IT Services_ 1Q25 CIO Survey Preview - Lowered IT Services Growth Expectations in March Consistent with Recent Market Moves

Summary of the Conference Call Notes Industry Overview - Industry: IT Services in North America - Growth Expectations: IT Services growth expectations have slightly decelerated, with a headline growth rate of +2.6% year-over-year (y/y) in 2025, down from +2.8% in 4Q24 [1][2][8]. Key Insights - CIO Survey Findings: - The CIO survey indicates a bifurcation in growth expectations based on the timing of responses. - For respondents polled between February 10 and February 20, growth expectations increased by +23 basis points (bps) to +3.0% y/y, while those polled from February 21 to March 10 saw a decrease of (59) bps to +2.2% y/y [2][10][13]. - Company-Specific Estimates: - The estimates for Cognizant Technology Solutions Corp (CTSH) have been lowered in line with the CIO survey data, reflecting concerns over bookings not showing the expected acceleration. The organic growth estimate for CY25 has been revised down by (100 bps) to +2.4% y/y constant currency (cc) [2][3]. - Market Reaction: - Following Accenture's (ACN) earnings report on March 20, the stock experienced a decline of approximately (7)% due to cautious management commentary regarding bookings growth and macroeconomic uncertainties [3][6]. Additional Observations - Defensibility of IT Projects: - Digital Transformation has been identified as the fourth most defensive tech priority, indicating a shift in decision-making delays observed in early March. Strategic consulting remains the least defensive priority with a net score of -8%, although it has improved from -10% in the previous quarter [7][12]. - Bookings Growth: - Bookings growth in the February quarter was flat y/y cc, significantly below consensus estimates of +6% y/y reported growth. The uncertainty in the market is contributing to uneven bookings activity [6][8]. Conclusion - The IT Services sector is facing a cautious outlook with decelerating growth expectations and mixed signals from CIO surveys. Companies like CTSH are adjusting their forecasts in response to these trends, while market reactions to earnings reports reflect heightened sensitivity to management commentary on bookings and macroeconomic conditions.