Cognizant Technology Solutions Corp forecast first-quarter sales below estimates, and said it does not expect Europe to rebound in 2012, but sees flat to marginally higher IT budgets in the United States.

Shares of the IT services provider, which gets more than three-quarters of its total revenue from the United States, fell 3 percent in early trade but recovered some of the losses later.

The company, which is seeing discretionary spending delays in Europe, called the economic volatility in the region "concerning" and said some financial institutions were relocating certain operations to other geographies.

"The macroeconomic issues in Europe continue to result in some volatility and constraints on discretionary spending, particularly in life sciences and financial services," its newly appointed President Gordon Coburn said on a conference call with analysts.

Cognizant, however, said Europe remained attractive over the longer term, as companies looking to downsize sought out services from IT firms.

Earlier this month, market research firm Gartner forecast 2012 global IT spending will grow at the slowest pace in three years, as Europeans cut back on investments.

Gartner expects global IT spending to rise 3.7 percent in 2012, down from its earlier estimate of 4.6 percent. The forecast for Western Europe was slashed to a 0.7 percent drop in spending, from a previously expected rise of 3.4 percent.

REVENUE MISS

For the first quarter, Cognizant projected sales of $1.70 billion, lower than analysts' expectation of $1.72 billion, according to Thomson Reuters I/B/E/S.

However, Cognizant's outlook was higher than its closest Indian rival Wipro's IT services revenue expectations of $1.52 billion to $1.55 billion for the March quarter.

Last month, Wipro and its bigger Indian rival Infosys Ltd predicted that global economic uncertainties and the European debt crisis could lead to order delays and cuts in technology spending.

Cognizant's fourth-quarter revenue missed estimates for the first time in more than two years.

Separately, the company said it promoted Karen McLoughlin as chief financial officer, in place of Gordon Coburn. Coburn will become its president.

Cognizant's fourth-quarter net income rose to $240.1 million, or 78 cents a share, from $206.2 million, or 66 cents a share, last year.

The company, which has never posted earnings below Wall Street estimates for at least nine quarters in a row, earned 84 cents a share, excluding items -- higher than analysts estimate of 82 cents a share.

Cognizant shares, which have gained more than 30 percent in value since touching a year-low of $53.54 in August, were down 1.6 percent at $70.85 in volatile morning trade on Wednesday on the Nasdaq. They fell to $69.65 earlier in the session.