The rising demand for business process outsourcing (BPO), driven by its flexibility and low costs, supports 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 Barrett Business Services, Inc. (BBSI Quick QuoteBBSI - Free Report) , The Brink's Company, Inc. (BCO Quick QuoteBCO - Free Report) and Capgemini SE (CGEMY Quick QuoteCGEMY - Free Report) from the Outsourcing market.

About the Industry

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.

What's Shaping the Future of the Outsourcing Industry?

Consistent Growth in Business Process & IT Outsourcing: The BPO services witness higher demand due to greater flexibility, lower costs and improved service quality. Our long-term outlook is that 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 entire IT departments to lower costs and 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.

Zacks Industry Rank Indicates Bright Near-Term Prospects

The Zacks Outsourcing industry, which is housed within the broader Zacks Business Services sector, currently carries a Zacks Industry Rank #35. This rank places it in the top 14% of 246 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.

Industry Underperforms Sector & S&P 500

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 1.9% over this period against the broader sector and the Zacks S&P 500 composite’s 3.7% and 17.7% growth, respectively.

1-Year Price Performance

Industry's Trades Cheaper Than Sector & S&P 500

On the basis of forward 12-month price-to-earnings (P/E), commonly used for valuing outsourcing stocks, the industry is currently trading at 16.43X compared with the S&P 500’s 23.34X and the sector’s 21.4X.

In the past five years, the industry has traded as high as 19.28X and as low as 15.52X, with the median being 16.9X, as the charts below show.

Price-to-Forward 12 Months’ P/E Ratio

3 Promising Outsourcing Stocks

Brink: This company provides cash and valuables management services, digital retail solutions, and ATM managed services. Strong organic revenue growth across segments and business lines aids the company. Brink is showing promising growth across the North American region with an organic growth rate of 5% in the second quarter of 2025.

In the June quarter, the company reported operating income growth of $9 million and a margin expansion of 20 basis points from the year-ago quarter. Factors, including strong productivity, revenue mix benefits and a prudent pricing strategy, drove this growth.

BCO’s global services division contributed to the increase in cash and valuable management, driven by strong demand for precious metals. The company’s customer acquisition efforts seem successful, as shown by the onboarding of new ATM managed services clients, including Sainsbury Bank in the U.K. and other major North American convenience store chains.

The Zacks Consensus Estimate for the company’s 2025 EPS of $7.95 has been flat over the past 30 days.

Brink flaunts a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here. 

Barrett Business Services: This company is a Professional Employer Organization and staffing service provider. New client sales, new products’ expanded adoption and strong client retention support the company’s financial performance. In the second quarter of 2025, BBSI touched a record number in worksite employees added from new clients, marking a year-over-year increase of 10,100.

On the product end, revenues were primarily driven by the BBSI Benefits health insurance offering. Investments made in the tech stack, including the launch of BBSI Applicant Tracking, are designed to gain an edge over its competitors. The company has expanded successfully in Chicago and Dallas, banking on its asset-light model.

The Zacks Consensus Estimate for the company’s 2025 EPS of $2.19 has been flat over the past 30 days.

Barrett Business Services carries a Zacks Rank #2 (Buy) at present.

Capgemini:This is a services and consulting company that helps organizations globally to transform or manage their businesses. Robust commercial momentum, and focus on areas such as GenAI, Cloud computing and geographies with high growth rates supported this company’s growth.

In the second quarter of 2025, the company held on to strong commercial momentum with a robust book-to-bill ratio of 1.08. High traction was experienced by the company as a business and tech transformation partner for clients primarily in high-value services in Cloud and Data, and AI. GenAI and Agentic AI aided the company’s performance with a contribution of nearly 7% in the second quarter of 2025 booking.

The Operations and Engineering business witnessed solid internal progress, with Business Services recording high-single-digit growth in the June quarter.

The Zacks Consensus Estimate for the company’s 2025 EPS has been revised up 1.2% to $2.57 over the past 30 days.

CGEMY has a Zacks Rank #3 (Hold) at present.