International Business Machines Corporation IBM recently announced that it has inked an agreement to acquire Brazil-based robotic process automation (RPA) provider –– WDG Automation.
The deal will enable IBM to address the increasing demand for need for business and IT transformation as well as cost reduction amid increasing COVID-19 induced uncertainties in the market. However, the exact financial terms of the deal have not been disclosed.
Markedly, WDG Automation’s portfolio consists of RPA, interactive voice response, intelligent automation, and chatbot services. Combined with IBM’s existing AI-infused automation capabilities the solution will aid customers optimize their operations and accelerate their digital transformation process.
Per the terms of deal, IBM plans to integrate 600 pre-built RPA functions from WDG Automation into its Cloud Pak for Automation. WDG’s Automation capabilities will also be embedded into Watson AIOps and Cloud Pak for Multicloud Management.
The expansion of IBM’s AI-infused capabilities is expected to help the company acquire new customers, which will bolster the top line in the quarters ahead. Moreover, it is likely to instill investors’ optimism in this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Shares of IBM have declined 12.2% in the year-to-date period compared with the industry’s fall of 17.2%.
International Business Machines Corporation Price and Consensus
International Business Machines Corporation price-consensus-chart | International Business Machines Corporation Quote
Strengthening Automation Capabilities Hold Promise
The WDG Automation deal is in line with IBM’s focus on advancing its automation offerings.
In May, the company introduced several new AI-infused services and capabilities designed to help companies automate their IT infrastructure and guard them from market disruptions. IBM launched IBM Watson AIOps, which automates the detection of IT anomalies in real time.
The company also unveiled the ‘Accelerator for Application Modernization with AI’ capability that is designed to aid customers reduce the overall costs associated with the modernization of business applications.
In January, IBM partnered with RPA provider Blue Prism to help clients drive innovation and improve customer service by the capabilities of IBM Cloud Pak for Automation with Blue Prism’s Digital Workforce.
These endeavors are expected to boost IBM’s automation offerings and are likely to help it acquire more customers. Notably, IBM’s Cloud Pak for Automation has already been adopted by Banco Galicia, ENN Group in China, PNC Bank, UK NHS Blood and Transplant as well as several government entities in Qatar.
The company is expected to benefit from the higher requirement for automate processes to reduce costs and improve their efficiency amid the ongoing pandemic. Per an IDC report, the contribution of automation robots to global workforce will grow by over 50% by 2022.
Further, IBM’s growing automation capabilities are likely to expand its footprint in the lucrative RPA market, which per Grand View Research data, is expected to witness a CAGR of 40.6% between 2020 and 2027.
Competitive Scenario
IBM is the not the only tech giant trying to capitalize on the immense growth prospects in the RPA space.
In May, Microsoft MSFT acquired RPA provider Softomotive to aid customers create their own bots and automate their manual business processes. Softomotive’s WinAutomation will become a part of Microsoft’s automation platform Power Automate. The combined offering facilitates RPA connectivity to new software applications from companies including SAP SE SAP.
Moreover, Appian APPN acquired RPA provider Jidoka in January to strengthen its platform and make it a one stop shop for Automation. It includes some of the best solutions for workflow, AI, and RPA.
These acquisitions have significantly intensified competition in the RPA market.
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