Finance and Accounting Outsourcing (FAO) Report: May 2011 Preview Deck

Transcription

1 Finance and Accounting Outsourcing (FAO) Report: May 2011 Preview Deck Topic: Global FAO Service Provider Landscape Competitive Intensity Driving Innovation

2 Table of contents (page 1 of 2) Topic Page no. Background and methodology 4 Summary of key messages 5 Section I: Everest PEAK Matrix for FAO 9 Summary 10 Leaders, Major contenders, and Emerging Players 11 Market success 13 Capability assessment 16 Section II: 2010 FAO Market Star Performers 23 Summary 24 Accenture 25 Genpact 26 IBM 27 TCS 28 WNS 29 Other notable 2010 performers 30 Section III: Increasing competitive intensity in the service provider landscape 31 Summary 32 Non-linear growth 33 Differentiated offerings 38 New buyer segments 46 2

3 Table of contents (page 2 of 2) Topic Page no. Appendix 51 Service provider capability assessment 52 Glossary of terms 56 Major upcoming research 59 References 60 3

4 Background and methodology of the research Background of the research 2010 saw the FAO market bounce back with ~15% growth in ACV, previously seen only in the pre-recession years. As the market continues to grow and mature, the competitive intensity in FAO is at an all time high. According to Everest s PEAK Matrix for FAO, there are now six service providers in the Leaders category and several Major Contenders are closing the gap fast. Rising competition is driving service providers to innovate and push the boundaries of traditional FAO solutions, as service providers invest in technology, maturity models, new markets and other differentiated offerings driving greater value creation in the market In this study, we analyze the global FAO service provider landscape in We focus on: Relative position of 20+ service provider on Everest PEAK Matrix for FAO The Star Performers of 2010 Implications of increased competitive intensity The scope and methodology of this report includes: Third-party FAO deals; it does not include shared services or captives 580 multi-process FAO contracts signed till the end of 2010 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, EXL Service-OPI, Genpact, HCL, HP, IBM, igate-patni, Infosys BPO, Intelenet, KPIT Cummins, Steria, TCS, VWA, Wipro, Xerox-ACS, and WNS 4

5 Summary of key messages (page 1 of 2) This report will assist key stakeholders (buyers, service providers, technology providers) understand the changing dynamics of FAO market service provider landscape and help them identify Leaders, Major Contenders, Emerging Players, and the Star Performers in the 2010 FAO market. This report provides comprehensive coverage of the global FAO service provider landscape including detailed analysis on market shares, capability assessment, and the service provider landscape movement in The report also profiles the growing role of technology tools and platforms. It provides details of the various dimensions along which service providers are innovating to differentiate themselves in an increasingly competitive and globalized FAO market. Some of the findings of this report, among others, are: Everest PEAK Matrix for FAO Everest updated its classification of 20+ FAO service providers on the Everest PEAK Matrix for FAO into Leaders, Major Contenders, and Emerging Players. The PEAK Matrix is a framework to assess the absolute market success and capability of service providers We assessed the delivery capabilities of each service provider across four dimensions: Scale, scope, technology, and delivery footprint. For each dimension we profiled service providers across all three categories and reported major developments in the market in The competitive intensity in FAO is increasing there are now six service providers in the Leaders category (Accenture, Capgemini, Genpact, HP, IBM, and Infosys BPO) and several Major Contenders (namely TCS, Wipro, and WNS) are closing the gap fast Technology was the key theme across acquisitions, partnerships, and internal investments in

6 Summary of key messages (page 2 of 2) 2010 FAO Market Star Performers Implications of increased competitive intensity Everest identified five service providers as the 2010 FAO Market Star Performers Accenture, Genpact, IBM, TCS, and WNS The five 2010 FAO Market Star Performers were chosen based on the relative movement on the Everest PEAK Matrix for FAO from 2009 to 2010 of 20+ FAO service providers. The movement relates to year-on-year (YoY) performance for a given service provider and does not reflect on overall market leadership positions Beyond the 2010 FAO Market Star Performers, several other service providers noticeably enhanced their positioning on the PEAK Matrix in These include Capgemini, Infosys, VWA, and Wipro Increased competitive intensity is driving innovation across three dimensions in the FAO market Non-linear growth: Service providers are now using process-agnostic solutions across different process areas. Wipro, Capgemini, and TCS are the leaders in innovation with the use of new tools and technologies Differentiated offerings: Industry-enabled FAO solutions are increasingly being introduced Specialized offerings in analytics and research, regulatory compliance and risk advisory are complimenting traditional FAO offerings Most established FAO service providers already offer procurement services or are building capabilities to provide integrated FAO-PO services New buyer segments: With increasing globalization of FAO, under-penetrated markets such as India and the Middle East have started witnessing increased activity Small and medium buyer segments saw several investments recently 6

7 This study offers three distinct chapters providing a deep dive into the global FAO service provider landscape; below are four charts to illustrate the depth of the report ILLUSTRATIVE Everest Performance Experience Ability Knowledge (PEAK) Matrix for FAO FAO number of contracts across service provider groups FAO service provider market shares Differentiated offerings: Service providers are creating differentiated process offerings that are complimentary to the traditional FAO offerings Source: Everest Research Institute (2011) 7

8 Major upcoming research Q1-Q FAO research plan Title Goals of the research Published 1 Global FAO Service Provider Landscape In this research study, we analyze the fast-changing global FAO service provider landscape and its impact on the FAO market. We focus on service provider position and market shares, delivery capability assessment, and modes of differentiation 2 FAO Service Provider Profile Compendium Profiles of 20+ established FAO service providers across various dimensions including overall revenues, FTEs strength, key delivery locations, FAO service suite, market positioning, overall FAO delivery capability assessment, and Everest Research perspective on service providers 3 Top Five Emerging Locations in FAO Beyond the established locations that feature in most leading FAO service providers global delivery network, newer locations are making their presence felt on the FAO delivery map. This study evaluates the top five such locations and highlights the market state therein 4 Process Maturity Models in FAO Can it be a Differentiator for Service Providers? The FAO value proposition has evolved from pure cost arbitrage to a cost+ value add. In a bid to continue growing in a competitive market, service providers are looking for ways to generate business impact beyond just labor arbitrage. Few FAO service providers have developed models to optimize the outsourced processes and shift them towards best-in-class performance benchmarks. This report investigates such models and their potential to create differentiation in the FAO market 8

9 Appendix: Additional FAO research references The following documents are recommended for additional insight on the topic covered in this Research Report. The recommended documents either provide additional details on the topic or complementary content that may be of interest 1. FAO Annual Report (ERI R-0393); This research includes comprehensive coverage of the FAO market including market size and trends, buyer adoption, transaction mechanics, service provider capabilities and position, and comparison of FAO with other BPOs 2. Value Creation through FAO Perspectives of Mature Buyers (ERI R-0465); Cost arbitrage continues to be an important value-creation lever in FAO. However, companies increasingly evaluate value created by FAO at three levels direct-cost impact, process impact, and strategic impact. This research highlights drivers, challenges, and benefits of FAO. It also provides details around criteria for service provider selection 3. Moving beyond Transactional FAO: The Rise of FP&A Outsourcing (ERI R-0490); The multi-process FAO market constitutes various F&A processes that differ in their degree of outsourcing, with some processes outsourced less often than others. FP&A is one segment that is outsourced less than others. This report will assist key stakeholders in understanding the trends in outsourcing FP&A processes within the FAO market 4. Global FAO Service Provider Landscape Leaders, Contenders, Emerging Players, and the 2009 Star Performers (ERI R-0414); The 2009 FAO market context gave service providers an opportunity for introspection, revaluating service offerings, and building capability (both in-house and through acquisitions) for the anticipated growth in In this study, we analyze the global multi-process FAO service provider landscape and focus on service provider evaluation and relative position on the Everest PEAK Matrix For more information on this and other research published by the Everest Research Institute, please contact us: Saurabh Gupta, Vice President: Kuldeep Lulla, Senior Research Analyst: Rishabh Gupta, Senior Research Analyst: FAO Team: Everest Research Institute Two Galleria Tower Noel Road, Suite 2100 Dallas, TX Phone:

10 About Everest Group Everest Group is an advisor to business leaders on next generation global services with a worldwide reputation for helping Global 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With a fact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use and delivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practical consulting, original research and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent and sourcing models, technologies and management approaches. Established in 1991, Everest Group serves users of global services, providers of services, country organizations and private equity firms, in six continents across all industry categories. For more information, please visit and 10

11 Everest Group leads clients from insight to action Contact us for more information about our consulting, research, and industry resources. Dallas (Corporate Headquarters) Canada New York India/Middle East UK Netherlands & Continental Europe