INTRODUCTION

The global multi-process Finance and accounting outsourcing (FAO) market witnessed a healthy growth rate of 12% in 2011 to reach to US$3.9 billion in ACV. However, the growth in 2011 was slower when compared to the growth of 18% in 2010, indicating that the market is signaling towards maturity.

As the FAO market grows and matures, the competition in the service provider landscape intensifies. The consolidation activity in 2011 further complicated this. As a result, it is becoming difficult to differentiate service providers purely based on delivery capability. As a result, service providers are making investments across various areas to create innovative FAO solutions and differentiated value proposition and, in an effort to stand out in the crowded FAO market. 

In this study, we analyze the global FAO service provider landscape in 2011. We focus on:

• Position of 20+ service provider on Everest Group Performance | Experience | Ability | Knowledge (PEAK) Matrix for FAO
• 2012 FAO Star performers
• Emerging service provider trends
• Implication for buyers and service providers

SCOPE AND METHODOLOGY

• Third-party FAO deals (Does not include shared services or captives)
• 690+ multi-process FAO contracts 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 Service, Genpact, HCL, HP, IBM, iGATE, Infosys BPO, IQ BackOffice, Mahindra IT & Business Services, Serco, Steria, Sutherland Global Services, TCS, Wipro, WNS, Xchanging, and Xerox

CONTENT

This report examines the dynamics of the global FAO service provider landscape and its impact on the FAO market. In this report, based on comprehensive Everest Group PEAK Matrix, each of the 20+ FAO service providers are categorized into Leaders, Major Contenders and Emerging Players. In addition, 2012 FAO Star Performers are selected. This report also provides detailed analysis on market success and FAO delivery capability (across scale, scope, technology, and delivery footprint dimensions) for service provider categories. Additionally, it provides details of the various areas in which service providers are investing to stand out in the crowded FAO market.

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

• Based on Everest Group’s comprehensive evaluation framework, PEAK Matrix, the 22 established FAO service providers evaluated are segmented into three categories – Leaders, Major Contenders, and Emerging Players
• The competitive intensity in FAO is all-time high – there are now six service providers in the Leaders category and several Major Contenders are further closing the gap with Leaders
• Year 2011 witnessed significant service provider consolidation in the FAO market. These acquisitions positively impacted the service provider landscape towards enhanced capability
• Everest Group identified five service providers as the “2012 FAO Market Star Performers” based on the relative year-on-year movement of each service provider on the PEAK Matrix
• We assessed the overall FAO delivery capability by evaluating each service provider along four dimensions – scale, scope, technology, and delivery footprint
• While the gap between the Leaders and Major Contenders is diminishing across each of the above dimensions, Emerging Players continue to lag behind across most parameters
• The competition in the FAO service provider landscape is intensifying. As a result, in 2010-2011, FAO service providers made significant strategic investments across various dimensions to differentiate themselves in the crowded FAO market