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Here Are 2 Stocks to Buy From the Growing Outsourcing Market
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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 (TNET - Free Report) and Barrett Business Services (BBSI - 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: 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 amid heightened public awareness and evolving 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 reduce 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 #112. This rank places it in the top 45% of 247 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 outperform the 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 36.5% over this period compared with the broader sector’s 22.9% dip and against the Zacks S&P 500 composite’s 27.5% rally.
1-Year Price Performance
Industry 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 16.72X compared with the S&P 500’s 21.43X and the sector’s 16.88X.
In the past five years, the industry has traded as high as 33.22X and as low as 4.94X, with the median being 16.92X, as the charts below show.
Price-to-Forward 12 Months’ P/E Ratio
2 Outsourcing Stocks Poised for Growth
TriNet: This human capital management service provider for the U.S.-based small and medium-sized businesses registered an impressive start to 2026, delivering $2.48 in adjusted EPS, rising 24.6% year over year. The strength in operational performance was fueled by prudent expense management and a health fee repricing strategy that brought all customers at par with the historical risk practices.
Management expects to register an adjusted EPS of $2.15-$3.05 for 2026, and the fact that the company is tracking toward the top half of the outlook bolsters strength in future profitability. The company delivered a solid insurance performance, yielding an 84% insurance cost ratio, strengthened by lower-than-forecast health trends and one-time claim development from 2025.
TNET witnessed 12% year-over-year growth in Request for Proposal (RFP) in the first quarter of 2026. Robust growth in RFP can be attributed to the company’s broker strategy providing an impetus to the deal flow.
The company entered partnerships and acquired Cocoon, improving its product ecosystem. TriNet’s operational prowess was further elevated by the rollout of TriNet Assistant, a gen-AI tool that mitigates inbound volumes during tax season, lowering inbound customer contracts by 6%.
The Zacks Consensus Estimate for the company’s 2026 EPS of $4.6 remained unchanged over the past 30 days. TNET shares have gained 33.3% over the past month.
Barrett Business Services: BBSI offers business management solutions for the U.S.-based small and mid-sized companies. The company witnessed a 5% year-over-year gain in its top line in the first quarter of 2026. Despite macroeconomic setbacks, the company achieved a 1.9% year-over-year increase in its total worksite employees, fueled by robust sales volume and client retention that surpasses historical averages.
On a regional basis, the East Coast delivered double-digit growth for the 20th time in a row and the Pacific Northwest returned to growth. This growth was further bolstered by BBSI’s asset-light geographic expansion, adding nearly 550 worksite employees.
The company secured a 93% book renewal rate, adding nearly 140 clients and 3,500 participants. A promising California workers’ compensation pricing environment is expected to aid profitability and margins. With the successful rollout of products like employee file cabinet and performance management modules, the company strengthened its balance sheet with $92 million in cash as of the end of the first quarter of 2026 against zero current debt.
The Zacks Consensus Estimate for the company’s 2026 EPS has been unchanged at $1.88 over the past 30 days. BBSI shares have gained 27.8% over the past month.
BBSI currently has a Zacks Rank of #3 (Hold).
Price and Consensus: BBSI
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Here Are 2 Stocks 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 (TNET - Free Report) and Barrett Business Services (BBSI - 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: 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 amid heightened public awareness and evolving 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 reduce 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 #112. This rank places it in the top 45% of 247 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 outperform the 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 36.5% over this period compared with the broader sector’s 22.9% dip and against the Zacks S&P 500 composite’s 27.5% rally.
1-Year Price Performance
Industry 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 16.72X compared with the S&P 500’s 21.43X and the sector’s 16.88X.
In the past five years, the industry has traded as high as 33.22X and as low as 4.94X, with the median being 16.92X, as the charts below show.
Price-to-Forward 12 Months’ P/E Ratio
2 Outsourcing Stocks Poised for Growth
TriNet: This human capital management service provider for the U.S.-based small and medium-sized businesses registered an impressive start to 2026, delivering $2.48 in adjusted EPS, rising 24.6% year over year. The strength in operational performance was fueled by prudent expense management and a health fee repricing strategy that brought all customers at par with the historical risk practices.
Management expects to register an adjusted EPS of $2.15-$3.05 for 2026, and the fact that the company is tracking toward the top half of the outlook bolsters strength in future profitability. The company delivered a solid insurance performance, yielding an 84% insurance cost ratio, strengthened by lower-than-forecast health trends and one-time claim development from 2025.
TNET witnessed 12% year-over-year growth in Request for Proposal (RFP) in the first quarter of 2026. Robust growth in RFP can be attributed to the company’s broker strategy providing an impetus to the deal flow.
The company entered partnerships and acquired Cocoon, improving its product ecosystem. TriNet’s operational prowess was further elevated by the rollout of TriNet Assistant, a gen-AI tool that mitigates inbound volumes during tax season, lowering inbound customer contracts by 6%.
The Zacks Consensus Estimate for the company’s 2026 EPS of $4.6 remained unchanged over the past 30 days. TNET shares have gained 33.3% over the past month.
TNET sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Price and Consensus: TNET
Barrett Business Services: BBSI offers business management solutions for the U.S.-based small and mid-sized companies. The company witnessed a 5% year-over-year gain in its top line in the first quarter of 2026. Despite macroeconomic setbacks, the company achieved a 1.9% year-over-year increase in its total worksite employees, fueled by robust sales volume and client retention that surpasses historical averages.
On a regional basis, the East Coast delivered double-digit growth for the 20th time in a row and the Pacific Northwest returned to growth. This growth was further bolstered by BBSI’s asset-light geographic expansion, adding nearly 550 worksite employees.
The company secured a 93% book renewal rate, adding nearly 140 clients and 3,500 participants. A promising California workers’ compensation pricing environment is expected to aid profitability and margins. With the successful rollout of products like employee file cabinet and performance management modules, the company strengthened its balance sheet with $92 million in cash as of the end of the first quarter of 2026 against zero current debt.
The Zacks Consensus Estimate for the company’s 2026 EPS has been unchanged at $1.88 over the past 30 days. BBSI shares have gained 27.8% over the past month.
BBSI currently has a Zacks Rank of #3 (Hold).
Price and Consensus: BBSI