Outsourcing: Stock Market is no barometer

Two stories have come across Intelligent Sourcing’s desk this morning, both of which concern share prices and they contradict each other completely.

First, Proactive Investors has quoted Capita stating that the outsourcing market is subdued. Its share price took a knock as a result, as you might expect.

Second, Euronews suggests that Serco’s shares have had a boost because – wait for it – the outlook on the outsourcing market is so positive.

These statements are mutually exclusive (not the reports about the shares, which are quantifiably factual, but the assumptions on which they are based).

So here’s out best guess. The outsourcing market is going to be a little volatile in the UK for a while. We base this in part on an interview we carried in the dim and distant past of 2015, when the Conservative Party had just won the election (seems a while ago, doesn’t it) and the CEO of the then National Outsourcing Association (now GSA) hailed this as a great opportunity for outsourcers.

We still have a Conservative government but the one from 2015 fell as a result of the EU referendum; its replacement, with Theresa May at the helm, fell after her insistence that she needed to be elected with a bigger majority this year. The result wasn’t so much a ringing endorsement as a “what? Oh, yeah, OK, faintly…”

So if outsourcing, at least in the public sector, depends on politics (we’d argue that it shouldn’t but that’s another story), things are too unstable to call.

In the meantime, nobody is going to blame companies for blaming a poor outlook on the market, or attaching a positive result to a good perceived outlook. It manages expectations so that Serco in particular has license to perform variably during the year and blame external forces. The truth, we suspect, is that fewer people than you’d imagine actually have much of an idea what’s going to happen next.

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