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By Matteo Allievi and Victor Goury-Laffont
May 4 (Reuters) - French IT consulting group Capgemini on Thursday reported weaker revenue growth in the
first quarter of 2023, compared with the year-ago period, citing
a tense economic environment with clients adopting a
"wait-and-watch stance".
Still, the company's quarterly revenue reached 5.73 billion
euros ($6.35 billion), 10.9% above the first three months in
2022.
Cloud services for years have been one of the largest
sources of growth for some of the biggest tech companies, but
investors are now looking to see whether there is a glut in
capacity that will lead to investment cuts as companies deal
with rising costs amid soaring inflation, while interest rate
hikes have squeezed consumer demand.
The sector downturn forced tech giants including
Alphabet , Microsoft , Meta and Amazon to slash jobs.
Capgemini, which offers consulting, digital, technical
and engineering services, in February announced plans to ease
hiring after growing its workforce by 11% in 2022, pointing to
the sluggish demand for artificial intelligence, data and cloud
services.
At the end of March, the pace of expansion had dropped
to 5% year-on-year with a headcount of 357,000 workers.
"We will start recruiting again later this year to
achieve our growth targets", Capgemini's CEO Aiman Ezzat told
reporters.
The Paris-based company reiterated its outlook for 2023,
pointing to revenue growth in a range between 4% and 7% in
constant currency terms, down from a 21.1% increase in 2022, and
an operating margin between 13.0% and 13.2%.
"The economic context remains tense (...) It's all about
postponements, but our clients' agenda hasn't changed, digital
transformation remains their priority", Ezzat added.
Growth in new hires remains strong in tech products, the
CEO specified, including research on generative AI.
Late last month, German competitor SAP announced plans
to embed OpenAI's chatbot ChatGPT into its products.
Capgemini remains more cautious on AI development, with
Ezzat stating that "when adopting a new technology, it takes
times to find the specific ways of using it to generate high
margins".
($1 = 0.9024 euros)
(Reporting by Matteo Allievi and Victor Goury-Laffont in
Gdansk; Editing by Muralikumar Anantharaman, Sherry
Jacob-Phillips and Kim Coghill)
victor.goury-laffont@thomsonreuters.com))
