KPMG held its 2Q12 Global Sourcing Advisory Pulse Survey. The outsourcing business is turning into a winners versus losers game, as customers are looking for solutions vs. labor arbitrage. Demand for vertical BPO is healthy particularly in F&A. The pricing environment eased, but the vendors’ ability to increase profitability remains challenging. Overall demand remains muted. The movement toward solutions versus labor arbitrage favors our coverage with consulting capabilities – BUY rated Accenture (55% consulting) and IBM (18% consulting). Positive BPO demand trends favor BUY rated EXLService, WNS, and Genpact.
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Joseph D. Foresi