Finance and Accounting Outsourcing (FAO) - Service Provider Landscape with PEAK Matrix Assessment...
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Topic: Finance and Accounting Outsourcing (FAO) – Service Provider Landscape with PEAK Matrix Assessment 2013 Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0927 Finance and Accounting Outsourcing (FAO) Market Report: August 2013 – Preview Deck
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Rising competition in the FAO market is driving service providers to innovate and look beyond traditional solutions. In this study, we analyze the multi-process FAO service provider landscape and focus on service provider capability assessment (market success, scale, scope, technology, delivery footprint, and buyer satisfaction), relative position on the Everest PEAK Matrix, Star Performers, and emerging investment themes among service providers
Transcript of Finance and Accounting Outsourcing (FAO) - Service Provider Landscape with PEAK Matrix Assessment...
Topic: Finance and Accounting Outsourcing (FAO) –
Service Provider Landscape with PEAK Matrix
Assessment 2013
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927
Finance and Accounting Outsourcing (FAO)
Market Report: August 2013 – Preview Deck
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 2
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Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 3
Table of contents (page 1 of 2)
Background and methodology 5
Executive summary 9
Summary of key messages 10
Implications of FAO trends for buyers and service providers 14
Section I: FAO service provider landscape overview 16
Summary 17
Service provider market share
– Overall FAO 18
– By industry 19
– By geography 20
Section II: 2013 FAO PEAK Matrix and Star Performers 21
Summary 22
PEAK Matrix for FAO 26
Service provider capability assessment 27
2013 FAO Star Performers 31
Section III: Key insights on PEAK Matrix dimensions 33
Summary 34
Market success 37
Scale 38
Scope 39
Technology 41
Delivery footprint 42
Buyer satisfaction 43
Topic Page no.
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 4
Table of contents (page 2 of 2)
Section IV: Emerging service provider trends 44
Summary 45
Emerging trends
– Serving the SMB segment 46
– Penetrating APAC, LATAM, and MEA 47
– BPaaS and cloud-enabled solutions 48
– Industry-specific expertise 49
– Analytics 50
– Financial Planning & Analysis (FP&A) 51
– Mobility 52
– Onshore and nearshore delivery 53
– Risk sharing 54
– Compliance and risk management 55
Appendix 56
Glossary of key terms 57
FAO research calendar 59
References 60
Topic Page no.
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 5
Background and methodology of the research
Background of the research
The global multi-process FAO market witnessed a healthy growth of 10% in 2012, showing signs of a mature and
stable market. Beyond cost reduction, process improvement, standardization, and scalability/flexibility drove FAO
adoption, emphasizing a cost+ value proposition. Moreover, adoption moved beyond the traditional geographies to
cover under-penetrated markets as well. With the market maturing, the competition intensity is at an all-time high. As a
result, it is becoming difficult to differentiate service providers purely based on delivery capability. Service providers are
also making investments across various areas to create innovative FAO solutions and offer differentiated value
proposition, in order to stand out in the crowded FAO market.
In this research, we analyse the global FAO service provider landscape in 2012. We focus on
Position of 20+ service providers on the Everest Group PEAK Matrix for FAO
2013 Star Performers
Key insights on PEAK Matrix dimensions
Emerging service provider trends
Implication for buyers and service providers
The scope and methodology of this report include
Third-party multi-process FAO deals with a minimum of two F&A processes, over US$1 million in ACV, and a
minimum contract term of three years
Over 800 multi-process FAO deals signed as of 2012
Coverage across 20+ FAO service providers with multi-process capability including Accenture, Aditya Birla Minacs,
Aegis, Capgemini, Cognizant, Datamatics, EXL, Genpact, HCL, HP, IBM, iGATE, Infosys, IQ BackOffice, NCO,
Quatrro, Serco, Steria, Sutherland Global Services, TCS, Tech Mahindra, Wipro, WNS, Xchanging, and Xerox
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 6
This report is based on three key sources of proprietary
information
Note: We continuously monitor the market and update the above list to include emerging service providers such as Aegis and Quatrro
Confidentiality: Everest Group takes its confidentiality pledge very seriously. Any information we collect that is contract specific will only be presented back to the industry
in an aggregated fashion
Proprietary database of 800+ multi-process FAO contracts (updated annually)
The database tracks the following elements of each multi-process FAO contract:
– Buyer details including industry, size, and signing region
– Contract details including Total Cumulative Value (TCV), Annualized Contract
Value (ACV), term, start date, service provider FTEs, and pricing structure
– Scope including buyer geography and functional activities
– Technology including core F&A technology, service provider-provided tools
(if any), ownership, and maintenance
– Global sourcing including delivery locations and level of offshoring
– Sourcing process including sole-sourced, competitive, advisor, or non-advisor led
Service providers covered in the analysis 1
Proprietary database of operational capability of 20+ FAO service providers
(updated annually)
The database tracks the following capability elements for each service provider
– Key Leaders
– Major FAO clients and recent wins
– Overall revenue and F&A employees
– Recent F&A-related developments
– FAO delivery locations
– FAO service suite
– Quality certifications and credit rating
– F&A-related technology capability
2
Buyer surveys and interactions
Global survey and one-on-one executive-level interviews to understand how
organizations perceive performance of their FAO provider
3
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 7
The scope of FAO services includes both transaction-
intensive and judgment-intensive processes
Capital budgeting
Strategy
Administer approval process
Project reporting
Strategy
Judgment-intensive
Transaction-intensive
Regulatory reporting and
compliance
Strategy
Data extraction
Analysis and MD&A
Regulatory reporting
Compliance program
Management reporting and
analysis
Strategy
Regular reporting
Data extraction
Analysis
– Ad hoc analysis and
special projects
– Cost accounting
Payroll
Strategy
Earnings
Deductions
Checks and EFT
Reconciliation
Third-party payments
Tax reporting and filing
Vendor management
Budgeting/forecasting
Strategy
Budget analysis and approval process
Build-line item budget
Forecast roll-ups and consolidation
Forecast analysis and approval
process
Treasury and risk management
Strategy
Bank relations and administration
Cash management and forecasting
Investments
Debt management
Foreign exchange
Treasury risk management
Accounts payable
Strategy
Maintain master data
Process payment requests
Process T&E claims
Administer EDI/P-card
Month-end close
Vendor inquiries
Reporting
Accounts receivable
Strategy
Customer set-up
Billing
Cash applications
Credit and collections
Customer inquiries
Reporting
General accounting
Strategy
Process general entries
Account reconciliations
Inter-company accounting
Prepare trial balances
Perform closings
Manage consolidations
Cost accounting
Tax
Strategy
Tax accounting
Tax planning and
analysis
Tax compliance
Tax audit
Fixed assets
Maintain master data
M/A/C of assets
Post depreciation
Internal audit
Strategy
Establish annual
audit plan
Conduct audits
Reports and
recommendations
F&A
strategy
Internal audit
Budgeting/forecasting
Treasury & risk management
Management reporting & analysis
Capital budgeting
General accounting
Accounts receivable
Tax
Payroll Accounts payable and T&E
Fixed assets
Regulatory reporting & compliance
Strategy
F&A strategy including
tax and risk position
Accounting policy and
control
Shareholder relations
M&As/divestitures
External reporting
Source: Everest Group (2013)
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 8
This report examines the global FAO service provider landscape and its impact on the FAO market. It focuses on service provider
position and growth in the FAO market, changing market dynamics and emerging service provider trends, and assessment of
service provider delivery capabilities. It also identifies the key implications of the research findings for buyers and service
providers.
Overview and abbreviated summary of key messages
2013 FAO Star
Performers
Everest Group identified five service providers as the “2013 FAO Market Star Performers”
based on the relative year-on-year movement of each service provider on the PEAK Matrix –
Accenture, Genpact, IBM, Infosys and Wipro
Some of the findings in this report are:
Everest Group PEAK
Matrix for FAO
Based on Everest Group’s comprehensive evaluation framework, PEAK Matrix, the 20+
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
Service provider
delivery capability
assessment
We assessed the overall FAO capability of service providers by evaluating them along six
dimensions – 2012 market success and wins, scale, scope, technology, delivery footprint, and
buyer satisfaction levels.
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
Emerging service
provider trends
The competition in the FAO service provider landscape is intensifying. As a result, in
2011-2012, FAO service providers made significant strategic investments across various
dimensions to differentiate themselves in the crowded FAO market
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 9
This study offers four distinct chapters providing a deep dive
into key aspects of FAO service provider landscape; below
are four charts to illustrate the depth of the report
Source: Everest Group (2013)
Everest Group PEAK Matrix for FAO Global FAO service provider market share
Service provider assessment parameters – Technology Emerging service provider trends
Mark
et
su
ccess
25
th p
erc
en
tile
High
Low
FAO delivery capability
(Scale, scope, technology, delivery footprint, and buyer satisfaction)
25th percentile
75th percentile
Low High
Major Contenders
Emerging
Players
Leaders
75
th p
erc
en
tile
Accenture
Xerox
Aditya Birla Minacs
Capgemini
Cognizant
Datamatics
EXL Service
Genpact
HCL
HP
IBM
iGate
Infosys BPO
Serco
IQ Back office
Quatrro
Steria
Sutherland Global Services
TCS
Tech Mahindra
Wipro
WNS
Xchanging
Aegis
Penetrating APAC, LATAM, and MEA Serving the SMB segment
Industry-specific expertise
Financial Planning & Analysis (FP&A) Analytics
Onshore and nearshore delivery Mobility
Compliance and risk management Risk sharing
6
4
2 1
5
8 7
10 9
BPaaS and cloud-enabled solutions
3
Top 10 service provider investment themes in FAO
Service provider 1
Service provider 2
Service provider 3
Service provider 4
Service provider 5
Service provider 6
Service provider 7
Service provider 8
Service provider 9
Service provider 10
Service provider 11
Service provider 12
Service provider 13
Service provider 14
Service provider 15
Service provider 16
Service provider 17
Service provider 18
Service provider 19
Platform-based
Augmentation
Tie-and-run
100% =
Bu
yer-
ow
ne
d
Serv
ice
pro
vid
er-
ow
ned
54% 41%
50%
40% 55%
50%
6% 4%
Leaders Major Contenders Emerging Players
Technology flavors in FAO contracts across service provider groups on PEAK Matrix Number of contracts
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 10
FAO research calendar
Topic Release date
Published Current
October-2012 Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting
January-2013 Unlocking Value From End-to-End Process Outsourcing: Focus on Order-to-Cash (O2C)
February-2013 Procure-to-Pay (P2P) Outsourcing: Unlocking Value from End-to-End Process Outsourcing
May-2013 FAO – Annual Report 2013: Increasing Market Maturity Driving Cost+ Value Proposition
August-2013 FAO – Service Provider Landscape with PEAK Matrix Assessment 2013
Q3-2013 FAO – Service Provider Compendium 2013
Q3-2013 Role of Analytics in FAO
Q3-2013 Growth of Horizontal BPO in LATAM
Q4-2013 Implications of IFRS Conversion in the United States on FAO
Q4-2013 Evaluation of BPaaS Solutions for FAO/PO/HRO
Copyright © 2013, Everest Global, Inc.
EGR-2013-1-PD-0927 11
Additional FAO research references
The following documents are recommended for additional insight into the topic covered in this research. The recommended documents either
provide additional details on the topic or complementary content that may be of interest
1. FAO Annual report 2013 (EGR-2013-1-R-0865a); 2013. This report assists key stakeholders (buyers, service providers, and technology providers) in
understand the changing dynamics of the FAO market. It also helps them identify the trends and outlook for 2013. The report provides comprehensive
coverage of the global FAO market including detailed analysis of market size and growth, buyer adoption trends, FAO value proposition and client
satisfaction, solution characteristics, and service provider landscape
2. Industry-specific FAO and Deep Dive into the U.S. Healthcare Providers (EGR-2012-1-R-0650); 2012. 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, and
industry-specific FAO in the U.S. healthcare provider space
3. Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting (EGR-2012-1-R-07054); 2012. This report looks at outsourcing of the
judgment intensive F&A processes, Financial Planning & Analysis, regulatory reporting and compliance. Record-to-Report, Order-to-Cash, and
Procure-to-Pay cover the entire F&A function as three end-to-end processes
4. Order-to-Cash (O2C) – Creating a Top-line Impact (EGR-2013-1-R-0816); 2013. Similar to the R2R report, this report looks at outsourcing a
separate end-to-end F&A process called Order-to-Cash, covering mostly the transactional activities within the function on the customer side
For more information on this and other research published by the Everest Group, please
contact us:
Saurabh Gupta, Vice President:
Vishnu Khandelwal, Senior Analyst:
FAO Team:
Phone: +1-214-451-3110
Email: [email protected]
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13455 Noel Road, Suite 2100
Dallas, TX 75240
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EGR-2013-1-PD-0927 12
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