Margin compression among the leaders of tech services.
Clearly, the sector ain't bottoming out for now.
@_ prashanair “Margins for largecap I.T. is now below pre-Covid levels!”.
The business of largecap I T. companies is a summation of n sets of projects in m sectors with each offering o sets of services.
So, it's toomany eggs in toomany baskets.
When the business cycle turns, the sizes of the eggs change and some
of the eggs break sooner than later. 🤔
Your data reflects the aforementioned churn.
By the way, new biz opportunities are conspicuous by their absence in such a cycle.
Yet, they would exist to some extent.
Atleast, the explosion of data is a reality.
In anycase, data is the new oil & necessary to keep us moving. 😉
However, on ground business realities would bring investments in I.T. sector under the magnifying glass.
So, breaking of eggs would gain pace while hatching of new eggs would be throttled by the budgetary constraints of the clients.
Now, only real innovation can hatch new eggs.
As per my limited understanding, real innovation ain't coming by
Digitization was the last big opportunity & is already a reality for most businesses & services
Further, cut-throat competition, SAAS & cloud computing is increasingly depriving I.T. companies their pricing power.
If one goes by historical data in economic cycles, it's economies of scale that triumphed in earlier cycles.
In the current cycle, cloud computing & SAAS have levelled the playing field in select sectors & to a great extent.
So, I really don't know.
KUCH BHI HOAN SAKHTA HAIN!!
Logically, the competitive advantage(/moat) of @tcs is their high quality manpower in high numbers, at rockbottom cost.
Hence, it boils down to economies of scale greatly further aided by the brand equity of 'TCS' brand.
Everything else can be arranged and is up for grabs. 🤣👏
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