In the face of a recent sales slowdown, leading technology consulting firm Capgemini has found itself in the spotlight as investors closely monitor its performance. The company’s shares took a hit as concerns grew about its ability to navigate the changing market dynamics. However, amid the challenging times, Capgemini has unveiled a bold and ambitious strategy to regain momentum and secure its position as a frontrunner in the tech industry.
French IT consulting group Capgemini (CAPP.PA) posted weaker quarterly growth due to a slowdown across its regions, marked by a softer-than-expected U.S. market as clients cut costs. Its shares were down 5% at 10:50 GMT, the biggest decliner among French blue-chip stocks (.FCHI).
The U.S. market is a little bit softer than what we expected. We see more clients in cost cutting in the U.S., and that basically has put a bit more pressure on the U.S. market.
CEO Aiman Ezzat told analysts on a call.
In the second quarter, Capgemini experienced a growth of 5.2% in sales at constant exchange rates, a notable decrease from the 10.7% growth recorded in the first quarter. Notably, the revenue in the U.S., which is Capgemini’s second-largest market, increased by 3%, showing a slowdown compared to the 6.1% growth achieved in the previous quarter.
According to Chief Operating Officer Olivier Sevillia, certain industries witnessed a cautious approach from clients, leading them to adopt a “wait and see” attitude, particularly in the U.S. However, he clarified that clients were not entirely canceling deals but rather adjusting the timing of their orders. Regarding the possibility of a turning point in the future, Sevillia expressed that the fourth quarter might be premature for such a shift. He remained optimistic that once the conditions changed, the demand would rebound strongly.
With AI poised to reshape industries, including finance, healthcare, retail, and manufacturing, the company’s significant investment may position it as a key player in shaping the AI-driven digital transformation journey of businesses globally. By leveraging AI technologies, Capgemini aims to enhance its existing offerings and deliver tailored solutions that address complex business challenges in the digital age.