Strategic activity has been a constant with- in the infrastructure services industry and this has been true across all its respective segments. But things are starting to change. Nearly a decade of consolidation activity has changed the competitive landscape and the rise of massive-scale platforms has altered the fortunes of segments that not too long ago were healthy and thriving. The impact is already being felt. M&A is changing directions, with more deals focused on technology and capabilities, while investment capital is moving into the sector at a slightly slower rate and looking for new opportunities within the ecosystem, while avoiding areas that are now being disrupted.
It is very hard to miss the impact of massive-scale. It has forced providers to change gears and become more specialized. It has also changed the mindset providers previously had. It is no longer about competing against the likes of Amazon. It is now very much about partnering with them. This shift has significant strategic implications. Providers are investing in new areas and moving to asset-light operating models. There is a corresponding impact on capital requirements and the efficiency and predictability it will have. This in turn will allow providers to focus more on areas like software development where innovation is paramount. This has not historically been a point of emphasis for many of the providers in the sector.
In this report, we take a closer look at the noteworthy developments shaping strategic activity within the sector and assess the impact. The sector is undergoing a significant period of change and the strategic activity that has long been a staple will shift along with it. Those that are ahead of the curve will find opportunities and success.