Tata Consultancy Services (TCS) has issued a warning about the weakening technology spending environment in the United States following disappointing earnings.

The company reported a 7.9% increase in sales to 596.9 billion rupees and an 8.7% rise in net income to 113.4 billion rupees ($1.4 billion) for the quarter ending in September. However, this fell short of analysts’ projections, leading to a 1.7% decline in TCS shares in early Mumbai trading.

TCS, a leader in India’s $245 billion-plus IT services industry, anticipates a slowdown as U.S. and global enterprises reduce technology spending due to higher interest rates and inflation. The ongoing conflict between Russia and Ukraine has also contributed to economic uncertainty for businesses. Similar to its domestic competitor Infosys Ltd., TCS aims to boost growth through higher-margin digital services.

According to N Ganapathy Subramaniam, TCS’s Chief Operating Officer, “The demand environment is under pressure in the U.S. market. In this quarter, we’ve signed about $4 billion worth of deals in North America, which is a tad low.”

Customers are initiating projects expected to yield visible results within one or two quarters while deferring longer-term endeavors, Subramaniam explained.

TCS CEO K Krithivasan noted that “IT industry growth has moderated, and till there’s a certainty on the global economic outlook, this moderation will continue because many customers will try to conserve cash for a difficult period ahead if they expect a difficult period.”

In response to these challenges, TCS approved a share buyback program worth up to 170 billion rupees. CEO Krithivasan previously restructured the company in June to enhance profitability in areas like artificial intelligence and cloud computing.

TCS has organized its operations into seven business groups covering various sectors, including banking, finance, insurance, healthcare, energy, and retail.