Cognizant Acquires 10th Magnitude, Adds More Muscle To Its Microsoft Business Unit

Cognizant, sixth place on the 2020 CRN SP500, says the acquisition -- its sixth cloud related deal in 2020 -- expands its Microsoft Azure expertise, adding more muscle to the new Microsoft Business Group.

Systems integration behemoth Cognizant has acquired fast-growing Microsoft partner 10th Magnitude as a part of an Azure sales blitz anchored by a new Microsoft business group.

The deal teams 10th Magnitude’s talented Microsoft Azure team with New Signature, another top-notch Microsoft solution provider that Cognizant acquired just last month.

Financial terms of the deal were not disclosed. The deal is expected to close in the third quarter.

“We are so excited to be in an agreement to be acquired by Cognizant,” said 10th Magnitude CEO Alex Brown (pictured) in a prepared statement to CRN. “10th Magnitude has been one of the longest-standing Azure-centric system integration partners focusing on digital transformation. Our opportunity to expand the Microsoft Azure expertise within Cognizant’s new Microsoft Business Group is a big win for our mutual customers.”

Cognizant shares were down one cent or four percent to $66.83 in the wake of the acquisition.

Cognizant, No. six on the 2020 CRN SP500, said the acquisition- its sixth cloud related deal in 2020- expands its Microsoft Azure expertise, adding more muscle to the new Microsoft Business Group.

10th Magnitude – a Microsoft Gold partner with 150 employees - is one of just 70 certified Azure Expert Managed Service providers worldwide. Just this year, it received the Microsoft US Application Innovation Partner Award and the Microsoft US Solution Assessment Partner Award.

“10th Magnitude’s increased focus on application modernization and data intelligence with AI-driven analytics and insights will be an incredible contribution to Cognizant’s acquisition strategy,” said 10th Magnitude Chief Technology Officer Ira Bell in a statement to CRN.

Cognizant has “set aside of tens of millions of dollars to invest in hyperscale partners and SaaS vendors with a view to accelerating” the company’s cloud practices, Cognizant CEO Brian Humphries told analysts on the most recent earnings call.

On that call, Humphries said he expects the New Signature deal to provide the fire power to “scale the Microsoft business practice rapidly.”

10th Magnitude - which was founded ten years ago as a Microsoft Azure born in the cloud partner- adds even more hard to find Microsoft cloud talent to that Cognizant Microsoft Business Group.

Private equity firm Pamlico Capital Investment made an investment in 10th Magnitude in 2016.

In 2018, the company acquired Northwest Cadence – a Microsoft partner headquartered in Bellevue, Washington as part of it growing national footprint.

Bob Venero, CEO of Future Tech Enterprise, a Microsoft partner headquartered in Holbrook, New York, said he welcomes the competition from systems integrators bulking up to compete against the likes of Future Tech.

“This is not the first time we have seen these extremely large systems integrators go down this path nor will it be the last time,” he said. “They believe that by acquisition they can change and fix the challenges they have that are systemic to those large integrators but it doesn’t work. It’ll buy them time and some opportunities but at the end of the day it doesn’t fix the overall challenges they have. It’s a Band-Aid approach.”

As for Future Tech, its Microsoft practice is growing at double digits, said Venero. “What we find is that systems integrators like Cognizant can’t do the hand holding and the custom white-glove service that organizations like Future Tech provide,” he said. “I love it when I see acquistions like this that add cost overlay into an organization like Cognizant. We welcome it. Future Tech is a scrapper. We love a good fight.”

Michael Goldstein, CEO of LAN Infotech, a Fort Lauderdale, Fla., solution provider, said he sees the deal as one more sign of the high demand for Microsoft cloud services and the high valuations for Microsoft cloud solution providers.

“Our Microsoft business is up 75 percent over the last year,” he said. “Love or hate Microsoft you know they are going to continue to be there and continue to grow in the cloud. We see a bright future ahead for our Microsoft cloud services business and look forward to competing against Cognizant.”