McKinsey adds Malaysia-based design firm VLT to Digital Labs

McKinsey & Company has acquired VLT Labs, a Malaysian digital business builder and product development studio, in a deal which aimed at the further improvement of the consulting firm’s Digital Labs service.

Kuala Lumpur-based VLT Labs has over four years of digital product engineering and design experience, specialising in helping corporations to conceptualise, design and build digital products. McKinsey & Company has acquired the subsidiary of VLT Group for an undisclosed fee, adding VLT Labs to the firm’s Digital Labs offering. Along with a number of consultancies, including Cognizant and Synechron, McKinsey have recently launched a number of digital capability centres across the world. One of these is in Singapore, as the firm aims to position itself well to benefit from a coming spike in Asian businesses looking to leverage digital transformation solutions from the consulting sector.

The swoop for VLT Labs further signals McKinsey’s intent in the region, and the move further boosts the company’s digital capabilities in Asia. According to sources at the firm, demand is fast growing following the acquisition, as local organisations vie to become regional and global leaders amid the disruptive environment of the evolving digital economy. Digital disruption presents these clients with a major opportunity, as previously dominant firms continue to lag behind in the adoption of new technologies.

Following the deal, the broader VLT Group will avoid key personnel changes – retaining its brand, clients and equity stakes in various investments and start-ups – while the agency’s service offerings will also remain. In a letter to clients, the independent agency said the sale of VLT Labs to McKinsey was “both a validation of [its] beliefs, values and results-driven model”, enabling the Group to pursue the company’s agenda for growth on a global stage. VLT Group will now accelerate its plans to grow its core business, with its expansion into Cambodia, the starting point.

Meanwhile, Nimal Manuel, a Managing Partner at VLT Labs’ Malaysian presence, said the company was committed to growing a digital studio in the country to serve its clients across the region. “We are proud to have found exceptional talent in home-grown VLT Labs to help us achieve our mission,” Manuel said, concluding, “We look forward to integrating the team of designers, developers and product managers into McKinsey, taking them to serve our clients globally.”

Recently, VLT Labs helped launch a chatbot machine-learning app for an Australian fashion brand, while present projects include the developing of technology for an urban farming company to help ensure optimal water pH balance for non-wild fish, with ‘aquaculture’ becoming a rapidly expanding Asian industry in response to the environmental impact of over-fishing. Having already helped clients build 53 new products and businesses, VLT Labs is now a part of the consulting industry player’s Digital Labs team based in Kuala Lumpur. Earlier this year, the pair demonstrated why the companies feel they are the right fit for a deal, partnering to deliver a banking app for a Southeast Asian bank threatened by fast-growing digital competitors.

When asked how they expected the Lab’s culture would continue to mesh with that of McKinsey, VLT Labs’ two cofounders, Izwan Ismail, an industrial, medical, software, and product designer, and Andrew Tan, an electrical engineer and innovation strategist, commented, “Like McKinsey, we share that same hunger for knowledge and passion for doing excellent work. Despite our obvious differences in size, we both follow very specific work processes in how we approach client problems and reach solutions… What will be new and exciting for us is tapping into McKinsey’s much vaster base of knowledge and expertise. Coming from a small team to an organisation of thousands and thousands will mean we’ll now be able to reach out to anyone in the world for any specific set of knowledge in a field. That’s pretty cool.”