Top Takeaways: Sentiment Turns More Cautious | Market Analysis

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1. Cognizant Extends Deal with ING U.S. (06/14/12). The deal was expanded to $330 mn/7 yrs. CTSH will hire 1,000 ING U.S. employees. Every little bit counts in a challenging 2012 environment.

2. Infosys Delays Hiring Process (06/18/12). Infosys delayed the completion of the hiring of entry-level employees (28K campus offers) by three months originally scheduled for March 2013. The delay raises concerns regarding business prospects coming on the heals of a postponement in wage hikes. In related news, IT hiring seems to have slowed (06/18/12).

3. Emerging Markets-Go Where the Growth Is! (06/19/12). Emerging market exposure is a positive. Takeaways: Outlook better for emerging vs. mature markets given the growth rates, contract size, and pricing, India still premier destination for outsourcing over China, & best positioned IBM (IBM; BUY) & ACN (ACN;BUY) & VanceInfo (VIT; NEUTRAL).

4. EXLService Board Member from Oak Hill Resigns (06/19/12). Mr. Edward V. Dardani, a member of the Nominating & Governance Committee, resigned from EXLS’s Board of Directors on June 15th. Mr. Dardani works at Oak Hill who recently divested itself of its position in EXLS. Oak Hill’s lone remaining representative is on the board is .

5. WNS Buys Fusion Outsourcing Services, 1,500 Person South African Based BPO Provider (06/21/12). WNS paid $15.6 mn. The acquisition will add $9-$10 mn in Fiscal 2013 ($3 mn per qtr; +3% to annual revenue). It will be neutral to earnings in FY13 and accretive in FY14.

6. BPO Environment Remains Healthy (EXLS; BUY) 06/21/12. Takeaways: demand for BPO remains healthy with no slowdown of deal flow or elongation of sales cycles, currency movement should be neutral to EXLS’ earnings, and valuation for EXLS is compelling.

7. European IT Spending Slows-CIO.com (06/21/12). A Forrester report says European IT spending will grind to a halt this year (0.3% growth this yr) and next due to economic uncertainty. IT outsourcing will show “meaningful” albeit “mediocre” spending for 2012. IT outsourcing and maintenance spending will rise 3.3% in Euros in 2012.

 

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