My 2 cents on issues plaguing TCS. My views may be biased as I own shares since last 8 years and tracking since then.
TCS had been a silent market leader from 2006 but the sales stream started slowing down by 2019. Digital was a upcoming vertical, however it was not the major business.
This was not peculiar to TCS, the whole end user industry at that time were not sure of switching to cloud. Please remember that IT is important for business but not that they spend everything in it. Newer Investors may be surprised that there are lot of business which do not run on cash burn model.
Then 2020 came and introduced the importance of business continuity. So cloud migration became a priority, every one wanted their business to continue so they gave projects with that factor business continuity.
This is the story so far.
Talent: Talent demand was naturally high as so many projects required lots of talent. TCS tried to re-train talent and got newbies on the projects to run the show. The employee demand eventually increased and so did the attrition.
Demand: If the recession or inflation cost run is true then Cutting/ delay of IT projects is expected. This happened many times read AR 2009, 2018 etc. and history does rhyme.
Now it seems WFH will be discontinued, it might mean 3 things :
- they are sure the talent is going to come back
- Demand reduced so even if some portion does not come back they can run the show but still need not give a pink slip.(see rishad premji’s Twitter thread to know how many employees are waiting for joining date)
- They want to outrun TWITCH. Think if you are Mr. Rajesh Gopinathan. You are willing
to pay well, but not top notch. Attrition is an at all time high. So what do you do, you pay more well but you want to know who sticks to you. You institute WFO and pray to god that industry follows you (The moonlighting episode shows everyone wants to act).
Still why do I continue to hold. I have heard lot of times that new tech will disrupt TCS in last 8 years eg: IOT, Cloud, Infra maintenance, etc. but each time TCS changed itself and adapted. I believe that it’s difficult to dislodge an industry leader unless they do too many stupid things. Please note I might sell if they do stupid things.
The above are purely my opinion and may be some fiction, read it in good humour.
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