Industry-specific FAO and Deep Dive into the U.S. Healthcare Providers

29 Feb 2012



FAO is largely considered a horizontal BPO offering. However, in recent years, there is a movement towards industry-specific FAO solutions with increasing buyer sophistication and intensifying competitive dynamics in the FAO industry. FAO service providers are increasingly focusing on specific industries, both in terms of service offerings as well as sales strategy, to drive greater penetration.

For example, industry-specificity around FAO solutions is high for healthcare providers. Revenue Cycle Management (RCM) for healthcare providers is essentially an industry-specific version of a more generic Order-to-Cash (O2C) process. However, the market dynamics for outsourcing RCM are very different compared to the horizontal FAO market across value proposition, solution characteristics, and service provider landscape.

In this study, we investigate the rising industry-specificity in the FAO market. We focus on:

  • Understanding the need for industry-specific FAO
  • Service provider investment themes
  • Industry-specific FAO in the U.S. healthcare provider space

Industry-specific F&A requirements 

Scope and methodology

  • Proprietary Everest Group database of ~580 multi-process FAO contracts signed till the end of 2010 with a minimum of two F&A processes, over US$1 million in ACV, and a minimum contract term of three years
  • Proprietary Everest Group database of operational capability of 25+ FAO service providers and healthcare-specific BPO service providers such as Accenture, ADP, BancTec, Capgemini, Cognizant, Genpact, IBM, MedAssets, Med 3000, NCO, TCS, Wipro, Xerox, and WNS
  • Web-based BPO Buyer survey conducted in Q3 2011. This survey included BPO buyers across all industries and geographies

Levels of industry-specificity 


This report will assist key stakeholders (buyers, service providers, industry enablers) understand trends in industry-specific in the FAO market. Industry expertise is emerging as an important source of value from service providers for FAO buyers. Consequently, service providers are making continuous investments in industry-specific FAO solution to meet buyer demands and create a differentiated offering. In this backdrop, this report provides an understanding of the need for industry-specific FAO, service provider investment themes in industry-specific FAO, and a deep dive into the U.S. healthcare providers market

Some of the findings in this report, among others, are:

  • There are three forces that are together driving industry-specificity in FAO services – inherent industry-specific F&A requirements, changing macro-economic conditions, and maturing FAO landscape
  • Beyond corporate F&A that remains largely similar across industries, there are corporate and operational industry-specific F&A requirements
  • Industry expertise is a key requirement in FAO service provider selection especially in service oriented industries
  • Given the increasing cost and competitive pressures along with regulatory changes, the need to address the industry-specific F&A requirements has become critical
  • Further, the maturing FAO landscape is driving innovation across multiple dimensions in the FAO market. The industry-oriented investments is one of the focus areas
  • Service providers are making continuous investments in industry-specific FAO solutions across three levels – industry relevant, industry enabled, and industry platform
  • Within the healthcare value chain, RCM is the key pain point for providers under increasing financial pressures.
  • The integrated RCM (I-RCM), which represents an industry-specific version of the O2C process, is the largest BPO segment in the U.S. healthcare BPO market
  • The service provider landscape is clustered across I-RCM and horizontal BPO services

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