Bad times are just starting for India's IT outsourcers, says JP Morgan
- Reference: 1686893528
- News link: https://www.theregister.co.uk/2023/06/16/indian_it_services_grim_outlook/
- Source link:
In a report released Wednesday, based on meetings with 15 players, the firm concluded "the demand environment for IT services has likely weakened further in June."
Author and JP Morgan's head of APAC telecoms and India TMT research Ankur Rudra noted "increased competition for a smaller pie could trigger falling win-rates, pricing and deteriorating deal terms" and projected that deferred project starts, project halts and cancellations are likely to persist.
[1]
The firm predicts recovery for the industry isn't likely over the next six to nine months, making all of calendar 2023 – indeed all of financial year 2024 – a "washout."
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JP Morgan previously expected that only the first half of 2023 would be tough for India's tech services sector. It's since trimmed its estimates of the industry's revenue by one to three percent for Q1. The report also suggests the sector will not deliver investors' hoped-for revenue figures or growth expectations for around a year.
[4]India's major IT outsourcers slow hiring and fret about deal pipelines
[5]Wipro tells freshers a job awaits - if they accept a lower salary than first offered
[6]India's top services outfits still growing strong, but bracing for tough times
[7]Tata Consultancy Services to create touchy feely 'Internet of Actions'
The report cut JP Morgan's view of Tata Consultancy Services FY24-25 revenues and earnings by one percent, noting that "the unexpected CEO departure could lead to periods of volatility in a time of weaker tech spend and rapidly evolving macro." That's a reference to K Krithivasan taking over from Rajesh Gopinathan as CEO of TCS earlier this month. After 34 years with the firm, Gopinathan stepped down "to pursue his other interests."
JP Morgan also cut its outlook for Infosys by one to two percent over FY24–FY26. Wipro and HCL Technologies predictions went unchanged.
Rudra advised the tough times facing the industry represent a chance for investors to take a short position – potentially profiting from the sector's woes.
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India's top outsourcers [9]struggled to hire and retain talent during 2022, when their order books ballooned. In the months since, the industry worried that workers didn't have enough to do and even [10]reneged on job offers.
Tata Consultancy Services (TCS) CFO Samir Seksaria called FY23 "a year of transition" in the firm's Q4 2023 earnings statement. For most Indian IT outfits, that quarter was marked by missed revenue targets and slowed pipelines.
"There is a slowdown, but still, we believe there is a floor level which will be higher than the pre-pandemic cycle. And the time to recover also should be shorter," [11]said HCL CEO C Vijayakumar in his firm's Q4 2023 call.
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However, JP Morgan has ruled out any quick recovery, predicting less than five percent year-on-year growth. ®
Get our [13]Tech Resources
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[4] https://www.theregister.com/2023/05/05/hcl_infosys_tcs_wipro_results/
[5] https://www.theregister.com/2023/02/22/wipro_freshers_pay_cuts/
[6] https://www.theregister.com/2022/10/25/tcs_infosys_wipro_hcl_q2/
[7] https://www.theregister.com/2022/06/29/tcs_internet_of_actions_haptics/
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[9] https://www.theregister.com/2023/05/05/hcl_infosys_tcs_wipro_results/
[10] https://www.theregister.com/2023/02/22/wipro_freshers_pay_cuts/
[11] https://www.theregister.com/2023/05/05/hcl_infosys_tcs_wipro_results/
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[13] https://whitepapers.theregister.com/
Re: I can't stand...
Skillset etc.
Because of decades of outsourcing, our corporate overlords have essentially hollowed out the UK's IT expertise.
Anyone with 1/2 a brain should be retiring in their 50s if they can afford it and realistically a LOT of the experienced IT staff in this country are in their 60s and retiring too.
I'm in my late 40s and the minute I Can get out of this shit show of an industry I'm out. OR if I can get a job in another country. There is no respect for engineers in this country,.
What this means is that there is a MASSIVE skills gap. You MIGHT have kids graduating now, but they are starting on £16k, which is what I started on in 1999, so why would you do a job that entails compulsory late nights, weekends, zero overtime or TOIL, being dictated to on how to do your job by people who struggle to turn a laptop on.
I was drunk the other night and ruined some poor dude who was quite proud of his AWS engineering job. He's never seen a server, doesn't know about networks, no idea about security, literally silo'd to know his little slice of the world and that is it. and THAT is what is coming up the ranks.
Other countries where Engineers (or medicine, etc) are valued, push their kids into university. Parents in India don't eat for days so that their kids can go to school and then to university to get an education and then hopefully a high paying job.
In this country we have "the intelligencia" being used as an insult. We have people in those poor areas making excuses for htier kids not going to school, even today some dude whose being fined £100s because his son refuses to go to school making excuses for his kid.
What makes it worse, is that then people in those areas who in a lot of cases actively discourage their kids from going to university and call these office jobs "not real jobs", because apparently the only REAL jobs are getting cancer down t'pit then COMPLAIN about how advertisers ignore them (because they have no money), how people like those of us in IT or even marketing and communications earn more than them.
Always found offshore outsourcing / modern day slavery
Large companies support this "cheaper" support method, more profits for fat cats.
I have on numerous occasions found that offshore is leaving somebody with your data that should not have access.
It also takes jobs away from local economy, don't pay taxes, and is this a form of corporate / modern day slavery?
Why do we have more scams originating from offshore?
Re: Always found offshore outsourcing / modern day slavery
"Why do we have more scams originating from offshore?"
Maybe because 99% of the population is offshore.
Re: Why do we have more scams originating from offshore?
Come now, you don't think the UK has more scammers than the entire rest of the world, now do you ?
"After 34 years with the firm"
34 years is certainly a highly commendable amount, but gee, how lucky it is for him to get out right before the crunch.
Re: "After 34 years with the firm"
I have always wondered at what point 'x years with the company' actually becomes a liability? I know that all roles will be different but most management positions need an awareness that 'we have always done it that way' is not the same as 'optimal approach' and that is something which needs refreshing by finding out how other people approach challenges and processes.
I can't stand...
.... outsourcing. But if you're going to do it, at least in the UK then why not oursource to areas in the UK. Areas that are remote that you know people struggle for jobs. Doesn't all have to be in the same area. Then you get IT engineers that could end up actually being good but are stuck in places like Cornwall etc where IT jobs aren't readily available. Yes, those engineers might very well get high paying roles remotely for other companies but some won't. As companies are still insisting on the bollocks "You need to be in the office one day a week".