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Serco celebrates sourcing forecast

Outsourcing giant Serco, so often the whipping-boy of the business world as outsourcing enjoys different levels of public regard (to put it mildly), has had good reason to celebrate over the last week, as have its shareholders.

The backdrop, as explained by the Financial Times and others, is that UBS has forecast 2018 sasd a potential turning point for outsourcing businesses. And Serco is just such a business, and of course the general anti-outsourcing sentiment in many of the news channels has left it and companies like it eager for good news.

This looks like it and the Stock Exchange has reacted accordingly, with improved forecasts for the organisation and an inevitable share price fillip. So what’s behind the improved forecast?

Changing culture

The short answer appears to be that outsourcing as an industry, particularly where the giants are concerned, is growing up and it’s doing so quickly. Serco in particular has gone through five years of restructuring that could charitably be called “interesting” in the same way that a dental root canal procedure could be described in the same way.

The company has shed a lot of its revenue-generating services and the broker thinks it’s ready to grown again, after a painfully long time. More importantly, in spite of noise from Donald Trump and others on the public stage, UBS believes that the outsourcing market is underserved at the moment so there is growth potential.

Growth market, company that’s gone through its internal sorting-out – you can see where this is going. It’s no surprise to find Serco stock on the “buy” lists again.

 

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