Achtung! Quest Global Deepens Its Automotive Expertise

Quest Global's recent acquisition of EDF GmbH is a good strategic move and a validation of our view that engineering services is evolving from a niche offering to the mainstream (Read HfS 2015 predictions here).  In particular, the drive of leading service providers to build their scale and make significant acquisitions is a sign of the focus and attention that is being brought to bear on this market segment.

EDF is a German automotive engineering services provider based out of Munich. The deal value was not disclosed but according to media sources, EDF has current revenues of about €30 Million and a headcount of 320 which makes it a nice tuck-in for Quest Global. Most of EDF’s business comes from BMW, but it also has other blue-chip automotive clients as well.

EDF is a good fit as it gives Quest Global:

• A strong onshore presence in Germany, which is a global hub for automotive and manufacturing. Ajit Prabhu, Chairman & CEO of Quest Global, said, "We will hire more engineers in Munich, not move jobs to India. Our goal is to have 1000 engineers in Germany." Now offshore centric providers are increasing their presence in onshore to drive the next phase of growth, a trend we noted in our recent research notes of new location announcements in Q3, Q4, and Goodbye Casablanca.
• Access to marquee clients in the automotive sector such as BMW, Mercedes-Benz, Audi, Rolls Royce, etc.
• Deeper engineering services expertise in the automotive sector, which is one of the largest engineering services market segments.
• An opportunity to build and strengthen relationships with Germany-based manufacturers and component suppliers and increase penetration in verticals other than automotive.
• Access to the skilled resources, who are hard to find in niche areas such as engineering services.

Quest Global's acquisition of EDF is not an isolated case. There has been a recent surge in acquisitions in engineering services space by India-centric service providers as discussed here. We think the next couple of years are going to see a great deal of change in the landscape of engineering services space. We are ramping our engineering service coverage and recently launched our inaugural 2015 HfS Engineering Services Blueprint report, which will be a seminal view into the present and the future potential of today's leading Engineering services providers including Quest Global.  Keep watching this space.