JP Morgan believes the CX industry will likely face headwinds from price deflation and automation arising from GenAI. However, with only approximately 27% of the CX workloads outsourced in Asean, the analysts expect the CX industry to see more outsourcing driven by price deflation, productivity gains and specialised workloads of GenAI — offsetting the negative impact of price deflation and automation.
JP Morgan analysts Ranjan Sharma, Sigrid Qiu and Aishwarya VR have upgraded New York Stock Exchange-listed TCDX to “overweight” with a lower target price of US$7.40 as the company prices in business continuity risks from generative artificial intelligence (GenAI).
In their Oct 29 note, the analysts highlight that customer experience (CX) companies such as TDCX appear most at risk from GenAI. As a result, CX companies appear to be trading at distressed levels at 2024 EV/ebitda of about 4.5x versus global financial crisis low of 2.6x and business process outsourcing sector at 9x, according to Bloomberg data.
