The outsourcing space is facing two factors heading into 2013. The first is the macro. The space is at a critical juncture with price declines taking place, but contained to specific verticals (capital markets). If the macro remains stable, then the problem is contained, but if it deteriorates we could see pricing discounts spread. The macro appears to be holding up as of our latest checks. The second is the maturity of the space with commoditization taking place causing a bias to the names further up the value chain. Both factors are hard to measure, but will be our focus in the upcoming months as they are crucial to gauging growth. Our BUY rated names are IBM, Accenture, Cognizant, Syntel, Virtusa, Genpact, WNS, and EXLService.
For more information, please contact:
Joseph D. Foresi