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The Zacks Business-Software Services industry is experiencing growth due to the increased demand for digital transformation and the shift to cloud computing. The automation of business processes and the rise in enterprise data volumes are also contributing to the demand for business software and services.

Companies like MSCI, Tyler Technologies, Guidewire Software, and ePlus are benefiting from these industry trends. However, the reopening of economies and macroeconomic challenges such as inflation and high interest rates have slowed down the growth rate. Operating expenses related to hiring new employees and sales and marketing strategies are also straining profit margins.

The business-software services industry includes companies that offer application-specific software products and services. These applications are either license-based or cloud-based and cover areas such as finance, sales and marketing, human resources, and supply chain management. The industry provides a wide range of products and services including business processing, consulting, application development, testing and maintenance, and infrastructure services. The primary end markets for these companies are manufacturing, retail, banking, insurance, telecommunications, healthcare, and public sectors.

There are several trends shaping the future of the business-software services industry. The transition to cloud computing is creating opportunities for companies as they offer multi-cloud-enabled software solutions. Subscription-based business models are gaining traction, providing increased revenue visibility and stability. Mergers and acquisitions are common in the industry as companies expand their product offerings. However, softening IT spending due to economic factors and elevated operating expenses are potential challenges.

The Zacks Business-Software Services industry ranks #60 out of nearly 250 industries, indicating bright prospects. The industry has underperformed the S&P 500 and the broader technology sector in the past year. In terms of valuation, the industry has a higher price-to-earnings ratio compared to the S&P 500 but is lower than the technology sector.

One stock to watch in this industry is ePlus, a company that offers IT infrastructure optimization and supply chain management solutions. Their focus on work-from-home hardware and software, as well as acquiring regional solution providers, has contributed to their growth in the IT service market.

The post 4 Business Software Services Stocks to Watch in a Prospering Industry appeared first on ISP Today.