Cognizant provides a dismal 2024 projection as IT services slump deepens; shares tumble

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Cognizant provides a dismal 2024 projection as IT services slump deepens; shares tumble
Cognizant provides a dismal 2024 projection as IT services slump deepens; shares tumble

Cognizant Technology Solutions introduced a new tab that forecasted full-year revenue below estimates, suggesting a persistent weakness in demand for IT.

Cognizant Technology Solutions (CTSH.O.) opened a new tab that predicted full-year revenue below expectations on Tuesday, highlighting continued weakness in demand for IT services and sending its shares down 4% in extended trade.

Businesses across industries are reducing technology and outsourcing costs while bringing some activities in-house to deal with the effects of persistent inflation and increasing interest rates.

This has resulted in a downturn in the IT services sector. Last month, competitor Tata Consultancy Services (TCS.NS) recorded its slowest profit growth since 2020, while Infosys (INFY.NS) missed profit projections in the most recent quarter.

Cognizant, which generates the majority of its income from customers in North America and Europe, forecasted revenue of $19 billion to $19.8 billion in 2024. Analysts predicted $19.8 billion, according to LSEG statistics.

Its forecasts for full-year adjusted earnings and first-quarter revenue were also lower than expected.

Cognizant’s revenue declined 1.7% to $4.76 billion in the quarter ended December 31, but it was in line with estimates, while adjusted earnings were 14 cents more than expected at $1.18.

Revenue from its top two customer sectors, financial services and health sciences, fell 5.8% and 2.1%, respectively.

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