Key Message - IT Services and Product Players
- Market
Market Size: $1.4 Tn
- Growth: (6-8%)
- Technology Change: High
- Life Cycle: Matured
- Regulation: Med-Low
- Business Environment - High Risk hence all of them have a cash surplus on their books and give insight into their sales and organisation culture (loyalty based instead of talent-based like Apple)
- Capgemini and Cognizant brand has no equity in them and both have strayed from their original positioning. Capgemini in particular has lost its mojo.
- TCS is the shining light when it comes to brand equity, growth potential, and margin among all IT services players.
- From India's IT services sector perspective, TCS and Infosys are premium players. HCL and Tech M are low-cost (price-taker) players.
- Accenture is the flag bearer of a premium tier 1 IT consulting services organisation.
- IBM is trying to compete with Accenture and other IT players to get its premium position in the market. The balance sheet is leveraged and they are getting aggressive in the market and are taking more risks.
Updated View with IT Services Players
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View with IT Product or Software Players
- ServiceNow is leading the pack of Cloud-based ITSM providers with an EBITDA Margin of nearly 500%. This is reflected in its PE ratio.
- Cisco is struggling with the decline in MPLS (SD-WAN) and IP Telephony (Teams) and facing heat from HPS and cloud providers. Besides supply chain issues and competitive pressure and loss of market share to Huawei is adding to its woes.
- Oracle is finding it hard to compete with Salesforce and SAP in CRM and Cloud-driven business apps respectively.
- Salesforce is undervalued and is leading the CRM and BSS domain. Its currently facing internal headwinds because of a couple of acquisitions like Slack, Tableau, and Mulesoft. Once the integration is complete it will be in the topmost quadrant.
- MSFT has completely turned around under Satya Nadella. Its 365 and Cloud portfolio is leading the transformation
Software Performance - 2023
