IBM targets federal digitalization efforts, buying ‘modernization’ provider

RESEARCH TRIANGLE PARK – IBM is ramping up its digital transformation efforts, this time targeting government clients, by acquiring Octo a Washington, D.C.-area company whose expertise is already federal clients.

Privately held Octo is currently owned by Arlington Capital Partners, a private equity firm. Based in Reston, Va., the company has some 1,500 employees. Financial terms weren’t disclosed.

IBM Consulting’s public and federal market group currently has some 2,700 workers. IBM also will gain accesses to a big Octo facility in Reston.

The deal is a significant one, notes StreetInsider: “IBM’s acquisition of Octo establishes one of the largest digital transformation partners to the federal government.”

Arlington Capital Partners describes Octo as a “pure-play digital modernization solutions provider to the federal government.”

Octo’s workers will become part of IBM Consulting’s U.S. public and federal market organization.

“Governments require agility and resiliency to meet the evolving needs of citizens directly and in real time,” said John Granger, Senior Vice President of IBM Consulting, in a statement. “The combination of Octo’s highly qualified and respected team with IBM’s consulting expertise, technical capabilities and strategic partner ecosystem will enable federal clients to transform faster and better serve citizens.”

Mehul Sanghani, founder & CEO of Octo, noted that the 16-year-old venture, brings much to IBM.

“We have created an organization focused on digital transformation with modernization missions at scale ranging from public healthcare, to national security, to intelligence and defense.,” he said in a statement. “Octo’s combination with IBM affords our clients and our nearly 1,500 employees the unique opportunity to expand and accelerate that vision – with the global reach of one of the world’s pre-eminent brands and largest technology firms.”

The acquisition is the eighth made in 2022 as IBM CEO and Chair Arvind Krishna has aggressively expanded IBM’s consulting and tech services footprint as well as in artificial intelligence and cloud computing. Big Blue has made more than 25 acquisitions under Krishna in just over two years.

IBM owns Raleigh-based Red Hat and employs thousands of people across North Carolina. Its campus in RTP is one of the tech giant’s largest.