The tech industry is growing amid significant advancements, widespread digitization across industries, and increasing cloud migrations. So, quality tech stocks Accenture plc (ACN), Nomura Research Institute, Ltd. (NRILY), Cognizant Technology Solutions Corporation (CTSH) and The Hackett Group, Inc. (HCKT).
Many companies are now choosing applications hosted in the cloud for their day-to-day operations. The demand for cloud computing services is expected to drive the demand for IT services. The information technology market is expected to reach $12 trillion in 2027, growing at a CAGR of 7.9%.
IT services have become the competitive edge for businesses, while IT outsourcing has grown from a simple cost-reduction procedure for companies. The unprecedented climb in cloud services has led to a rise in demand for flexible and tailorable solutions, boosting prospects for the outsourcing industry.
According to Mordor Intelligence, the IT outsourcing market is expected to grow from $585.60 billion in 2023 to $764.63 billion by 2028, expanding at a CAGR of 5.5% between the timeframes.
With these favorable trends in mind, let’s delve into the fundamentals of the three best Outsourcing – Tech Services stocks, beginning with the fourth choice.
Stock #4: Nomura Research Institute, Ltd. (NRILY)
Headquartered in Tokyo, Japan, NRILY provides consulting, financial information technology solutions, industrial IT solutions, and IT platform services in Japan. The company operates through the broad segments of Consulting; Financial IT Solutions; and IT Platform Services.
On November 1, NRILY announced that it had partnered with three Japanese regional banks to launch TSUBASA – AML Center, a joint venture aimed at combating financial crimes. NRI will provide its AML/CFT SaaS, GPLEX, as a centralized operational platform for transaction monitoring, suspicious transaction reporting, name screening, and customer risk assessment.
The move reflects NRI’s commitment to collaborative efforts in the Anti-Money Laundering/Countering the Financing of Terrorism (AML/CFT) space and enhances its position as a provider of financial IT solutions.
NRILY’s revenue increased 8.1% year-over-year to ¥185.36 billion ($1.23 billion) in the second quarter of the fiscal year ending March 2024. The company’s gross profit increased 8.3% from the prior-year period to ¥65.20 billion ($431.81 million), while its earnings per common share increased 21.1% year-over-year to ¥35.
Analysts expect NRILY’s revenue for the fiscal year ending March 2024 to increase 49.2% from the prior year to $4.90 billion. For the fiscal year ending March 2025, its revenue is estimated to increase 5% year-over-year to $5.14 billion. The stock has gained 9.7% over the past year to close the last trading session at $27.46. It has also gained 15.9% year-to-date.
NRILY’s solid prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
NRILY has a B grade for Stability and Quality. It is ranked #4 in the A-rated 9-stock Outsourcing – Tech Services industry.
Click here to see the additional POWR Ratings for NRILY (Growth, Value, Momentum, and Sentiment).
Stock #3: Accenture plc (ACN)
Based in Dublin, Ireland, ACN is a professional services company that provides strategy and consulting, interactive, industry X, song, and technology and operation services worldwide.
On November 16, ACN announced that it had agreed to acquire Solnet, an IT services provider for New Zealand government and private organizations across multiple industries. This should facilitate operational expansion in New Zealand.
On November 14, ACN and Workday, Inc. (WDAY) expanded their collaboration to help organizations accelerate skills-based talent strategies. The partnership leverages Workday Skills Cloud to analyze and identify workforce skills, providing insights for reskilling opportunities.
ACN’s revenues increased 3.6% year-over-year to $15.99 billion in the fiscal fourth quarter that ended August 31, 2023, while net income amounted to $1.41 billion. Additionally, as of August 31, 2023, total current assets came in at $23.38 billion, up 8.2% from $21.61 billion as of August 31, 2022.
ACN’s revenue is expected to increase 2.9% year-over-year to $16.20 billion for the fiscal first quarter of 2024 (ending November 2023). Its EPS is expected to increase 1.9% year-over-year to $3.14 in the same quarter. Also, it has surpassed EPS and revenue estimates in three of its trailing four quarters, which is impressive.
The stock has gained 22.7% year-to-date and 17.2% over the past six months to close the last trading session at $327.32.
ACN’s strong prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
ACN has an A grade for Quality and a B for Stability and Sentiment. It is ranked #3 in the same A-rated industry.
Click here to see the additional POWR Ratings for ACN (Growth, Value, and Momentum).
Stock #2: Cognizant Technology Solutions Corporation (CTSH)
CTSH is a professional services company that provides consulting, technology, and outsourcing services in North America, Europe, and internationally. It operates through four segments: Financial Services; Health Sciences; Products and Resources; and Communications, Media, and Technology.
On October 31, CTSH announced the launch of its Synapse initiative to provide job training to more than one million individuals with tech skills like generative Artificial Intelligence (AI). This could expand the company’s customer base significantly.
On October 17, the company and Vianai Systems, Inc. launched a global strategic go-to-market partnership to accelerate human-centered generative AI offerings. Ravi Kumar S, CTSH’s Chief Executive Officer, said, “With Vianai’s platform and our Neuro AI platform, we believe we will be able to offer our clients a high-quality solution to support seamless data analysis with predictive decision-making capabilities.”
During the third quarter that ended September 30, 2023, CTSH’s revenue increased marginally from the prior-year period to $4.90 billion. Its cash and cash equivalents came in at $2.20 billion, up marginally year-over-year. Its adjusted earnings per share came in at $1.16.
Street expects CTSH’s revenue for the second quarter of the next fiscal year (ending June 2024) to increase marginally year-over-year to $4.93 billion. Its EPS is expected to increase 1.4% from the prior-year quarter to $1.12 for the same quarter. The company surpassed consensus revenue and EPS estimates in three of its trailing four quarters.
The stock has gained 19.7% year-to-date and 10.5% over the past six months to close the last trading session at $68.48.
It’s no surprise that CTSH has an overall rating of B, which translates to a Buy in our POWR Ratings system.
The stock has a B grade for Stability and Quality. It is ranked #2 in the same industry. Access additional CTSH grades for Growth, Value, Momentum, and Sentiment here.
Stock #1: The Hackett Group, Inc. (HCKT)
HCKT operates as a strategic advisory and technology consulting firm primarily in the United States, Europe, and internationally. The company operates through three segments: Global Strategy & Business Transformation; Oracle Solutions; and SAP Solutions.
On August 23, HCKT announced the availability of its purchase-to-pay (P2P) software solutions market intelligence research. The Hackett Value Matrix analyzes ten leading P2P solutions providers in terms of their ability to deliver value, breadth of capability, solution maturity, and actionable insight. This should enhance the company’s operative capability.
In the third quarter (ended September 29, 2023), HCKT’s total revenues increased 5.3% year-over-year to $75.86 million, while its revenue before reimbursements rose 5.1% from the year-ago value to $74.63 million. The company’s adjusted net income came in at $11.42 million. Also, its adjusted net income per common share increased 10.8% from the prior-year period to $0.41.
Analysts expect HCKT’s revenue for the fourth quarter (ending December 2023) to increase marginally year-over-year to $70.76 million. Its EPS is expected to increase 2.8% year-over-year to $0.37 in the same quarter. Moreover, the stock topped the consensus EPS and revenue estimates in each of the trailing four quarters, which is promising.
Over the past six months, the stock has gained 19.3% to close the last trading session at $22.25. It has also gained 9.2% year-to-date.
HCKT’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
The stock has a B grade for Stability and Quality. Within the same industry, it is ranked first.
Beyond what is stated above, we’ve also rated HCKT for Growth, Value, Momentum, and Sentiment. Get all HCKT ratings here.
What To Do Next?
Get your hands on this special report with 3 low priced companies with tremendous upside potential even in today’s volatile markets:
Want More Great Investing Ideas?
ACN shares were trading at $327.44 per share on Friday afternoon, up $0.12 (+0.04%). Year-to-date, ACN has gained 24.66%, versus a 18.99% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|ACN||Get Rating||Get Rating||Get Rating|
|CTSH||Get Rating||Get Rating||Get Rating|
|NRILY||Get Rating||Get Rating||Get Rating|
|HCKT||Get Rating||Get Rating||Get Rating|
|WDAY||Get Rating||Get Rating||Get Rating|