Capgemini Results On IT Services Predict Soft Landing

Capgemini has delivered an incredible performance in the last year but has predicted a soft landing for IT. Capgemini’s advice on revenue growth and market behaviour becomes essential as many companies have abstained from giving guidance for the financial year 2023-24. As the market remains volatile, and the risks of inflation and insecurities in the supply of goods are constantly lurking around the doors, the path the global economy will take is not very specific. In these situations, guidance from one of the largest business tech companies becomes significant. Let’s explore what Capgemini’s revenue guidance 2023 signifies and what it implies for the fast-growing information technology industry.

Capgemini As A Business Tech Company

Capgemini is a French information technology company that employs cutting-edge technology and expertise to revolutionise business operations. It was established in 1967 as Société pour la Gestion de l'Entreprise et le Traitement de l'Information (Sogeti) and has acquired several businesses worldwide since its inception. Capgemini employs more than 360,000 individuals from almost 50 plus countries and has an experience of more than 55 years in assisting companies with technologies like artificial intelligence, digital engineering, cloud, and data connectivity.

Consistent Growth

The IT giant has exhibited a capability to continue on its growth trajectory in the adverse years of the COVID pandemic and the slow post-pandemic year of 2021. This proves Capgemini’s ability to navigate the change in market conditions. The IT company ended 2022 with a revenue collection of €21,995 million which is 21.1% higher than the previous year. Moreover, Capgemini has witnessed a constant currency growth of 16.6% in the financial year 2023, which includes organic growth of 15.3%. 2022 saw a 34% rise in Group share, net profit and a 25% rise in normalised earnings per share. The incredible performance is good news to everyone, including the founders, stakeholders, management team, and retail investors who own Capgemini’s stocks. The proposed dividend of €3.25 for each share is the cherry on the cake.

Solid Image Among The Clients And Investors

Capgemini has been a good investment choice for many reasons. Firstly, it has an extensive portfolio of products and services like cybersecurity, cloud, connectivity, artificial intelligence, and customer experience. Moreover, the company has immense expertise in leveraging these technologies to provide the best in world enterprise management. This helps Capgemini build excellent trust among potential and existing clients. As business tech becomes the future way of doing business, companies like Capgemini are expected to see more market demand. Compared to most IT companies, Capgemini has only added new staff instead of relieving them and has constantly outgrown its set targets in the last five years.

The enterprise management company has constantly held above 70 percent of business utilisation rates, and its operating margin touched 13 percent. These are the signs of a healthy and growing organisation and why experts predict that Capgemini shares will remain a good investment choice.

IT Giants Capgemini, Apple, And Microsoft Restrict Hiring Due To Slowdown In IT Sector

Capgemini joins large IT companies like Apple and Microsoft to significantly reduce new hiring ahead of risks like inflation, recession and slow growth. The CEO of Capgemini, Aiman Ezzat, said the company restricted new hiring due to stagnant demand for data intelligence and cloud services. “We are optimising our operation, taking advantage of the lower attrition and also factoring the fact that we have lower growth in front of us”, he stated. The chief executive added, “(I'm) not going to do a prediction regarding headcount growth, but to see our growth in 2023, we'll have to increase headcount.” Notably, Capgemini’s workforce increased by 11 percent in 2022, but the growth has been reduced to 0.3% since October 2022.

However, Capgemini is one of many IT companies fearing recession. Apple has been reportedly focussing on cutting costs and delaying bonuses for some corporate segments. According to Bloomberg, the company will limit the frequency of employee bonuses to once a year for specific divisions. Apple is also reluctant to hire new employees and plans to operate carefully in the post-pandemic business environment. Before this, Meta slashed jobs quoting it to improve the “financial performance in a difficult environment”. The Zuckerburg-led Meta had fired 11,000 employees some months ago, and the CEO disclosed that the company would continue the same suit. “We expect to reduce our team size by around 10,000 people and to close around 5,000 additional open roles that we haven't yet hired”, Mark added.

Google had slowed down new hiring by the second half of 2022. “Like all companies, we're not immune to economic headwinds…. we'll be slowing the pace of hiring for the rest of the year, while still supporting our most important opportunities”, Alphabet CEO Sundar had commented. As companies take drastic measures to cut costs, bad news has become more common for working individuals. Latest developments in Google indicate a new streak of layoffs in Google which might include the loss of payment for approved medical or maternity leave. Microsoft followed the same suit and laid off 1% of 180,000 employees.

What Does Capgemini Soft Revenue Guidance Imply For The IT Sector?

Even though Capgemini has experienced a strong booking rate and high revenue growth in the last quarter of FY2023, Capgemini’s predictions mean weak growth in revenue for most of the enterprises and small businesses in the year ahead. Although the demand for cloud services is still resilient, slow business growth in 2023 may impact that significantly. However, according to ICICI securities, there is a silver lining to the looming dark clouds. If experts at ICICI securities are to be believed, the offshore shift might continue to benefit Indian IT companies like Tata Consultancy Services and Infosys. Furthermore, these companies help clients optimise their costs and consolidate vendors. Experts suggested that share prices will continue to do well for TCS and Infosys, with target prices of Rs 3,834 and Rs 1,772, implying a rise of 11 percent and 12 percent, respectively.These IT companies show a high return potential in the share market and significant benefit to retail investors. Stockify features a diverse portfolio of trending unlisted shares of high-grossing IT companies like Tata Technologies and Capgemini Technology Services India. If you want to make good long-term investments, register with Stockify and make your first investment today!