IQ Navigator focuses on software, sells their MSP business

Despite the holiday period, it seems to be a busy time for corporate activity in our sector, with Proactis announcing another acquisition the other day and also IQ Navigator making a significant announcement.

IQ Navigator is one of the world’s leading VMS (vendor management system) providers – the software that runs contingent labour and related programmes in many large organisations these days. But they also had their own MSP (managed service provider) business. MSPs do the actual operational management of contingent labour programmes as an outsourced service to large organizations.

But now IQNavigator is selling its managed services provider business to MSX International (“a leading global business process outsourcing, training, and human capital management company”, and a firm I must admit to not knowing anything about until today!)

“MSXI will combine its existing MSP business with IQNavigator's MSP operations to form Geometric Results, Inc. (GRI), a new global human capital services company that becomes the world's largest independent MSP”.

That’s not a surprising move for a number of reasons. There is a pretty obvious potential conflict of interest in being an MSP and selling VMS software to other firms – some of whom will be MSPs themselves. You can imagine some reluctance there amongst that target market in terms of supporting a competitor’s business.

As Jason Busch put it on our US site, this move “will provide greater assurance to the MSP and broader staffing ecosystem that IQNavigator is singularly focused on the developing of technology versus potentially offering competing services”.

Interestingly, Comensura, one of our sponsors here, is basically an MSP, but one that has developed its own (rather impressive) software. But at the moment, they haven’t looked to sell that to others, thus avoiding the IQNavigator type conflict.

In any case, we expect IQNavigator to be a consolidator in the VMS market as well, so focusing purely on software makes sense from that point of view. And the market tends to value pure software firms more highly than those who mix software and services – see the valuation of Fieldglass (the VMS market’s number one) when they were recently acquired by SAP. Assuming IQNavigator succeed, their appeal to new investors, via a trade sale, re-financing or flotation, will be increased.

Historically, the firm has been largely US based and focused, but has developed a stronger European presence in recent years, in part through serving the European arms of large US clients, but increasingly through local European customer wins. So look out for more coverage both on our US site and here as their story unfolds.

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