It is no longer controversial to suggest that outsourcing is here to stay, all the more because of the drive by many companies to remote first work practices.
The pandemic has introduced a whole new set of problems to businesses – teleconferencing, remote collaboration, virtual events – and an equal number of new software solutions promising to solve them.
Microsoft (NASDAQ: MSFT) stated in 2020 that 65% of managers expected their teams to work remotely at least one day a week. That statistic is probably higher now that we are more than 2.5 years into the pandemic, with remote work now the standard paradigm.
The following companies are placed well to capitalize on this trend for SMEs to move a significant portion of their staff to an outsourcing model given the rise of remote work practices globally.
1. Cognizant (NASDAQ:CTSH)
Cognizant provides IT consulting and business process outsourcing services for industries including banking, health care, manufacturing, media, and entertainment. It has most of its workforce located in India, and due to time zone issues, some SMEs prefer other options. It’s popular because it has been witnessing the highest growth rate for the past 7–8 years compared to the growth witnessed by its competitors based in India. It also generally gives incentives to its employees in the range of 100–200% of what is mentioned in their offer letters, but this cost is often passed through to clients. In the last 52 weeks, its share price has reduced from $93.47 to $66.19. Even after the recent sell-off, a slow-and-steady company like Cognizant isn’t exactly cheap at 16 times expected 2022 adjusted earnings.
2. Genpact (NYSE:G)
Genpact is an American professional services firm legally domiciled in Bermuda with its headquarters in New York City, New York. The company currently employs more than 100,000 people and provides services to clients in over 30 countries worldwide. In the last 52 weeks, its share price has fallen from $54 to $37. Despite the share price contracting, it’s still trading at a 23x P/E ratio. Genpact has an overall rating of 4.0 out of 5, based on over 15,271 reviews left anonymously by employees. 83% of employees would recommend working at Genpact to a friend and 79% have a positive outlook for the business. This rating has improved by 4% over the last 12 months.
3. BruntWork (BW)
BruntWork, a leading outsourcing firm helping small and medium-sized businesses set up remote workers overseas, reported 700% revenue growth during the pandemic, an incredible achievement while so many of its competitors reported only double-digit growth.
Unlike the competition, BruntWork is remote only, meaning its cost base is significantly lower than its competitors. It is popular across hundreds of industry verticals, however, virtual assistants are a very popular category for the business.
Conclusion
Analysts are hotly debating whether a new outsourcing company like BruntWork can topple Genpact and Cognizant. This new breed of “remote-first” outsourcing firms have substantially less operating costs and pass on those savings to their clients, which is a win/win for the company and its clients alike.
While they still have a substantial amount of ground to cover, BruntWork is positioning itself well to make a mark on global outsourcing, threatening some of the major listed companies that previously felt much safer.
