Finance and Accounting Outsourcing (FAO) Annual Report 2014 – Transformational Agenda to Combat Reducing Stickiness

22 May 2014



The FAO market remained buoyant and witnessed a moderate growth of 7-8% in 2013. The year saw significant rise in the share of new contracts signed as buyers switched service providers. The value proposition for FAO is growing beyond cost reduction, to focus on transformation and enabling world-class performance. The FAO solution landscape is also evolving to drive this cost+ agenda. Robotic automation and embedded analytics are emerging as disruptive approaches in driving F&A transformation.

In this study, we analyze the global multi-process FAO market in 2013. We focus on

  • Market size and buyer adoption
  • Value proposition
  • Solution characteristics across process scope, technology, industry alignment, global sourcing, and pricing structures
  • FAO service provider landscape covering service providers’ market shares and areas of investments

FAO Market Growth

The scope of analyses includes:

  • Third-party FAO deals
  • Over 900 multi-process FAO deals signed as of 2013 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 Accenture, Aditya Birla Minacs, Aegis, Capgemini, Cognizant, Datamatics, Dell, EXL, Genpact, HCL, HP, IBM, iGATE, Infosys, IQ BackOffice, NCO, Quatrro, Serco, Sutherland Global Services, TCS, Wipro, WNS, Xchanging, and Xerox
  • Global survey and one-on-one executive-level buyer interviews to understand how organizations perceive their FAO engagements

FAO Service Provider Landscape


This report assists key stakeholders (buyers, service providers, and technology vendors) understand the changing dynamics of the FAO market and help them identify the trends and outlook for 2014. The report provides a comprehensive coverage of the global FAO market, including detailed analysis on market size and growth, buyer adoption trends, FAO value proposition, solution characteristics, and service provider landscape. Some of the findings in this report, are:

  • The multi-process FAO market remained buoyant and witnessed moderate growth of ~8% to reach US$4.6 billion in ACV
  • Inorganic growth contributed significantly to market expansion in 2013. Contract terminations also increased in 2013. The spurt in new contracts and their terminations were driven by a surge in deal switching as buyers ended their incumbent pacts and signed with new providers
  • Large market organizations in the United States continue to be the principal adopters of FAO. However, growth is being driven by Asia Pacific, primarily led by India and Australia
  • FAO value proposition is moving beyond labor arbitrage to drive business and/or strategic impact. The FAO solution landscape is also evolving to support the transformational agenda
  • The scope definition is evolving along three broad themes – end-to-end process-driven approach, industry-specificity, and expansion into adjacent functions
  • Adoption of analytics is moving beyond theory to successful high-impact examples
  • Robotic automation emerged as a disruptive technology solution to drive benefits across multiple dimensions – cost savings, efficiency, accuracy, scalability, and compliance
  • Service providers are making investments in onshore locations to create a balanced delivery model
  • With increasing maturity, buyers are moving to a hybrid pricing model (a mix of input- and output-/outcome-based models)
  • Indian-heritage IT+BPO providers witnessed maximum growth in 2013 (26%)
  • Service provider investments in 2013 were primarily focused on technology, including tools/platforms, analytics, and robotic automation

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