Introduction

In 2006 the Finance & Accounting Outsourcing (FAO) market clearly established itself as a viable and credible way for both corporate finance organizations and outsourcing service providers to develop and deliver value to their respective organizations. Contract signings surpassed 2005, itself a pivotal year in the life of FAO, and total Annual Contract Value (ACV) grew by nearly 10%. But what's next? This annual study reviews major developments in 2006, provides a comparative perspective on the overall direction of market development, and offers readers a roadmap of what to expect going forward. As the FAO market quickly evolves along many dimensions, the perspectives of various categories of market stakeholders are addressed, including technology, sourcing strategies, buyer behavior, and supplier capabilities. 

Scope

• Third-party FAO contracts (does not include shared services or captives)
• Multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in ACV, and a minimum contract term of three years
• All multi-process FAO contracts across all geographies and industries signed as of March 2006
• Leading suppliers including Accenture, ACS, EDS, Genpact, IBM, Wipro, Xansa, WNS, Cognizant, etc. 
  

Contents

Through a combination of rich data and pointed analysis, readers are offered a rounded perspective on how the FAO market evolved in 2006 and what they should be considering about as 2007 unfolds. Commentary in the study targets the particular perspectives of different audiences, as illustrated in the implications for key stakeholders section, which provides an assessment of value creation and risk management opportunities for each buyers, suppliers, investors, and technology providers.

Key insights on the FAO market include:

• Untapped FAO opportunities remain abundant given single-digit penetration rates in most buyer segments
• The emergence of a mid-market in FAO is a reality
• While multi-tower deals represent a minority of BPO contracts, FAO forms a key strategic hub
• With a major FAO renewal cycle coming up in the next 3-5 years, buyers will come to the table with elevated expectations of what value now means