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Chicago, IL – December 24, 2025 – Today, Zacks Equity Research discusses TriNet TNET and Capgemini SE CGEMY.
Link: https://www.zacks.com/commentary/2807791/2-stocks-for-you-to-buy-from-the-growing-outsourcing-market
The increasing demand for business process outsourcing (BPO), driven by its flexibility and reduced costs, aids the Zacks Outsourcing industry. The upsurge in data encryption and cybersecurity risks necessitates the need to pivot toward outsourcing. Trends like the Internet of Things (IoT), cloud computing, Artificial Intelligence (AI) and Machine Learning (ML) are transforming the sector.
Investors can consider TriNet and Capgemini SE from the Outsourcing market.
Outsourcing involves delegating a company's internal operations to external resources or third-party contractors to enhance operational efficiency. Within the Zacks Outsourcing sector, one can find companies that provide human capital, business management and IT solutions, primarily catering to small and medium-sized enterprises. These services encompass a broad spectrum, including HR support, payroll management, administration of benefits, retirement planning and insurance services.
Certain firms excel in delivering business process services, with a strong focus on transaction processing, analytics and global automation solutions. This outsourcing approach empowers businesses to concentrate on their core competencies while external experts manage these critical functions.
Consistent Growth in Business Process & IT Outsourcing: BPO services witness higher demand due to greater flexibility, lower costs and improved service quality. Per our long-term outlook, outsourced IT services will cover a wide array of functions, including programming and technical support, which will boost their demand. This will enable companies to outsource their entire IT departments, lowering costs and allowing them to focus on core operations. The shortage of in-house engineering talent will drive the outsourcing trend.
Urgency of Cybersecurity Measures: The demand for robust data encryption and cybersecurity measures is increasing on the back of heightened public awareness and changing cyber threats, such as ransomware and national-level cyberattacks. To mitigate cybersecurity threats, companies are focusing on employee security awareness training and breach detection systems. Businesses are increasingly turning to outsourced cybersecurity services to lower risks, maintain compliance and support scalability in their operations.
Changing Industry Trends: The outsourcing sector is being transformed by trends such as IoT, cloud computing, AI and ML. These innovations improve efficiency, support innovation and increase competitiveness, transforming the outsourcing landscape for businesses to streamline operations.
For instance, IoT data can be collected, processed and analyzed in the cloud, enabling real-time decision-making and predictive maintenance for clients. By integrating AI and ML into customer support outsourcing, companies can provide swifter, effective and consistent customer support while optimizing operational costs.
The Zacks Outsourcing industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #102. This rank places it in the top 42% of 243 Zacks industries.
The group's Zacks Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates continued underperformance in the near term. Our research shows that the top 50% of Zacks-ranked industries outperformthe bottom 50% by a factor of more than two to one.
Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry's recent stock market performance and current valuation.
Over the past year, the Zacks Outsourcing industry underperformed the broader Zacks Business Services sector and the Zacks S&P 500 composite.
The industry has declined 33% over this period compared with the broader sector's 9.4% dip and against the Zacks S&P 500 composite's 16.7% rally.
On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing outsourcing stocks, the industry is currently trading at 16.11X compared with the S&P 500's 23.27X and the sector's 20.78X.
In the past five years, the industry has traded as high as 33.22X and as low as 4.94X, with the median being 17.17X.
TriNet: The company provides human capital management services for small and medium-sized businesses. In the third quarter of 2025, TNET displayed operational efficiency and ensured high-quality value creation. The company registered an adjusted EPS of $1.11, fueled by prudent expense management and pricing.
It impressively showed an all-time high Net Promoter Score during the aforementioned quarter, highlighting strong client retention. The company launched an AI-powered suite of capabilities that yields HR knowledge and delivers bespoke output for its customers. We anticipate this offering to generate more client wins, improving client retention.
TNET's preferred broker program comprises four national partners that align with sales and retention targets, resulting in double-digit growth in requests for proposals. Moreover, conversion rates of the Administrative Services Organization surpass the company's forecasts, highlighting robust demand for TriNet's offerings.
The Zacks Consensus Estimate for the company's 2026 EPS of $4.64 has risen 8.7% over the past 60 days. Shares of TriNet have increased 2.4% over the past month.
TNET flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Capgemini: This company provides digital transformation services, consulting, engineering and technology services. In the third quarter of 2025, consistent demand for cloud, digital core, data estate modernization and AI and GenAI solutions drove its top line. Robust deal wins resulted in pushing GenAI and Agentic AI to more than 8% of group bookings.
The company's offshore leverage was 60% in the third quarter of 2025, fueled by strong traction in segments with higher offshore leverage, including Financial Services, North America and the U.K. region. In September, CGEMY completed the bond issuance to finance the WNS buyout and this offering was oversubscribed more than three times, resulting in impressive pricing.
This acquisition positions the company to lead the Intelligent Operations market and generate profitable growth by operating within the fast-paced demand for Agentic AI-powered business operations.
The Zacks Consensus Estimate for the company's 2025 EPS has been revised 6.5% up to $2.64 over the past 60 days. CGEMY shares have gained 10.2% over the past month.
CGEMY has a Zacks Rank #2 (Buy) at present.
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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.
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This article originally published on Zacks Investment Research (zacks.com).
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