Government IT Consulting M&A: IBM Acquires Octo

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IBM has acquired Octo, an IT consulting company that offers artificial intelligence (AI), cloud, infrastructure, cybersecurity, data modernization, blockchain and DevSecOps services to U.S. federal government agencies. The seller is private equity firm Arlington Capital Partners, which owned Octo since April 2019. Financial terms of the deal were not disclosed.

This is technology M&A deal number 1,019 that ChannelE2E has covered so far in 2022.

IBM Acquires Government IT Consulting Firm Octo: Deal Details

Octo, founded in 2006, is based in Reston, Virginia. Roughly 1,500 Octo employees will join IBM Consulting’s U.S. public and federal market organization. Armed with that Octo talent, that IBM organization will grow to roughly 4,200 employees, IBM said.

This is IBM’s eighth acquisition of 2022. Other noteworthy IBM Consulting acquisitions include DialexaNeudesic, and Taos, the buyer noted. Many of the recent deals focus on AWS (Amazon Web Services) and Microsoft Azure cloud consulting capabilities.

IBM has acquired more than 25 companies since Arvind Krishna became the company’s CEO. Rather than acquiring expensive SaaS software companies, many of the deals essentially position IBM Consulting against Accenture and perhaps even Kyndryl, the 2021 managed infrastructure services spin-off from IBM.

In addition to the Kyndryl spin-off, IBM has been selling off some assets. For instance, Harris acquired IBM’s i2 intelligence analysis product portfolio in January 2022, and private equity firm Francisco Partners acquired the Watson Health business (now rebranded as Merative).

IBM Buys Octo: Executive Perspectives

In a prepared statement about the deal, John Granger, senior VP of IBM Consulting said:

“Governments require agility and resiliency to meet the evolving needs of citizens directly and in real time. The combination of Octo’s highly qualified and respected team with IBM’s consulting expertise, technical capabilities and strategic partner ecosystem will enable federal clients to transform faster and better serve citizens.”

Added Mehul Sanghani, CEO of Octo:

“Octo was founded on the belief that digital transformation could be delivered at scale to modernize the federal government’s approach to today’s most pressing challenges – from public healthcare to national security, to defense and intelligence. Today, we are excited to join forces with IBM to continue to deliver these digital transformation capabilities with greater reach and scale.”

The deal is expected to close before the close of 2022.

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