2023 saw a renewed commitment from some of the UK’s largest resellers to double down on services and solutions.
A renaissance in kit sales artificially lit up the channel’s top line during the lockdown years. Now, there appears to be a growing acceptance that services are a shrewder long-term bet, particularly for those looking to boost margins and gain longer-term revenue visibility.
One of the globe’s top product shifters, Insight, has begun styling itself as a ‘solutions integrator’ as it looks to help its customers design, build, implement and run the technology that it already sells them.
The 8th-ranked outfit matched that rhetoric by acquiring two services-focused firms in the second half of 2023 in the shape of Bristol-based software development outfit Amdaris and global Google partner SADA.
“Services are around 10% [of Insight’s overall] revenues but that will grow quite significantly with the acquisitions we’ve made [of Amdaris and SADA],” Insight EMEA President Adrian Gregory told IT Channel Oxygen.
“For us in EMEA at least, probably where the balance is on that over the next few years is getting it to somewhere around the 20-25% mark.”
SCC made a similar off-piste acquisition in September 2023 in the shape of 150-strong digital consultancy Nimble. It now has plans to build a 2,000-person European digital consultancy within the decade.
The 6th-ranked outfit “knows it has to evolve”, its Corporate Development Director Christine Olmsted told IT Channel Oxygen.
“We’re not trying to move away from our heritage in reselling. But we know based on customer demand that we can and should be doing more to help our clients transform, and that’s what this acquisition is about,” she said.
42nd-ranked Ultima, meanwhile, is now generating 50% of its top line from services, its CEO Scott Dodds told us. That compares to 10-15% before Apse Capital took over in 2019, when it was an “old school reseller with a bit of professional services”, he said.
The Microsoft partner in October invested in a new nearshore centre in Cape Town to further bolster its services prowess. It is set to employ 50-60 staff by April.
“As we win more and more services for our customers, this gives us that safety net to make sure we can deliver those services,” Dodds explained.
56th-ranked Total Computers characterised calendar 2022 as a “transformational year” as it began to morph from a traditional reseller into a “strategic solutions provider” (on the back of mid-year acquisition OverBright), meanwhile. Services generated £8.9m of its £89.7m revenue total, up from £3.5m a year earlier.
Boosting services and recurring revenue was a common theme among the wider Oxygen 250.
165th-ranked IPI (whose CEO, Sat Sanghera, CEO, is pictured above) said its strategy of moving from one-off products and services to a recurring revenue model is now “accomplished in the most part”. It is now switching its attention to developing its own intellectual property.
218th-ranked Cybit said it is making a “significant investment” in transforming the group to rely less on one-off professional services engagements and instead focus on long-term support contracts, meanwhile.
