Introduction

The multi-process FAO market continues to grow aggressively with approximately 65 new contracts being signed in 2007 – exceeding the unprecedented growth seen in the landmark year of 2006. The market continues to grow at an impressive 22% annually in terms of annualized contract value. The value proposition for FAO has strengthened and has evolved into providing value beyond cost arbitrage.  Building on this momentum and cognizant of low penetration rates, the FAO supplier landscape continues to attract new entrants.  Buyers and suppliers alike are now focusing on enhanced value through factors such as quality, productivity and timeliness.

The base of FAO buyers also continues to expand.  Non traditional buyer geographies like Continental Europe have emerged along with new buyer industries. This interplay between new geographies and industries coupled with rising interest from the mid market holds the promise to propel FAO into high growth gear.

This report will assist key stakeholders (i.e., buyers, suppliers, and technology providers) understand the changing dynamics of the FAO market and will help them identify value creation opportunities as well as identify potential risks involved.

The key trends of the FAO market in 2007 were

• The market has shown strong growth, with over 60 contracts being signed in the last year.
• Buyer adoption is expanding across all industries, geographies, and organization size. The interplay between relative maturity by industry and geography are key determinants of buyer adoption
• Focus around transaction intensive activities like AP, AR, and general accounting remains high. However, frequency of inclusion of management reporting and analytics is on the rise
• Most suppliers are improving their capabilities across the four parameters  - FAO operations, process capabilities, technology capabilities, delivery footprint
• Interest in end-to-end outsourcing offerings like O2C and P2P is also rising

Scope

• The report includes multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of 3 years
• Everest analyses includes all FAO contracts signed as of November 2007

Suppliers with multi-process FAO capability including Accenture, ACS, Capgemini, Cognizant, Compass BPO , EDS , EXL Service, Genpact, HCL , HP,  IBM, Infosys BPO, Intelenet,  NCO, OPI, RMS, Sourcenet ,Steria, TCS, VWA, WNS, and Wipro.

Content

This report examines the global FAO market and provides insights, detailed analyses and implications for stakeholders along four key dimensions: market size and buyer adoption; current contract characteristics; supplier landscape; and future growth drivers. Each dimension is discussed in detail (and illustrated with supporting data and analysis) to provide the reader an in-depth and accurate overview with clear identification of the trends observed. For example, Growth Drivers section offers the following insights, among others

• Buyer satisfaction:  Everest Research Institute survey indicates that FAO buyers are satisfied with the overall FAO experience. However a need for strategic impact was missing to hit the right buttons with buyers.
• Broader buyer adoption: Continental Europe is the fastest growing FAO segment by geography. Also, the upper-end of the mid-market has been growing substantially
• Expanding process Scope : The market is seeing an increased adoption of “Phased” approach where process inclusion expands to judgment-intensive processes over time
• Evolving Solution design delivery: Suppliers are starting to build capabilities in F&A related but industry-specific processes to build competitive advantage. The prioritization of value creation levers for FAO is now being re-considered with the increased use of technology, and “blended” operating models.