Thread regarding DXC Technology layoffs

Absolutely spot on about the "captive customers where the cost of change is prohibitive, painful or otherwise difficult to move from". As soon as that protection is gone, the company will go down the toilet. Mike 2 will already have tens of millions in the bank by then, while everyone else is struggling with "DXC" on their CV. Might as well have Bernie Madoff as your character reference.

The company is probably undervalued. It has a long term legacy contracts many of which rely on legacy CSC/EDS technology and solutions. i.e. DXC has captive customers where the cost of change is prohibitive, painful or otherwise difficult to move from. Lots of banks, insurers and government agencies (aka platinum customers) running on ancient solutions written in COBOL, running on mainframes or sited in DXC Datecenters. While moving off this legacy is likely to bring efficiency and agility, it's risky. Customers will leave it until the encumbrance forces change. So M1 and M2 are playing the same game - reduce the cost base as quickly as you can while keeping these client by whatever means necessary. This will demonstrate true earning power and for a while will produce a positive cash flow of a relative low cost base. Eventually, the lack of growth, the customer dissatisfaction and eventual move away from the legacy will bring to the fo-e the DXC's underlying inefficiencies and it will be game over. The only bump in the road is the dropping of the pants to keep platinum clients on board. The recent Lloyds of London deal is probably a good example of this

For a company to grow, it needs to be giving customers what they want, or convince them to buy what they don't yet know they need. DXC is doing neither. It's battling to survive on ropey big government ITO deals where the client is as dysfunctional as DXC is. When we're all in trouble, no one is, right?

Good analysis by the previous poster.

The offshore thing though, i don't think csc grew any onshore resource since about 2003 when the craze for offshore lit up.

It's been almost two decades of grinding down expensive employees in the USA and Europe since then.

It's not magically coming back either unless the country you live in suddenly becomes low enough down the global sh1tlist to be the next cheapest location of choice. Certainly could happen in the UK hahaha

It seems to me that HPES hadn't done that with the zeal of csc. Hence M1's scope to savage the head count....

Its everyone's pay rises, capital investment in tools, process, training and anything that isn't debt, restructurings costs or TSI which is consuming $500M a year and leaving the company with no cash-flow at all (which is a risk, but then so is debt, as shareholders either don't get dividends, or they dilute the shares for a cheaper price to get the debt under control.

The cost of restructuring (getting rid of staff) is expected to be reduced from $500M to $100M by FY24 which will release some cash-flow to cover the debt, to reduce the risk (of shareholders not get paid) or creditors demand payment which I doubt will get to that stage given a large chunk $6B chunk was paid off last year. They might even use the cash-flow to start investing in process, tools, people and...lol, yeah I know, but one can dream.

Without organic growth the only card they can play is more job cuts which costs a lot in redundancy payments in Europe for those with a lot of years service. Hence DXC will never go there again, preferring to create lots more sweat shops in low-cost countries (ideally with no people laws) and maintain the low grade robotic services that enterprise clients expect.

Maybe that's why this week the emea cfo said their focus was on being debt free by fy24.

But you already know that right?

Not quite sure where the money is coming from to do that but suspect its everyone's pay rises for the next few years.