French IT consulting group Capgemini has forecast weaker revenue growth and said it would slow down hiring in 2023 amid a tech sector downturn.
The company offers consulting, digital, technical and engineering services.
Poor macroeconomic situation
Slowing growth, soaring inflation and a looming recession has been forcing many tech companies including U.S. giants Alphabet, Microsoft and Amazon to make massive cuts in jobs.
India is undergoing a similar situation as well, with IT companies here exercising caution about hiring and onboarding already hired talent.
Meagre percentage of staff growth
Capgemini grew its workforce by 11% in 2022, reaching a headcount of 359,600 at the end of December.
However, the percentage of growth in staff was a mere 0.3% from the end of September.
More than half the headcount works at offshore locations, and most of that is in India.
Boss explains factors behind slowed hiring
Chief Executive Aiman Ezzat said the group had slowed hiring in response to sluggish demand for cloud, data and artificial intelligence services.
He said, “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.”
Utilisation of existing talent
He did not reveal anything about the firm’s hiring plans this year, but said focus is on utilisation.
“We are expecting lower growth in 2023. With that we are trying to optimise utilisation,” he said.
“(I’m) not going to do a prediction regarding headcount growth, but to see our growth in 2023, we’ll have to increase headcount”, he went further.
2023 Revenue growth
The firm expects revenue growth in 2023 to fall in the range of between 4% and 7% in constant currency, compared with 16.6% last year.
This is above the 2022 target range of 14% to 15%, which was revised upwards on the publication of the half-year results.
2023 Operating margin
Its annual revenue reached 22 billion euros ($23.48 billion) on bookings of 23.7 billion euros, an increase of 16.8% at constant exchange rates.
Furthermore, it has forecast 2023 operating margin in a range of 13.0% to 13.2%, and organic free cash flow of around 1.8 billion euros.
