Finance and Accounting BPO Market Landscape, 2013

Transcription

1 The Knowledge Community for Global Business & IT Services Finance and Accounting BPO Market Landscape, 2013 Market Evaluation, Forecast and Competitive Analysis Conducted with the support of KPMG s Shared Services and Outsourcing Advisory Practice March 2013 Phil Fersht Founder & CEO, HfS Research phil.fersht@hfsresearch.com Ron Walker Principal, Shared Services and Outsourcing Advisory, KPMG LLP rwalker@kpmg.com Brian Dubiel Principal Analyst brian.dubiel@hfsresearch.com

2 Table of Contents Topic Page Executive Summary 3 Research Methodology 7 Market Size and Forecast 11 Key Market Dynamics 18 Competitive Landscape 28 Multi-Process F&A BPO Deal Trends 38 Market-Wrap and Recommendations 50 About the Authors 55 The information contained herein is of a general nature and is not intended to address the circumstances of any particular individual or entity HfS Research Ltd. Proprietary Page 2

3 Competitive Landscape

4 Major Service Provider Dynamics - Highlights EXECUTION Genpact Shines Client big or small Genpact can do it all should be its corporate motto. Genpact s experience with upper middle market clients, in addition to its strong portfolio of enterprise clients, has helped it develop a stellar reputation in F&A BPO execution. Genpact has also excelled in its ability to develop niche vertical strength in F&A, for example servicing 8 of the 10 major global Pharma companies. Capgemini Looks to Be a Rising Star Capgemini has pushed itself from High Performer to Winner over the course of a few years. Cap s ability to execute leveraging its global process model, coupled with its excellent client management, have been the real catalysts for its entrance into the Winner s Circle. Greater depth in industry verticals, as well as a non-eu based clientele will help Capgemini in its quest to challenge the leaders in the Winner s Circle. EXL Greatly Improved Execution Capabilities With the dust now settled on the OPI acquisition, things are looking up at EXL. Legacy OPI customers are satisfied with a seamless transition, and have been pleased with the increased breadth OPI has brought to EXL s operations all adding to the provider s ability to execute. INNOVATION Accenture Leads All Service Providers in the Category Over the course of Accenture s reign at the pinnacle of the F&A market, the firm has consistently been at the forefront of providing services with a genuine vision for the future direction of BPO. Its success winning and extending major marquee enterprise clients, as a result of many years cultivating deep relationships, has been the cornerstone of its success. Its next challenge will be addressing the needs of the upper middle market, which is primed for the next wave of F&A BPO adoption. IBM is a Strong Performer in Analytics All the leading service providers are looking to incorporate analytics as a core ability in the fight for differentiation, and IBM sets itself apart with a strong integrated approach across its analytics and BPO practices especially F&A. Buyers no longer seek simple labor arbitrage in F&A deals they want better processes. Analytics can potentially unlock the keys to those productivity gains and providers must increase their capabilities in this area. Wipro Increased Capabilities in Innovation Wipro has sought to increase its capabilities through developing and focusing its client relationships. The additional emphasis on developing vertical capabilities, has also helped it become one of the more innovative firms and a real dark horse to watch in the coming months HfS Research Ltd. Proprietary Page 29

5 The Big Four of Accenture, IBM, Capgemini & Genpact Dominate two-thirds of the Multi-Process F&A BPO Market Overall Market Share as % of TCV: All Years To-date EXL Service, 2% InfosysBPO, 2% WNS, 3% HP, 4% Steria, 4% Xerox, 5% Other, 9% Wipro, 2% Genpact, 10% TCS Ltd., 1% Cognizant, 0.4% Xchanging, 0.4% Capgemini, 11% Accenture, 30% IBM, 15% Service Provider % Market Value Share TCV Projected TCV ($M) Accenture 29.6% 10,446.5 IBM 14.7% 5,205.0 Capgemini 10.6% 3,731.0 Genpact 10.2% 3,621.0 Other 8.9% 3,132.1 Xerox/ACS 5.4% 1,894.0 Steria 4.4% 1,550.0 HP 3.7% 1,307.0 WNS 3.4% 1,199.0 Wipro 2.5% InfosysBPO 2.3% EXL Service 2.1% TCS Ltd. 1.3% Cognizant 0.4% Xchanging 0.4% Serco 0.2% 78.2 Sutherland 0.04% % $35,350.7 M Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 30

6 Accenture s Dominance in the F&A Space Makes Them the Clear Market Share Leader Total Market Share of TCV: All Years 35% 30% 29.6% 25% 20% 15% 14.7% 10% 10.6% 10.2% 8.9% 5% 0% 5.4% 4.4% 3.7% 3.4% 2.5% 2.3% 2.1% 1.3% 0.4% 0.4% 0.2% 0.0% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 31

7 2011 & 2012 Were Explosive Years for Accenture s FAO Business, Doubling the Nearest Competitor s Acquired TCV During That Time Market Share of Deals of TCV: (n = 215) 45% 42.6% 30% 15% 16.3% 12.3% 4.3% 7.4% 6.0% 2.3% 3.1% 1.4% 0.7% 1.1% 1.1% 0.8% 0.2% 0.1% 0% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 32

8 In Terms of ACV for 2011 and 2012, EXL Made a Significant Bump in Yearly Contract Value Compared to Totals Market Share of Deals of TCV: (n = 215) 45% 42.6% 30% 15% 16.3% 12.3% 4.3% 7.4% 6.0% 2.3% 3.1% 1.4% 0.7% 1.1% 1.1% 0.8% 0.2% 0.1% 0% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 33

9 Accenture s Success Based on Large Deal Success; Genpact s Client Mix are a Balance of High and Mid-Sized Contracts Market Share Percentage per Size of Deal Percent of Deal Count (Including Other) 25% 20% Enterprise-level Mid-mkt-level engagements engagements % Market Share >25M TCV %% Market Share <25M TCV TCV 15% 10% 5% 0% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 34

10 Deal Size (<$25M TCV) Shows a Fairly Uniform Distribution Across a Handful of Service Providers Market Share Percentage: Size of Deal <$25M TCV Percent of Deals (Including Other) Behind the Numbers 16% 14% 12% 14.0% Distribution among service providers is quite even for smaller deals; only Genpact stands above in terms of market share 10% 9.3% 9.1% 8.7% 8.5% 8.5% 8.5% 8% 6% 6.5% 6.3% 6.1% 4% 2% 0% 3.6% 3.4% 3.0% 2.4% 1.2% 0.8% 0.2% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 35

11 Deals as a Percentage of Overall Market Share Shows a Significant Difference in the Motivation for Certain Service Providers Market Share Percentage: Size of Deal <$25M TCV Percent of Deals (Including Other) Behind the Numbers 30% 25% 24.8% Accenture has taken steps towards making the big deals work. This has helped them gain a stronger foothold in the overall market share in F&A. 20% 15% 15.0% 14.2% 11.8% 10% 5% 7.7% 6.1% 4.9% 4.5% 2.8% 2.4% 2.0% 1.2% 1.2% 0.8% 0.4% 0.0% 0.0% 0% Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 36

12 Multi-Process FAO Market Penetration Continues to be Dominated by the North American Market Region Contract Signed Number of Contracts 50% 45% 40% 35% 30% 48.50% Behind the Numbers Although small individually in comparison to NA, Europe still remains relatively large players in the market equating to roughly a 1/3 of the market. 25% 20% 17.02% 15% 13.35% 10% 7.79% 5% 3.89% 2.45% 1.89% 1.22% 0.78% 0.44% 0% North America Continental Europe UK India ANZ Other APAC Japan Latin America China Africa Source: HfS Research, 2013; n = 745 live multi-process FAO Contracts; based on live FAO contracts over $1M in TCV with a min. of two core F&A processes bundled 2013 HfS Research Ltd. Proprietary Page 37

13 About the Authors

14 Phil Fersht Founder and CEO, HfS Research Overview Over 17 years business experience in the global outsourcing and shared services industry across US, Europe and Asia An acknowledged industry advisor, strategist, author, speaker, practitioner and blogger Advised on 100s of global IT & BPO engagements Previous Experience Practice Head for IT Services & BPO Practice, AMR Research (Gartner Inc.) BPO Marketplace Leader at Deloitte Consulting Vice President for Everest Group, leading research and consulting teams based in the US and India. Prior Career Regional Director, IDC Asia/Pacific Program Manager, European IT Markets Services, IDC Europe Education BS with Honors in European Business & Technology from Coventry University, United Kingdom Diplôme Universitaire de Technologie in Business & Technology from the University of Grenoble, France 2013 HfS Research Ltd. Proprietary Page 56

15 Ron Walker Principal, Shared Services and Outsourcing Advisory, KPMG LLP Overview Member of the SSOA practice, specializing in transformation, shared services, outsourcing, and G&A processes. Leader for hundreds of improvement initiatives, including more than 80 shared services and/or new outsourcing relationships Leader for multiple outsourcing transactions from $1.5M - $1.5B across many functional areas including IT, HR, F&A, Supply Chain, Customer Care, and RE & FM Early practitioner in the business process outsourcing (BPO) industry and was a founding member of an F&A BPO service provider. rwalker@kpmg.com Previous Experience Led strategic sourcing assessment for a global 1000 FSI in its efforts to develop a new service delivery model for their back-office general and administrative functions. Provided the account leadership for FORTUNE 100 telecommunications company in its process of outsourcing real estate and facilities management functions in North America. Led strategic engagement to evaluate and implement service delivery model options for a leading software provider in the healthcare industry. Led initial evaluation and assessment for a large natural resources company as it evaluated internal and external G&A cost enhancement strategies HfS Research Ltd. Proprietary Page 57

16 Brian Dubiel Principal Analyst, HfS Research Overview Covers the Finance and Accounting and Procurement Outsourcing industries for HfS Research An acknowledged industry expert in BPO operations, having worked on multiple engagements including areas such as KPO, FAO, PO and LPO domains Previous Experience Served as the outsourcing category manager for State Street s Bank Initiated and developed State Street s Outsourcing Center of Excellence, creating corporate outsourcing tools and methodology, and standardizing knowledge for internal business lines to better govern their outsourcing providers and sourcing events Education Dual BA in Economics and Philosophy from Trinity College MBA with an Operations and Supply Chain concentration from Northeastern University 2013 HfS Research Ltd. Proprietary Page 58

17 About HfS Research 20 dedicated analysts across US, Europe and Asia/Pac Industry leading focus on demand-side trends, market landscapes, competitive evaluations, pricing dynamics, market sizing and forecasting Educates and facilitates discussion among the world s largest knowledge community of services and operations executives, currently comprising 120,000 subscribers. 19,000 LinkedIn Group members; leading blog and research portal in the services industry The largest web and social media presence in the sourcing industry A major following from the buy-side: 40% of readership comes from sourcing buyers We leverage our vast community of sourcing professionals to deliver rapid insights on global sourcing industry trends & developments - Surveyed over 15,000 organizations in on their sourcing intentions and dynamics 2013 HfS Research Ltd. Proprietary Page 59

18 About HfS Research HfS Research ( is a leading independent global analyst authority and knowledge community for the business and IT services industry. HfS is unique in the fact that it serves the research and strategy needs of business operations leaders across finance, supply chain, human resources, marketing, customer management, IT and core industry functions. In addition to researching business operations strategies, HfS educates and facilitates discussion among the world's largest knowledge community of enterprise services professionals, currently comprising 120,000 subscribers. HfS Research also facilitates the HfS Sourcing Executive Council, the acclaimed elite group of sourcing practitioners from leading organizations, which meets on a bi-annual basis to share the future direction of the global services industry and discuss the future enterprise operations framework. Led by recognized industry expert Phil Fersht, HfS Research differentiates itself with its global team of expert services analysts with real industry experience, provocative and opinionated research, unrivalled market analytics, and a view of technology as an enabler for business process improvement. Its on-demand expertise relationship model helps clients leverage HfS knowledge and strategic insight in a rapid, responsive and engaging manner. In 2010 & 2011, HfS was awarded Analyst of the Year by the International Institute of Analyst Relations (IIAR), the premier body of analyst-facing professionals, and achieved the distinctive award of being voted the research analyst industry's most Innovative Analyst Firm in Now in its sixth year of publication, HfS Research's acclaimed blog Horses for Sources is widely recognized as the leading destination for unfettered collective insight, research and open debate of sourcing industry issues and developments. To learn more about HfS Research, please research@hfsresearch.com HfS Research Ltd. Proprietary Page 60

19 About KPMG s Shared Service and Outsourcing Advisory KPMG is a leading provider of global sourcing advisory services, has the ability to help member firms clients transform enterprise services to help improve value, increase agility, and create sustainable business performance. Who we are: Shared Services and Outsourcing Advisory brings a specialized global team of more than 400 professionals within KPMG s global network of independent member firms operating in 152 countries. What we do: We help clients align their business strategy, organization, and execution to enable them to manage the entire IT and business process life-cycle, improving business performance, and laying the groundwork for genuine business transformation.. How we do it: We apply focused research, automating tools, proprietary data, clear business acumen, and a forwardthinking mind-set to provide timely, objective, actionable advice and practical approaches for clients HfS Research Ltd. Proprietary Page 61

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21 The Knowledge Community for Global Business & IT Services Phil Fersht Founder & CEO, HfS Research Ron Walker Principal, Shared Services and Outsourcing Advisory, KPMG LLP Brian Dubiel Principal Analyst