The problem of plenty for software services firms

Business Standard looks at cash utilisation, M&As and buybacks at Infosys, Cognizant, Wipro and TCS

Indian software services companies are no longer investors’ favourites, as returns on information technology (IT) stocks have declined significantly during the past few years. Their traditional business is going through a decline and they have been late in tuning in to emerging technologies. Besides, the political uncertainty in the US, the largest export market, has only increased. On the other hand, companies have largely been accumulating cash in their books, which generally earns lower returns compared to their core business, and is thus putting pressure on ratios like return on equity. This too is weighing on the stock performance. Not