According to Everest
Group, Financing and Accounting Outsourcing: Annual report 2013, the global
multi-process FAO market grew at the rate of 10% to reach ACV of US$4.3 billion
which highlights the fact the market is matured and stabilizing and is further
substantiated by the fact that over 65% of the ACV growth in 2012 was
contributed by contract extensions/renewals. Cost reduction and process
improvement are the primary drivers for adoption but standardization,
scalability and flexibility drove FAO adoption further, emphasizing a cost+
value proposition highlights the Everest Group report. As the traditional
markets matured the vendors are forced to move to under-penetrated markets but
Europe led the market increased FAO adoption and mid-market and small buyer
segments also increased their adoptions significantly in 2012 led to moderate
growth in 2012. Competition in the FAO market is intensifying as the share of
the top three service providers declined from 68% in 2002 to ~50% in 2012. Some
of the key players in the FAO market are Accenture, Aditya Birla Minacs, Aegis,
Capgemini, Cognizant, Datamatics, EXL Services, Genpact, HCL, HP, IBM, iGATE,
Infosys, IQ BackOffice, NCO, Quatrro, Serco, Steria, Sutherland Global
Services, TCS, Wipro, WNS, Xchanging, and Xerox. ( Data Source: Everest Group)
One of the significant trends is the rise in Adoption
of end-to-end process but buyers continue to remain cautious and adopt a phased
approach to F&A outsourcing. Some of the new focus areas that are emerging
are Analytics, risk management & compliance and F&A services are
increasingly getting industry-specific. The Everest report also highlights buyers are
increasingly adopting non-advisor-led competitive bidding route for sourcing
F&A services. India continues to be the predominant hub of offshore delivery
and most of the vendors both global and Indian are striving to build a balanced
onshore-nearshore-offshore model. Technology augmentation model is becoming the
predominant approach where in the vendors are developing technology
infrastructure and also adopting emerging technologies like cloud computing,
mobility, social media and big data analytics to offer innovative service
offerings to clients. Outcome based pricing model and platform-based solutions
are also gaining traction. Service provider performance is up-to-the-mark
against the metrics important to FAO buyers, resulting in high satisfaction
levels. However, buyer organizations have highlighted some areas of
improvements for service providers to work upon. Vendors are shifting their
focus to building technologies and service offerings through adoption of
emerging technologies like cloud computing and offer cloud-enabled F&A
technology that can be delivered as a BPaaS solution.
