Nordic M&A activity boomed in 2019 - can it continue?

Sweden, Norway, Denmark and Finland saw major IT deals, mergers and acquisitions in 2019, but what will happen in 2020?

The Nordic region has become an increasingly appealing location for major IT companies over the past decade. One of the draws is a population that's comfortable with using technology on an everyday basis to access fundamental services. For example, almost all personal banking in the Nordic countries is carried out on mobile devices. There's also a lot of trust in tech companies, more so than in some other areas of the world. Data protection is taken seriously, as is privacy: the region has experienced fewer and less harmful data breaches than is the norm worldwide, although this factor is partly explained by the relatively low population of the region.

Other contributing factors include a coherent local and national approach to attracting inward investment from international companies, a well-educated workforce, and a stable political environment that's broadly welcoming to tech companies. As a result, major international technology firms have a significant presence in the region, and not just for data storage, although Apple, Facebook, Google and Microsoft all have major datacentres there or are building them. IT outsourcing providers also have a strong presence here, albeit with the majority of the larger ones being internationally based, most notably in India.

The sheer scale of IT outsourcing deals, mergers and acquisitions in 2019 was impressive. Some of the highlights include the following:

  • IBM's €473m managed services contract with Nordea, reflecting an increasing trend among Nordic banks to outsource more of their IT.
  • Mastercard Inc. agreed to buy the account-to-account payments business of Nets A/S, a Danish payments technology company, for about US$3.2bn, marking its biggest acquisition so far.
  • Tieto scooped up Evry in a £1.2 billion deal to create the Nordic region's largest digital services provider.
  • A strategic deal between Danske Bank and IBM to bring AI to banking IT.
  • Accenture acquired Swedish strategic consultant Northstream to expand its capabilities in the Nordic region.
  • Accenture deepened its Nordic presence with its Hjaltelin Stahl acquisition.
  • Volvo Cars selected HCL Technologies for IT services and digital transformation.
  • Mastercard and P27 Nordic Payments Platform announced plans to build a world-first real-time payments system across the region.
  • Volvo selected Infosys as its main supplier of digital services.
  • TCS expanded its partnership with Norway's Posten Norge.
  • Cognizant expanded its Nordic presence with the acquisition of Samlink.
  • Swedish telecom equipment maker Ericsson teamed up with Microsoft to build the next generation of connected cars.
  • LTI won a multi-year managed IT operations engagement with Hoist Finance AB, the Swedish financial services company.
  • Telenor picked Sweden's Ericsson as the key technology provider for its fifth-generation (5G) telecoms network in Norway.
  • Norges Bank signed a 6-year, NOK470 million contract with Basefarm (Orange Business Group) for infrastructure, operations and monitoring.

These fifteen new or extended partnerships represent some of the biggest deals of 2019, but there was no shortage of smaller ones that didn't make the international headlines. In terms of population size, the Nordic region punched far above its weight in terms of IT outsourcing provision and related services in 2019 - and continues to do so.

But what does 2020 hold? With a global economy that's experiencing significant headwinds, can Nordic IT growth continue unabated? Some analysts believe so. According to Manoj Chandra Jha, lead analyst-Cloud & AIOPs Services at technology research and advisory firm ISG, "I deeply anticipate that in 2020, we would continue to hear [about many] more M&A and large IT outsourcing deals with [a significant proportion being based on] cloud and digital transformation."

Jha is particularly focused on the skill level of the Nordic population when making this prediction. "While Nordic enterprises have increased their cloud, digital transformation and IT outsourcing spend, enterprises expect global IT service providers to build a large pool of niche technology talent availability in the region."

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