(Reuters) - Cognizant Technology Solutions (NASDAQ:CTSH) forecast fourth-quarter revenue below Wall Street estimates on Wednesday, as clients tighten their IT budgets in an uncertain economy, sending its shares down more than 3% in extended trading.
The Teaneck, New Jersey-based company expects current-quarter revenue between $4.69 billion and $4.82 billion, compared with market estimates of $4.86 billion, according to LSEG data.
Rising borrowing costs and fears of a slowdown are driving most companies to keep a tight leash on their spending, especially on non-core IT functions, which have been a lucrative revenue stream for technology service providers.
Indian IT services giants Infosys (NS:INFY) cut the upper end of its annual revenue forecast earlier in Oct, raising concerns about near-term demand, while Tata Consultancy Services (NS:TCS) reported weaker-than-expected quarterly revenue.
Rival Accenture (NYSE:ACN) also forecast full-year earnings and first-quarter revenue below Wall Street targets in late Sept.
Cognizant now expects annual revenue in the range of $19.3 billion to $19.4 billion, compared with its prior estimates of $19.2 billion to $19.6 billion.
"We have narrowed our full-year revenue guidance range, which now reflects recent discretionary spending pressure and its impact to our near-term revenue expectations," CFO Jan Siegmund said in a statement.
The company expects annual adjusted profit per share in the range of $4.39 to $4.42, from its prior estimate of between $4.25 and $4.48.
Revenue for the third quarter stood at $4.90 billion, slightly below estimates of $4.91 billion.
The company reported a profit of $1.04 per share, compared with $1.22 per share a year earlier.