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The Zacks Business - Services industry is benefiting from rising outsourcing demand, digital transformation, infrastructure investment and companies' growing focus on workforce productivity. Providers are increasingly combining specialized expertise, technology and recurring service models to help clients lower costs, improve operations and address complex labor and operational requirements. Concentrix, Sodexo and ABM Industries are positioned across customer experience solutions, food services and facility management.
Artificial intelligence and automation are also reshaping service delivery. Concentrix is integrating AI into customer experience solutions, while Sodexo and ABM can leverage technology to improve workforce deployment, operational execution and service efficiency. However, rapid technological change requires sustained investment and may expose less-differentiated offerings to pricing pressure.
Demand remains supported by businesses' need to enhance customer engagement, maintain facilities and improve operational efficiency. Concentrix benefits from growing demand for technology-enabled customer experience solutions, while Sodexo and ABM serve essential food and facility management needs. Recurring contracts and long-term customer relationships provide stability, but labor shortages, wage inflation and project delays remain challenges.
Macroeconomic conditions can produce uneven results. Corporate spending, business activity and employment trends affect demand, while higher costs may pressure margins. Nonetheless, diversified end markets and essential service offerings provide the industry with resilience.
About the Industry
The Business Services industry encompasses a diverse group of companies that provide specialized support to corporations, governments and consumers. Offerings include customer experience management, business process outsourcing, food services, facility management, infrastructure support and technical solutions. Participants range from Concentrix's integrated customer experience solutions and Sodexo's food services and facilities management offerings to ABM's facility, engineering and infrastructure solutions.
Outsourcing, digital transformation, infrastructure investment, growing operational complexity and the need for specialized labor are driving industry growth. AI and automation are helping providers improve efficiency, enhance customer engagement and deliver more integrated solutions.
What's Shaping the Future of the Industry?
1. AI and Digital Transformation Are Reshaping Service Delivery
Artificial intelligence, automation and cloud-based platforms are changing how business services companies manage customer interactions, deploy labor and support business operations. These technologies can improve productivity, accelerate decision-making and reduce the cost of repetitive tasks. Providers that combine technology with specialized expertise and established customer relationships should be better positioned to protect pricing and deepen client engagement.
Concentrix is advancing its transition toward AI-enabled customer experience solutions. In the third quarter of fiscal 2026, 50% of its revenues came from business secured and deployed over the preceding three years, reflecting the growing contribution of newer offerings. Although quarterly revenues declined 1.2% year over year to $2.45 billion, non-GAAP operating margin expanded 30 basis points to 12.6%.
Adjusted free cash flow reached $218.3 million, highlighting improving operational efficiency and cash generation. Continued adoption of AI-driven solutions and expansion of newer services should support profitability and long-term competitiveness. However, rapid technological change and disruption of traditional customer experience services remain challenges.
2. Workforce Challenges and Outsourcing Support Demand
Persistent labor shortages, rising employee expectations and companies' focus on productivity are increasing demand for outsourced customer experience, food and facility management services. Businesses are seeking solutions that improve operational efficiency, service quality and workforce management while allowing internal teams to concentrate on core operations. This creates opportunities across customer support, food services, cleaning, maintenance and technical services.
Sodexo benefits from businesses' growing reliance on outsourced food services and facilities management to improve efficiency and maintain consistent service standards. In the third quarter of fiscal 2026, organic revenues increased 2%, exceeding expectations amid resilient demand. Growth was supported by strong activity at Sodexo Live! North America, particularly across stadiums, conference centers and airport lounges.
The company raised its fiscal 2026 organic revenue growth guidance to 1.2-1.5% from 0.5-1%, reflecting improving commercial momentum. ABM similarly benefits as customers outsource facility operations requiring specialized labor and consistent service quality. However, both companies remain exposed to wage inflation, employee availability, training costs and the need to maintain service standards across large workforces.
3. Infrastructure, Safety and Technology Investment Create Opportunities
Growth in data centers, advanced manufacturing, aviation, energy infrastructure and building modernization is expanding demand for facility management, engineering and technical services. These projects require specialized expertise, regulatory compliance and ongoing maintenance, creating opportunities that extend beyond the initial construction phase. Electrification and energy-efficiency initiatives provide additional demand drivers.
ABM is benefiting from healthy technology markets, airport activity and infrastructure modernization. In the third quarter of fiscal 2026, its Manufacturing & Distribution and Aviation revenues increased 17.6% and 12.5%, respectively. Technical Solutions revenues grew 4.2%, although some project deferrals affected near-term performance. Total revenues increased 4.2% to a quarterly record of $2.32 billion, while adjusted EBITDA advanced 11%.
Sodexo is similarly supported by demand for integrated facilities management, particularly across corporate, healthcare and education markets. Nevertheless, project timing, customer budgets, labor constraints and execution risks may produce quarterly volatility.
4. Recurring Services and Acquisitions Strengthen Growth
Recurring contracts, long-term customer relationships and essential service requirements can provide business services companies with predictable revenues and attractive cross-selling opportunities. Once a provider becomes integrated into a customer's operations, switching can be disruptive, supporting retention. Customer experience management, food services, facility maintenance and technical solutions therefore improve resilience during uncertain economic periods.
Concentrix's AI-enabled offerings, Sodexo's long-term service contracts and ABM's recurring facility relationships support revenue visibility. However, rising debt and execution risks remain concerns, while macroeconomic uncertainty may prompt customers to delay projects or reduce spending on services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #173, which places it in the bottom 30% of 247 Zacks industries.
The group's Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term growth prospects. Our research shows that the top 50% of the 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's take a look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
The Zacks Business Services industry has underperformed the broader sector and the S&P 500 over the past 12-month period.
The industry has declined 21.4% compared with the S&P 500 composite's growth of 19.4%. The broader sector has declined 15.7% over the same time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 13.58X compared with the S&P 500's 19.87X and the sector's 17.48X.
Over the past five years, the industry has traded as high as 24.79X and as low as 12.99X, with the median being 22.08X.
3 Business Service Stocks in Focus
Concentrix: The company provides integrated customer experience (CX) solutions globally, encompassing the design, development and management of customer engagement services.
Concentrix is making significant progress in transitioning toward AI-enabled services, with 50% of its quarterly revenues generated from business secured and deployed over the past three years since the introduction of AI. This shift reflects growing demand for its newer solutions and successful diversification beyond traditional services. Improving margins, robust free cash flow, and growth in new services further highlight the strength of its evolving business model. Continued adoption of AI-driven solutions should support revenue growth, operational efficiency and long-term profitability.
Sodexo: The company offers food services and facilities management solutions across North America, Europe and other international markets.
The company's third-quarter fiscal 2026 organic growth exceeded expectations, reflecting resilient demand and disciplined execution across its businesses. Strong performance at Sodexo Live! North America helped the company capitalize on growth opportunities and navigate operating challenges. Continued progress in strategic transformation initiatives, improving commercial momentum and efforts to strengthen competitiveness should support sustained revenue growth, operational efficiency and long-term profitability.
SDXAY currently carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2027 EPS has been revised slightly upward to 77 cents in the past 60 days.
ABM: The company is a leading provider of integrated facility solutions, serving clients both in the United States and internationally.
ABM is increasing exposure to semiconductor, microgrid and data center markets. In the first nine months of fiscal 2026, these businesses generated nearly $775 million of revenue, representing more than 11% of company revenues. Revenues increased 26% organically year over year and about 40% including WGNSTAR, with double-digit blended operating margins.
Semiconductor revenue rose 65% organically year over year, microgrids increased 17% and data centers grew 8%. Semiconductor investment, demand for power resiliency and a growing data center pipeline support further expansion. Management expects a portion of the data center pipeline to convert into revenue during fiscal 2027 and 2028, providing a longer-term growth avenue.
ABM currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2027 EPS has been revised slightly upward to 77 cents in the past 60 days.
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Zacks Investment Research is under common control with affiliated entities (including a broker-dealer and an investment adviser), which may engage in transactions involving the foregoing securities for the clients of such affiliates.
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.
View the Zacks #1 Rank List
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Zacks Industry Outlook Highlights Concentrix, Sodexo and ABM Industries
For Immediate Release
Chicago, IL – October 13, 2026 – Today, Zacks Equity Research discusses Concentrix (CNXC - Free Report) , Sodexo (SDXAY - Free Report) and ABM Industries (ABM - Free Report) .
Industry: Business Services
Link: https://www.zacks.com/commentary/3005393/3-business-services-stocks-to-consider-amid-industry-woes
The Zacks Business - Services industry is benefiting from rising outsourcing demand, digital transformation, infrastructure investment and companies' growing focus on workforce productivity. Providers are increasingly combining specialized expertise, technology and recurring service models to help clients lower costs, improve operations and address complex labor and operational requirements. Concentrix, Sodexo and ABM Industries are positioned across customer experience solutions, food services and facility management.
Artificial intelligence and automation are also reshaping service delivery. Concentrix is integrating AI into customer experience solutions, while Sodexo and ABM can leverage technology to improve workforce deployment, operational execution and service efficiency. However, rapid technological change requires sustained investment and may expose less-differentiated offerings to pricing pressure.
Demand remains supported by businesses' need to enhance customer engagement, maintain facilities and improve operational efficiency. Concentrix benefits from growing demand for technology-enabled customer experience solutions, while Sodexo and ABM serve essential food and facility management needs. Recurring contracts and long-term customer relationships provide stability, but labor shortages, wage inflation and project delays remain challenges.
Macroeconomic conditions can produce uneven results. Corporate spending, business activity and employment trends affect demand, while higher costs may pressure margins. Nonetheless, diversified end markets and essential service offerings provide the industry with resilience.
About the Industry
The Business Services industry encompasses a diverse group of companies that provide specialized support to corporations, governments and consumers. Offerings include customer experience management, business process outsourcing, food services, facility management, infrastructure support and technical solutions. Participants range from Concentrix's integrated customer experience solutions and Sodexo's food services and facilities management offerings to ABM's facility, engineering and infrastructure solutions.
Outsourcing, digital transformation, infrastructure investment, growing operational complexity and the need for specialized labor are driving industry growth. AI and automation are helping providers improve efficiency, enhance customer engagement and deliver more integrated solutions.
What's Shaping the Future of the Industry?
1. AI and Digital Transformation Are Reshaping Service Delivery
Artificial intelligence, automation and cloud-based platforms are changing how business services companies manage customer interactions, deploy labor and support business operations. These technologies can improve productivity, accelerate decision-making and reduce the cost of repetitive tasks. Providers that combine technology with specialized expertise and established customer relationships should be better positioned to protect pricing and deepen client engagement.
Concentrix is advancing its transition toward AI-enabled customer experience solutions. In the third quarter of fiscal 2026, 50% of its revenues came from business secured and deployed over the preceding three years, reflecting the growing contribution of newer offerings. Although quarterly revenues declined 1.2% year over year to $2.45 billion, non-GAAP operating margin expanded 30 basis points to 12.6%.
Adjusted free cash flow reached $218.3 million, highlighting improving operational efficiency and cash generation. Continued adoption of AI-driven solutions and expansion of newer services should support profitability and long-term competitiveness. However, rapid technological change and disruption of traditional customer experience services remain challenges.
2. Workforce Challenges and Outsourcing Support Demand
Persistent labor shortages, rising employee expectations and companies' focus on productivity are increasing demand for outsourced customer experience, food and facility management services. Businesses are seeking solutions that improve operational efficiency, service quality and workforce management while allowing internal teams to concentrate on core operations. This creates opportunities across customer support, food services, cleaning, maintenance and technical services.
Sodexo benefits from businesses' growing reliance on outsourced food services and facilities management to improve efficiency and maintain consistent service standards. In the third quarter of fiscal 2026, organic revenues increased 2%, exceeding expectations amid resilient demand. Growth was supported by strong activity at Sodexo Live! North America, particularly across stadiums, conference centers and airport lounges.
The company raised its fiscal 2026 organic revenue growth guidance to 1.2-1.5% from 0.5-1%, reflecting improving commercial momentum. ABM similarly benefits as customers outsource facility operations requiring specialized labor and consistent service quality. However, both companies remain exposed to wage inflation, employee availability, training costs and the need to maintain service standards across large workforces.
3. Infrastructure, Safety and Technology Investment Create Opportunities
Growth in data centers, advanced manufacturing, aviation, energy infrastructure and building modernization is expanding demand for facility management, engineering and technical services. These projects require specialized expertise, regulatory compliance and ongoing maintenance, creating opportunities that extend beyond the initial construction phase. Electrification and energy-efficiency initiatives provide additional demand drivers.
ABM is benefiting from healthy technology markets, airport activity and infrastructure modernization. In the third quarter of fiscal 2026, its Manufacturing & Distribution and Aviation revenues increased 17.6% and 12.5%, respectively. Technical Solutions revenues grew 4.2%, although some project deferrals affected near-term performance. Total revenues increased 4.2% to a quarterly record of $2.32 billion, while adjusted EBITDA advanced 11%.
Sodexo is similarly supported by demand for integrated facilities management, particularly across corporate, healthcare and education markets. Nevertheless, project timing, customer budgets, labor constraints and execution risks may produce quarterly volatility.
4. Recurring Services and Acquisitions Strengthen Growth
Recurring contracts, long-term customer relationships and essential service requirements can provide business services companies with predictable revenues and attractive cross-selling opportunities. Once a provider becomes integrated into a customer's operations, switching can be disruptive, supporting retention. Customer experience management, food services, facility maintenance and technical solutions therefore improve resilience during uncertain economic periods.
Concentrix's AI-enabled offerings, Sodexo's long-term service contracts and ABM's recurring facility relationships support revenue visibility. However, rising debt and execution risks remain concerns, while macroeconomic uncertainty may prompt customers to delay projects or reduce spending on services.
Zacks Industry Rank Indicates Dull Near-Term Prospects
The Business-Services industry is housed within the broader Business Services sector. It carries a Zacks Industry Rank #173, which places it in the bottom 30% of 247 Zacks industries.
The group's Industry Rank, which is the average of the Zacks Rank of all the member stocks, indicates dull near-term growth prospects. Our research shows that the top 50% of the 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's take a look at the industry's recent stock-market performance and current valuation.
Industry's Price Performance
The Zacks Business Services industry has underperformed the broader sector and the S&P 500 over the past 12-month period.
The industry has declined 21.4% compared with the S&P 500 composite's growth of 19.4%. The broader sector has declined 15.7% over the same time frame.
Industry's Current Valuation
On the basis of the forward 12-month price-to-earnings (P/E) ratio, which is commonly used for valuing business-services stocks, the industry is currently trading at 13.58X compared with the S&P 500's 19.87X and the sector's 17.48X.
Over the past five years, the industry has traded as high as 24.79X and as low as 12.99X, with the median being 22.08X.
3 Business Service Stocks in Focus
Concentrix: The company provides integrated customer experience (CX) solutions globally, encompassing the design, development and management of customer engagement services.
Concentrix is making significant progress in transitioning toward AI-enabled services, with 50% of its quarterly revenues generated from business secured and deployed over the past three years since the introduction of AI. This shift reflects growing demand for its newer solutions and successful diversification beyond traditional services. Improving margins, robust free cash flow, and growth in new services further highlight the strength of its evolving business model. Continued adoption of AI-driven solutions should support revenue growth, operational efficiency and long-term profitability.
CNXC currently carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for fiscal 2026 EPS has been revised slightly upward to $11.07 in the past 60 days. You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here.
Sodexo: The company offers food services and facilities management solutions across North America, Europe and other international markets.
The company's third-quarter fiscal 2026 organic growth exceeded expectations, reflecting resilient demand and disciplined execution across its businesses. Strong performance at Sodexo Live! North America helped the company capitalize on growth opportunities and navigate operating challenges. Continued progress in strategic transformation initiatives, improving commercial momentum and efforts to strengthen competitiveness should support sustained revenue growth, operational efficiency and long-term profitability.
SDXAY currently carries a Zacks Rank #2. The Zacks Consensus Estimate for fiscal 2027 EPS has been revised slightly upward to 77 cents in the past 60 days.
ABM: The company is a leading provider of integrated facility solutions, serving clients both in the United States and internationally.
ABM is increasing exposure to semiconductor, microgrid and data center markets. In the first nine months of fiscal 2026, these businesses generated nearly $775 million of revenue, representing more than 11% of company revenues. Revenues increased 26% organically year over year and about 40% including WGNSTAR, with double-digit blended operating margins.
Semiconductor revenue rose 65% organically year over year, microgrids increased 17% and data centers grew 8%. Semiconductor investment, demand for power resiliency and a growing data center pipeline support further expansion. Management expects a portion of the data center pipeline to convert into revenue during fiscal 2027 and 2028, providing a longer-term growth avenue.
ABM currently carries a Zacks Rank #3 (Hold). The Zacks Consensus Estimate for fiscal 2027 EPS has been revised slightly upward to 77 cents in the past 60 days.
Free: Instant Access to Zacks' Market-Crushing Strategies
Since 2000, our top stock-picking strategies have blown away the S&P's +7.7% average gain per year. Amazingly, they soared with average gains of +48.4%, +50.2% and +56.7% per year.
Today you can tap into those powerful strategies – and the high-potential stocks they uncover – free. No strings attached.
Get all the details here >>
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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.