2 Stocks for You to Buy From the Growing Outsourcing Market

Industry Overview - The Zacks Outsourcing industry is benefiting from increasing demand for business process outsourcing (BPO) due to its flexibility and cost reduction [1] - Outsourcing allows companies to delegate internal operations to external resources, enhancing operational efficiency, particularly for small and medium-sized enterprises [2] - The industry includes services such as HR support, payroll management, and business process services focused on transaction processing and analytics [2] Current Trends - There is consistent growth in BPO and IT outsourcing driven by flexibility, lower costs, and improved service quality, with a long-term outlook indicating a broad range of outsourced IT functions [3] - The urgency for robust cybersecurity measures is rising due to increased public awareness and evolving cyber threats, leading businesses to seek outsourced cybersecurity services [4] - Innovations like IoT, cloud computing, AI, and ML are transforming the outsourcing landscape, improving efficiency and competitiveness [5] Industry Performance - The Zacks Outsourcing industry currently holds a Zacks Industry Rank of 102, placing it in the top 42% of 243 Zacks industries, indicating bright near-term prospects [6] - Over the past year, the industry has underperformed compared to the broader Zacks Business Services sector and the S&P 500, declining by 33% while the sector dipped by 9.4% and the S&P 500 rose by 16.7% [8] Valuation Metrics - The industry is trading at a forward 12-month price-to-earnings (P/E) ratio of 16.11X, lower than the S&P 500's 23.27X and the sector's 20.78X [11] Company Highlights TriNet (TNET) - TriNet provides human capital management services and reported an adjusted EPS of $1.11 in Q3 2025, driven by effective expense management [15] - The company achieved an all-time high Net Promoter Score, indicating strong client retention, and launched an AI-powered suite to enhance HR services [16] - TNET's preferred broker program has led to double-digit growth in proposals, with a Zacks Consensus Estimate for 2026 EPS rising by 8.7% to $4.64 [17] - TriNet currently holds a Zacks Rank of 1 (Strong Buy) [18] Capgemini SE (CGEMY) - Capgemini offers digital transformation services and saw strong demand in Q3 2025, particularly for cloud and AI solutions, leading to significant deal wins [18] - The company completed a bond issuance for the WNS buyout, which was oversubscribed more than three times, indicating strong market confidence [19] - The Zacks Consensus Estimate for CGEMY's 2025 EPS has been revised up by 6.5% to $2.64, with shares gaining 10.2% over the past month [20] - Capgemini currently holds a Zacks Rank of 2 (Buy) [20]