Kyndryl has confirmed on their earnings call they are only signing double digits profit contracts now.
They signed a number in the previous quarters so the extra margins are feeding through.
Looks like they are 1 step ahead of mikey.
With the slowdown of globalisation (Ukraine,covid,etc), nearshoring, and double digit inflation the end of cut throat IT loss making deals seems to be over.
Seems like providers are refusing contracts unless there 10% plus margin.
They mean 10% net profit margin not gross.
At the moment dxc are 7%, and targeting 10% plus.
The providers are seeming to realize that margins need to be upped. Effectively it got to the stage the IT outsourcing ended up paying customers to run contracts there's one contract on which DXC signed up to saving 10% a year, how is that possible?
But hopefully gone are those days of undercutting and slashing.
Hmmm.
Kyndryl requiring a minimum 10% margin. That's not a great start.
I've worked for a couple of large SIs who won't write anything with less than 33% margin except with EVP approval, and their absolute low was 25% in both cases.
Less than 25% margin is crazy in this type of work.
Margin below 10% can only result in the SI trying to cut costs to boost margins, which usually means laying off staff as that's the easiest way to cut costs. Unfortunately this also means reducing Quality of Service, leading to customers going elsewhere, and subsequently further cuts. Sound familiar?
From the original: "Looks like they are 1 step ahead of mikey."
I'd say they're several steps ahead. They're writing profitable business that lets them hire staff, rather than bad business leading to laying off staff.