(Corrects headline to say company raised full-year revenue forecast, not fourth quarter)
Oct 30 (Reuters) - Cognizant Technology Solutions Corp on Wednesday announced plans to cut costs as it looks to offset a decline in spending by financial companies on its information technology services, and also raised its full-year revenue forecast.
Shares of the company were up 7% in trading after the bell.
The company expects to save at an annual rate of about $500 million to $550 million by 2021, “primarily related to severance and facility exit costs”.
The company has been cutting down on its workforce and has made major changes to its senior management to help achieve its earlier target of annualized savings of $65 million in 2019.
The New Jersey-based company had said that it will slow down the process of hiring, anticipating muted spending in the banking sector to continue through the second half of the year.
As margins in the IT industry decline, companies are looking to augment their cloud-based services with the global cloud market poised to hit $249.8 billion in 2020, according to research firm Gartner.
In a cloud push, Cognizant said earlier this month that it will acquire technology consultancy company Contino Limited, its second acquisition since Chief Executive Officer Brian Humphries took over the reins earlier this year.
Revenue from the financial services segment rose 1.9% to $1.49 billion while that from healthcare services dropped 1.2% to $1.18 billion. The two segments make up more than half of the company’s total revenue.
Cognizant said it expected current-quarter revenue between $4.20 billion and $4.24 billion, compared with analysts’ estimate of $4.22 billion, according to IBES data from Refinitiv.
The company forecast full-year 2019 revenue growth between 4.6% and 4.9% from an earlier outlook of growth between 3.9% and 4.9%.
The information technology services provider reported net income of $497 million, or 90 cents per share, in the quarter ended Sept. 30, up from $477 million, or 82 cents per share, a year earlier.
Excluding items, the company earned $1.08 per share, above estimates of $1.05 per share. (Reporting by Neha Malara in Bengaluru; Editing by Shailesh Kuber)
Our Standards: The Thomson Reuters Trust Principles.