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Salesforce consulting services consolidation: Round 2

Salesforce partners have, once again, become popular acquisition targets for large, international IT services firms hoping to capitalize on the demand for SaaS consulting services.

The quickening pace of acquisition activity in the Salesforce consulting services sector underscores the burgeoning demand for SaaS skills -- and inspires a feeling of déjà vu.

Consider the following moves in the Salesforce ecosystem in February alone:

Feb. 4: Cognizant, a professional services company based in Teaneck, N.J., disclosed negotiations to acquire the French operations of Paris-based El-Technologies, a Salesforce platform specialist.

Feb. 10: Infosys, a digital services and consulting firm based in Bengaluru, India, agreed to purchase Simplus, a Salesforce partner with headquarters in Salt Lake City and operations in Australia as well as the U.S.

Feb. 18: Publicis Sapient, a digital transformation consultant based in Boston, said it wholly acquired Sapient i7, a joint venture it launched two years ago in London to pursue Salesforce business among large European companies.

A familiar pattern

The deals fit a similar pattern: A multibillion-dollar, international services company pursues a smaller, fast-growing Salesforce partner. If the scenario seems familiar, that's because we've been through this before -- and fairly recently. An earlier round of Salesforce consulting services consolidation took place in 2015-2016.

In that not-so-distant timeframe, top tier Salesforce consultancies were acquired in quick succession by large global IT services firms. In 2015, Accenture disclosed plans to acquire Cloud Sherpas, which specialized in Salesforce, Google and ServiceNow. IBM the following year acquired Bluewolf, another notable Salesforce consultant. And capping that particular wave of Salesforce-oriented deals was Wipro Ltd.'s $500 million acquisition of Appirio in late 2016.

Our headline for the article on the Appiro acquisition noted the "end of an era." End of a phase, in retrospect, would have been a better way to put it, given the rapid rise of more Salesforce specialists and the subsequent wave of purchasing activity. What's remarkable is the speed at which the second round of deals followed the first.

Soaring demand for Salesforce services has propelled young companies to significant revenue thresholds in a twinkling of time. Sapient i7, for example, started generating $1 million in revenue per month in its first 12 months of operations. Simplus, founded with five employees in 2014, grew to more than 300 employees by 2018. That year, Consulting Magazine cited Simplus as the fastest-growing consulting firm. That growth was fueled, in part, by acquisitions.

Expansion set to continue

The ongoing second round of Salesforce partner acquisitions is unlikely to be the last -- particularly if Salesforce's growth projections come to pass. The company is forecasting $34-35 billion in revenue for fiscal year 2024, which would represent a doubling of the company's current revenue of $17 billion.

The projected revenue expansion should provide Salesforce partners with plenty of room to grow and, presumably, plenty of acquisition options for interested parties. "There's still enough runway in this market," said Jason English, the global Salesforce practice lead at Publicis Sapient, citing the general feeling in the Salesforce consulting services sector. "There's a lot of optimism."

Look for the next phase of growth to develop around newer offerings such as Salesforce Customer 360, rolled out in 2018 and expanded in 2019, and recent Salesforce acquisitions such as ClickSoftware in the field service market. As for the latter, Mark Cattini, senior vice president and general manager of field service management at Salesforce and former ClickSoftware CEO, recently cited an investment in "partner enablement" as part of the company's field service management strategy.

With past history and current momentum as a guide, the Salesforce partner ecosystem seems poised for continued deal-making.

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