IT firm Capgemini expects flat growth in 2025 as demand remains weak
Growth in Capgemini's main markets, North America and France-which accounted for nearly half of the company's revenue in 2024-fell by 1.6 per cent and 5.8 per cent, respectively
 "IT firm Capgemini expects flat growth in 2025 as demand remains weak")
French IT services company Capgemini said that discretionary spending among clients will remain subdued at least for the next six months as the overall macroeconomic environment remains uncertain and volatile.
The company expects little to no growth for 2025. Revenue for the full year is expected to either drop 2 per cent or grow 2 per cent with operating margin between 13.3-13.5 per cent.
Growth in North America and France — which accounted for nearly half of the company's revenue in 2024 — fell 1.6 per cent and 5.8 per cent, respectively, in the fourth quarter on a constant currency basis as revenue from manufacturing slowed.
Manufacturing, which contributed 27 per cent to the top line last year, dropped 6.1 per cent and 3 per cent for the full year. Like Cognizant, Capgemini's financial year is the same as a calendar year.
"We remain cautious, notably around manufacturing and Europe, and expect H12025 constant currency revenue growth to remain in the same range as Q42024," chief executive Aiman Ezzat said in a post-result analyst call.
Ezzat said financial services, consumer goods and retail business have seen some green shoots where client spending has picked up. "Client demand continues to be driven by efficiency, operational agility and cost-optimization programmes which are driving traction for our cloud and data & AI services. Generative AI supported strong bookings and accounted for around 5 per cent of bookings in Q4," he added.
IT services companies have been working with clients on various GenAI projects which are mainly at a proof of concept (PoC) stage. The deal sizes continue to be small as companies try to figure out how best to use the technology.