Hitachi To Buy GlobalLogic For $9.6B In Digital Transformation Bid

‘The GlobalLogic deal, if you look at their skill base, their capabilities, the industries they serve, and their core capability of software engineering with a focus around new revenue generation for their clients, it was the perfect marriage in terms of putting the two companies together and really making it a core part of the transformation of Hitachi, as well as our clients,’ says Hitachi Vantara CEO Gajen Kandiah.

Hitachi Wednesday said it plans to acquire GlobalLogic, a digital engineering services company, as a way to bring digital engineering services to its customers and channel partners and expand the services available for other parts of its portfolio including its Lumada business insights and business analytics platform.

The deal, which is expected to close in July following regulatory review, is expected to cost about $9.6 billion including repayment of GlobalLogic’s interest-bearing debt.

The acquisition of GlobalLogic is a significant step in the transformation of Hitachi, which still remains primarily a product-focused company with depth in industrial products, said Gajen Kandiah, CEO of Hitachi Vantara, the Santa Clara, Calif.-based U.S. subsidiary of Japan-based Hitachi Ltd.

[Related: COVID-19 Accelerating Digital Transformation: McKinsey]

As digitization starts to gain traction and scale, particularly as it has been accelerated because of the COVID-19 pandemic, it is important for Hitachi to have a portfolio company that can help both the company and its clients in their digital transformation journeys, Kandiah told CRN.

“The GlobalLogic deal, if you look at their skill base, their capabilities, the industries they serve, and their core capability of software engineering with a focus around new revenue generation for their clients, it was the perfect marriage in terms of putting the two companies together and really making it a core part of the transformation of Hitachi, as well as our clients,” he said.

Hitachi and GlobalLogic are very complementary to each other, with GlobalLogic focusing on building software and new sources of revenue for their clients while Hitachi focuses on driving everything from infrastructure to cloud to data, Kandiah said.

“And we think that when you put those two together and you start to think about the end-to-end revenue opportunity from building to running, it presents a very, very interesting set of combinations for us to bring to our clients. ... GlobalLogic [is] really being an accelerator or a catalyst for what we are doing with Lumada,” he said.

According to Hitachi, GlobalLogic brings deep chip-to-cloud advanced software product engineering technology along with design skills and vertical industry experience across a client base of over 400 clients in such industries as communications, financial services, automotive, healthcare & life sciences, technology, media and entertainment, and manufacturing.

The acquisition of GlobalLogic is an exciting move for Hitachi Vantara and for the channel, said Joe Kadlec, vice president and senior partner at Consiliant Technologies, an Irvine, Calif.-based solution provider and long-time Hitachi Vantara channel partner.

“This will be a big help for us, especially for engineering services related to Lumada and Hitachi Vantara,” Kadlec told CRN. “This will give us a broader, global reach and expertise.”

The extended global reach is important to Consiliant which is bringing digital transformation to clients with international presence, Kadlec said.

“Digital transformation is key for these clients to be competitive,” he said. “Clients like those in the energy sector, for instance, are used to doing things a certain way. But they see digital transformation as the key to modernizing their infrastructures.”

Prior to hearing the news Wednesday, Kadlec said he had not heard of GlobalLogic before.

“But after seeing their presence and what they do, I’m excited,” he said. “And with Hitachi Ltd. backing it, I expect to see a big move behind it going forward. We haven’t done a lot with Hitachi Ltd., but have focused more on Hitachi Vantara and Hitachi Consulting. But Hitachi Ltd. backing is very important.”

GlobalLogic has about 20,000 employees while Hitachi has a staff of approximately 301,000.