Tata Consultancy Services (TCS) and Infosys are facing election-related uncertainty in the US and UK, which together contribute about 60% of demand for major Indian IT companies, according to analysts at CLSA.
Adding downside risks for Infosys, CLSA said the top management churn at the company is leading to loss of deals and slippage in delivery execution. Many senior level executives at top IT companies have resigned in the last two years.
For Tech Mahindra, the analysts said senior management hires have not been able to institutionalise revised processes and policies due to cultural differences with the existing pool of talent and management.
Analysts Sumeet Jain and Rucha Somaiya noted, “The percolating impact of these tailwinds (hype of GenAI) fails to reflect in various IT service companies’ (CTSH, Capgemini, Genpact, EPAM and Globant) calendar year 2024 revenue growth guidance and the growth outlook for banking, retail and telecom verticals. Even the 2024 ordering activity outlooks from Information Services Group and Gartner IT Services Forecast are reminiscent of CY2019 trends.”
Capgemini, Cognizant, EPAM and Genpact all issued weak revenue growth guidance for CY24. Globant issued organic revenue growth guidance of 10% for calendar year 2024 (vs 11% in 2023). Salesforce issued 8-9% revenue growth guidance for FY25 vs 11% in FY24.
The report added that banking sector technology spend direction for 2024 still remains uncertain and in retail, Walmart has given 2024 revenue growth guidance of 3-4% vs 6% in calendar year 2023.