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Earnings season has officially kicked off for the outsourcing group. Investors first taste were two conflicting earnings reports by Infosys and TCS. We agree that TCS' solid results would imply that Infosys has company specific challenges. However, the macro economic environment remains challenging for both. The macro doesn't discriminate. There are still plenty of reasons to be cautious on the investing front including the threat of pricing declines and contract cancellations. The one potential bright spot is that BPO appears to be holding up better than IT services on a comparative basis. Our Buy rated names are IBM, Accenture, Cognizant, Syntel, Virtusa, Genpact, WNS, and EXLService.
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Joseph D. Foresi
617-557-2972
