Investment Opportunities in Outsourcing

When I moved this summer, I had to undertake the dreaded task of calling every credit card, bank, broker, and utility company to update my address. The funny thing is that I don't think I ended up talking to someone in America in the dozen or so phone calls I had to make. That is, unless the Americans I spoke to had a strong accent from India.

Outsourcing is a trend here to stay, and the interesting thing about this is that the companies who benefit from that trend are not receiving a lot of attention by investors. For example, in this recent article in the New York Times about outsourcing by financial firms in the U.S., two companies receive attention - Satyam Computer Services (SAY) and Wipro (WIT). Here are their stock charts:

Both stocks have been flat for some time now, but the underlying growth must be quite impressive. Technically, both stocks are also holding up quite well in this market. A long flat trading base is exactly what you want to see after a strong upside move both stocks experienced some time ago. In my view, this trend is still in the early stages and it is something to put on your radar, especially those of you who are long-term investors. Like all new industries, a big winner or two is likely to emerge in the next year or so and it will be important to watch.