi
https://social-innovation.hitachi/en/article/touchless-finge...
And here is the press release of Hitachi launching their Biometric cloud service:
The old proverb usually holds: "If you pay peanuts, you get monkeys."
Man, what? What a weird set of owners
They own all sorts of stuff all over the world. Bridges. Airports. Hotels.
Partners Group is a very large investment management firm with $109bn assets under management (AUM), of which 48% is in private equity. It is pretty common for pension plans to invest in private equity firms, but the larger ones also make direct investments, usually alongside a large PE firm such as Partners Group.
CPP Investments, the entity that manages all of the assets of the Canada Pension Plan, has US$378bn AUM. ~25% of that, $90bn, is in private equity. Some of their direct investments, which you can see on their website[1], are Blackhawk Networks, Jimmy John's, Neiman Marcus, Petco, Qlik, SUSE, and Waymo. They also have investments in VC firms, such as A16Z, Sequoia Capital, and even Y Combinator.
[1] https://www.cppinvestments.com/the-fund/our-investments/inve...
Edit: I think this causes internal confusion as well, like consultancies hear "software project" and assume their team can do it because they have "software" experience, and then you end up with these disasters like you hear about from Accenture and Deloitte where they spend 10's of millions of dollars building a website that doesn't work. The parallel language in a academic, SV type tech, and tech consulting is actually a source of a lot of confusion.
I have worked with both GlobalLogic and InfoSys developers. In my experience, they can't be compared: for me globallogic wins. However,... they are both freaking huge companies, so you never know what you get.