Why Are IT Giants Buying Robotics Companies?

Accenture is all set to acquire the industrial and robotics automation firm Pollux, headquartered in Joinville, Brazil.

Accenture said the acquisition would expand its capabilities for clients in consumer goods, pharmaceutical and automotive industries seeking to make their factories, plants and supply chains more productive, safe and sustainable. This was Accenture’s first robotics acquisition, and it will take over the entire operations of Pollux in South America soon.

Last month, another IT giant Wipro acquired Precision Automation and Robotics India (PARI) based in Pune. Wipro is looking to expand its global footprint and become an end-to-end industrial automation company.

Below, we analyse what IT giants stand to gain from acquiring robotics companies.

Faster Processes

In the Industry 4.0 era, robots, machines, transport systems, etc are connected, and their data is available at a common shop floor server. 

Robotic companies have acquired knowledge of how information can be collected efficiently through robots and other devices using technologies like IoT.

Software companies, on the other hand, have developed sophisticated data models. Still, their applications have mostly been limited to the top floors, where the top executives or decision-makers have the run of the place. With the acquisitions of automation and robotics companies, the IT firms can work with the manufacturing companies and take applications from the top floors to shop floors where the real action happens.

“There is not a lot of strong IT in manufacturing,” said Vishvajit Dabak, Chief Information Officer at PARI, “With the introduction of IT applications, the automation processes will get faster.

“If the data related to the processes and system in our organisation is available at my fingertips, then it gives me a lot of comfort and confidence about running my business, and this I can get through IT.

“Technologies like IoT, IIoT AI or ML, improve the efficiency and effectiveness of these robots. Hence, IT companies have started taking an interest in it. It’s basically a revenue model for IT firms.”

In-house Manufacturing

Automation can digitally transform manufacturing and supply chain operations to be more flexible, resilient, sustainable and safe, and meet ever-changing customer demands better, according to the global lead for the Accenture industry, Nigel Stacey. However, to see tangible benefits, there needs to be a proper integration of information technology and operations technology. 

“IT companies want to create new verticals, which is an augmentation to their existing business,” said Dabak, “Companies like Wipro, for instance, have a lot of verticals, including manufacturing products. And all of these manufacturing companies need automation. 

“At the same time, they also have many manufacturing clients. So why not have it as an integral part of the firm instead of outsourcing it? They also have the funding for it.”

Higher Margins Through Value-Added Services

On the production shop floor, different operations like the material processes or business processes used to work in separate systems such as ERP, MES, SCADA, etc. It makes sense to connect these systems and use Data Science and Analytics for insights to improve overall productivity. 

For IT companies, selling a combined system to a manufacturing client will generate more revenue, and the user will get more options to control his production line. 

“Robotics has become a commodity, and now anybody can create a robot. Hence, the profit margins have comparatively reduced. Here, value-added services can bring more money,” said Dabak, “The reason why IT companies grow and have higher profits is that they provide value-added service. A similar trend will follow in robotics. And IT can provide this.

“Almost every electronic device that we have used before has become smart now. Be it a television, washing machine, or a phone, everything has become smart. And this smartness is the handiwork of IT companies.”

Lastly, in the modern era of manufacturing, consumers are ordering from digital devices and want more customisation. Software companies improve such software and develop systems through advanced analytics to generate more revenue streams.

Wrapping Up

The robotics market was valued at $23.67 billion in 2020 and is expected to reach $74 billion by 2026 and grow at a CAGR of 20.4% from 2021 through 2026.

The strategic acquisitions by IT giants to make robots smarter will help generate more revenue. This symbiosis will help both industries to grow.