(Reuters) – Cognizant Technology Solutions (NASDAQ:) forecast full-year revenue below estimates on Tuesday, underscoring persistent weakness in demand for IT services and sending its shares down 4% in extended trading.
Businesses across sectors are cutting technology and outsourcing expenses while bringing some processes in-house, as they deal with the effects of sticky inflation and higher interest rates.
That has led to a slowdown in the IT services sector. Last month, peer Tata Consultancy Services (NS:) reported its slowest profit growth since 2020, while Infosys (NS:) missed profit targets in the most recent quarter.
Cognizant, which draws the bulk of its revenue from customers in North America and Europe, said it expected revenue of $19 billion to $19.8 billion in 2024. Analysts were expecting $19.8 billion, according to LSEG data.
Its forecast for full-year adjusted profit and first-quarter revenue were also below expectations.
Cognizant’s revenue fell 1.7% to $4.76 billion in the quarter ended Dec. 31, but was in line with expectations, while adjusted earnings came in 14 cents higher than expectations at $1.18.
Revenue from financial services and health sciences – its top two customer segments – dropped 5.8% and 2.1%, respectively.
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