Telecoms Inorganic Growth Strategy Spectrum - 2023

Key Message:

• Market Size: $2.9 Tn 
• Growth (CAGR): (6%), Recovering since COVID 
•  Technology Change: High 
• Life Cycle: Matured Regulation: Heavy 
• Avg P/E < 15 (no growth), Industry is struggling in generating ROI 
• Organic Growth: Both Horizontal and Vertical Play are employed 
• Inorganic Growth: Adapt, Amalgamate, Acquisition

Global Challenges and IT Spend Macro View - 2023

WIP - more to come ....

Pathways to Digital Transformation

Pathways to Digital Transformation 

• In Business, value can be created by generating more revenue or reducing the cost envelope. In either case, this can be achieved by transforming the business operations. 
• Composing and deploying new services with compelling CX is key to driving growth in a digitally enabled business world. Besides enhancing operational efficiency, dividends are key to improving a business's bottom line. 
• The following pathways are available to achieve this goal: 
1. 1st transform CX and then Operations - Move from Silos to Integrated Experience and then to Future Ready. 
2. 1st transform Operations and then CX - Move from Silos to Industrialised Experience and then to Future Ready. M
3. Move from Silos to Future Ready State directly, that is, do both transformations in parallel, CX and Operations. This is the most challenging pathway as it requires aligning Business and IT resources in parallel for a desired outcome.        
• In practice, either path can be followed, depending on the maturity of digital transformation and how much information can flow without boundaries 

IT Services Organisations Positioning and Performance

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 











--
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