IT firm Capgemini raises 2021 targets on booming tech demand

French consulting and IT services provider Capgemini raised its 2021 guidance on Wednesday as it benefits from a global surge in demand for tech and cloud-based solutions that picked up speed during the pandemic.

The company now expects 2021 revenues to be up between 12% and 13%, an operating margin of 12.5% to 12.7% and an organic free cash flow above 1.5 billion euros ($1.77 billion).

It had previously forecast 2021 revenue growth in a range of 7% to 9%, an operating margin of 12.2% to 12.4%, and an organic free cash flow above 1.3 billion euros.

"These results are underpinned by two factors: a structural acceleration in client demand for technology and the relevance of our strategic direction," Chief Executive Officer Aiman Ezzat said in a statement.

Capgemini reported strong growth in its infrastructure and cloud services, helping to bring sales in its operations and engineering business up over 10% in the second quarter.

With employees having to work from home during extended pandemic restrictions and consumers moving further toward online services, companies had to accelerate their shift to digital platforms in order to keep their businesses afloat.

The European tech index reached an all-time high in July, and was up about 20% in the first half.

French peer Dassault Systemes and U.S. rival Accenture also raised their 2021 forecasts, betting on strong demand for their digital and cloud services from businesses looking to strengthen their operations as they work remotely.

Capgemini's sales rose 14.9% to 8.71 billion euros in the first six months of 2021, bringing its net profit to 443 million euros, up 42%.

($1=0.8460 euros)

 

(Reporting by Kate Entringer and Sarah Morland in Gdansk; Editing by Jacqueline Wong and Subhranshu Sahu)