We are taking a cautiously optimistic approach to the outsourcers June quarter results. The demand environment remains mixed with pockets of strength (North America, BFSI, & BPO) and weakness (EMEA, Telecom, & Consulting). The good news is BPO remains a bright spot. Earnings results are expected to be positively impacted by currency depreciation. Investor’s will be focused on the pace of discretionary spending and further color on the potential visa reform which continues to be an overhang. Our investment philosophy has a defensive tone to it. We favor BPO given the positive maturity inflection point-BUY-Genpact (G), WNS (WNS), & EXL (EXLS). We like the high quality names like BUY-rated Accenture (ACN) and Cognizant (CTSH). Virtusa (VRTU) remains in an advantageous spot given the combination of better-than-industry growth rates and margin expansion.
For more information, please contact:
Joseph D. Foresi