Finance and Accounting Outsourcing (FAO) Annual Report 2012: The FAO Market - Signaling Towards Maturity

26 Apr 2012



The global multi-process FAO market continues to grow at a healthy rate of 11%. However, the growth was slower when compared to 2010. This is the not a sign of worry but a sign of movement towards the maturity of the FAO market. As the FAO market matures, the value proposition expands beyond cost and consequently, the FAO solution elements change too. FAO adoption is now not restricted to traditional markets but extended to under-penetrated markets as well. In 2012, Everest Group expects the FAO market to continue strong activity, resulting in a YoY growth of 10-15% in terms of ACV.

In this research study, we review the global multi-process FAO market in 2011 and provide guidance on the market’s direction in 2012. We focus on

  • Market size and buyer adoption trends
  • FAO value proposition
  • Contract characteristics across process scope, technology, global sourcing, and pricing structures
  • FAO service provider landscape covering service provider’s market shares and areas of investments

Snapshot of multi-process FAO contracts over time 

Scope of analysis

  • Third-party FAO deals; it does not include shared services or captives
  • 680+ multi-process FAO deals signed as of 2011 with a minimum of two F&A processes, over US$1 million in ACV, and a minimum contract term of three years
  • Coverage across 20+ FAO service providers with multi-process capability including Aditya Birla Minacs, Accenture, Capgemini, Cognizant, Datamatics, EXL Services, Genpact, HCL, HP, IBM, iGATE Patni, Infosys BPO, IQ BackOffice, Mahindra IT & Business Services, Serco, Steria, Sutherland Global Services, TCS, Wipro, WNS, Xchanging, and Xerox
  • Ongoing buyer surveys and interactions such as Vertical Industry Strategies in Shared Services & Outsourcing (VISSSO), Best-in-class BPO buyer survey, Executive-level buyer interviews

Adoption of technology models in FAO contracts 


This report will assist key stakeholders (buyers, service providers, technology providers) understand the changing dynamics of the FAO market and help them identify the trends and outlook for 2012. In this backdrop, this report provides comprehensive coverage of the global FAO market including detailed analysis on market size and growth, buyer adoption trends, FAO value proposition, contract characteristics, and service provider landscape. Some of the findings in this report, among others, are:

  • The global multi-process FAO market grew at a rate of 11% to reach ACV of US$3.8 billion
  • The market witnessed a slower growth when compared to 2010 driven by a number of reasons
  • Nearly 70% of the ACV growth in 2011 was contributed by contract extensions/renewals
  • Asia Pacific emerged as an aggressive adopter. Mid-market and SMB buyer segments also witnessed strong activity in 2011
  • Beyond transaction-intensive processes (AP, AR, and GL), judgment-intensive processes such as FP&A were increasingly included in FAO contracts
  • The trend towards end-to-end solutions (P2P, O2C, R2R) continued to gain momentum as opposed to a traditional piecemeal solution
  • A more global delivery model is quickly becoming commonplace, expanding beyond the traditional offshore/nearshore model
  • While platform-based solutions witnessed significant increase, the technology augmentation model is the prevalent approach.
  • The incidence of hybrid pricing models (FTE-based pricing in combination with either transaction-based or performance-based/gain-sharing models) increased in 2011
  • The competition in the FAO market continues to rise. The share of top three service providers reduced from 65% in 2005 to 50% in 2011

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