In a sign that technology spending by American companies is slowly returning—and that the economic recovery is on track—information-technology companies have reported surprisingly upbeat earnings this quarter.
So far this earnings season, IT outsourcing firms Infosys, Wipro and Tata Consultancy Services have all beat Wall Street's expectations on earnings.
And on Tuesday, Cognizant, one of the biggest players in the sector, bested estimates by 2 cents, thanks to a 7 percent jump in sales over the previous quarter to $2.2 billion. "Cognizant continues to execute well in an improved spending environment, especially in the U.S.," said Keith Bachman, an analyst at BMO Capital.
Investing pros and analysts typically look to earnings from IT services firms for clues as to how corporations are putting their cash to use—whether to improve efficiency, cut costs, build a new product line or some other strategy.