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Motilal Oswal Report
IT services companies should see acceleration in structural growth over the medium term as corporates embark on a multi-year cloud-led upgrade cycle. This shift in the business model should lead to a substantial increase (5% revenue versus 3% historically) in the tech budgets of enterprise clients, adding 5–6% incremental growth for the industry.
Growth in the cloud would anchor this phase of technology spending, which would see a mid to high teen growth rate. Along with continued double-digit growth in digital services, this should more than compensate for the decline in traditional services.
We expect Tata Consultancy Services Ltd. to benefit from the sustained growth given its -
strong organic capabilities,
diverse vertical and geographic presence,
deal win momentum, and
strong headcount additions.
With the industry seeing supply-side challenges, TCS has been the industry bellwether in managing these challenges over multiple business cycles.
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