Great write-up Balkar/Daye. My main concern is on structural impairment of future growth. The infrastructure they built with universities across Belarus/Ukraine/Russia was crucial in their talent hiring process, which is the key revenue driver given the supply-constrained IT service industry.
if the war doesn't end in the next 2-3yrs, don't you think that future near/mid-term growth will be capped? Especially if you look at other "engineering-focused" service providers like Globant, where many of their "bulk" hiring are geographically-focused (despite most of them doing offshore work). I assume the shift will take a significant amount of time
Also the Russian employees, i think, cannot be paid due to sanctions, plus they are paid in rubles (if i recalled correctly), so you effectively lose part of your Russian workforce (also Belarus). So ur existing revenue, and future growth, will both be impaired
I find your expectations of being able to hire more talent and maintain profit margins overly optimistic. Given the challenge of finding these staff it is not going to be so easy to make this change. I would extend the timelines longer as it takes two to three years to develop talent.
Great write-up Balkar/Daye. My main concern is on structural impairment of future growth. The infrastructure they built with universities across Belarus/Ukraine/Russia was crucial in their talent hiring process, which is the key revenue driver given the supply-constrained IT service industry.
if the war doesn't end in the next 2-3yrs, don't you think that future near/mid-term growth will be capped? Especially if you look at other "engineering-focused" service providers like Globant, where many of their "bulk" hiring are geographically-focused (despite most of them doing offshore work). I assume the shift will take a significant amount of time
Also the Russian employees, i think, cannot be paid due to sanctions, plus they are paid in rubles (if i recalled correctly), so you effectively lose part of your Russian workforce (also Belarus). So ur existing revenue, and future growth, will both be impaired
Yeap understandable, and agree on the sizing given the risk-reward profile. Thanks for the perspective on this. Appreciate it!
Awesome research, explanation, and analysis. Thank you.
One other thing - there is high chance of clients sticking to the service provider in the difficult times to have empathy
I find your expectations of being able to hire more talent and maintain profit margins overly optimistic. Given the challenge of finding these staff it is not going to be so easy to make this change. I would extend the timelines longer as it takes two to three years to develop talent.
With cost going up. Will this company have pricing power? If they hike their price, will their customers leave or not renewal with them?
Awesome analysis Bakker.
Thank you for this additional explanation.