Order-to-Cash (O2C) Outsourcing - Creating a Top-line Impact


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Order-to-Cash (O2C) Outsourcing - Creating a Top-line Impact

  1. 1. Topic: Order-to-Cash (O2C) Outsourcing – Creating aTop-line ImpactFinance and Accounting OutsourcingMarket Report – January 2013 – Preview Deck Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0816
  2. 2. Our research offerings for global servicesSubscription information Market Vista The full report is included in Global services tracking across functions, sourcing models, locations, and the following subscription(s) service providers – industry tracking reports also available – Finance & accounting Banking, financial Healthcare Finance & accounting In addition to published services, insurance research, a subscription may include analyst inquiry, data Information cuts, and other services Procurement Cloud Vista technology If you want to learn whether your organization has a Human resources Recruitment process Global sourcing subscription agreement or request information on pricing and subscription Service provider Transaction PricePoint options, please contact us: Intelligence Intelligence – info@everestgrp.com – +1-214-451-3110 Custom research capabilities  Benchmarking | Pricing, delivery model, skill portfolio  Peer analysis | Scope, sourcing models, locations  Locations | Cost, skills, sustainability, portfolio  Tracking services | Service providers, locations, risk  Other | Market intelligence, service provider capabilities, technologies Copyright © 2013, Everest Global, Inc. 2 EGR-2013-1-PD-0816
  3. 3. Background and scope of the researchBackground of the research The Finance & Accounting (F&A) function comprises three end-to-end processes – Procure-to-Pay (P2P), Order-to-Cash (O2C), and Record-to-Report (R2R). This report focuses on the third-party outsourcing of O2C activities Traditionally, organizations outsourced transactional O2C processes such as Accounts Receivable (AR), as they provide direct cost reduction. However, with increased maturity of the FAO market, the value proposition is now expanding beyond cost reduction to creation of favorable business outcomes such as enhanced customer experience, reduced DSO, optimized working capital, effective cash management, and reduced revenue leakage. Therefore, buyers are increasingly looking to outsource activities beyond AR and taking an end-to-end process-driven approach. In this study, we investigate the business value and the market state of outsourcing end-to-end O2C processIn this study, we investigate the state of the O2C outsourcing market. We focus on: Definition, value proposition, and challenges of O2C outsourcing O2C outsourcing market size and growth Emerging and current solution trends O2C service provider landscape and capability assessmentScope of study and sources of information The scope of this report is non-voice based third-party O2C outsourcing The scope excludes internal shared services The report is based on Everest Group’s proprietary database of over 1,500 FAO contracts signed till mid-2012 and operational capability of more than 25 FAO service providers that offer O2C services Copyright © 2013, Everest Global, Inc. 3 EGR-2013-1-PD-0816
  4. 4. Table of contents (page 1 of 2)Topic Page no.Background and scope 5Summary of key messages 6Section I: O2C market overview 11 Summary 12 Definition and process map 13 Typical operational cost breakdown for F&A 16 Value proposition of O2C outsourcing 17 Unique O2C challenges and best practices 20 Industry specific O2C 21Section II: O2C outsourcing market size and solution trends 23 Summary 24 Size and growth of O2C outsourcing 26 Adoption trends by industry, geography, and size 27 Inclusion of O2C activities in FAO contracts 29 Copyright © 2013, Everest Global, Inc. 4 EGR-2013-1-PD-0816
  5. 5. Table of contents (page 2 of 2)Topic Page no.Section II: O2C outsourcing market size and solution trends (continued) O2C solution trends 30 – Process scope 30 – Global sourcing 32 – Technology 35 – Pricing 37 – Performance indicators 39Section III: O2C outsourcing service provider landscape 40 Summary 41 O2C service provider landscape 42 Delivery strength and footprint for O2C providers 43 Investments in O2C services 48 Emerging trends in O2C 50Appendix 51 Glossary of terms 52 FAO research calendar 54 References 55 Copyright © 2013, Everest Global, Inc. 5 EGR-2013-1-PD-0816
  6. 6. Overview and abbreviated summary of key messagesThis report provides a comprehensive coverage of the O2C outsourcing market and analyzes it across variousdimensions such as market overview, value proposition and key challenges, buyer adoption trends, solutioncharacteristics, and service provider landscape.Some of the findings in this report, among others, are:Market  O2C outsourcing has a strong cost+ value proposition. It enables enterprises tooverview, value address several business pain-points such as inefficient cash flowproposition and key management, revenue leakages (bad debt), and receivable managementchallenges  O2C outsourcing has some specific underlying issues arising from inter-functional dependencies, industry-specific requirements, disparate technological landscape, and direct exposure to end customerBuyer adoption  O2C inclusion across all customer segments (by geography, industry, and size) is high,trends though end-to-end coverage is lowSolution  While most O2C outsourcing contracts continue to be AR-focused, an end-to-end O2Ccharacteristics scope is an emerging trend  Technology augmentation is a more prevalent approach in O2C vis-à-vis platform- based approachService provider  The service provider landscape for O2C outsourcing is diverse, spanning globallandscape majors, BPO pure-plays, IT-BPO providers, and O2C specialists  There are three key themes of recent service provider investments in O2C capabilities: 1) technology & analytics; 2) onshore/offshore delivery expansion; and 3) overall capability enhancement Copyright © 2013, Everest Global, Inc. 6 EGR-2013-1-PD-0816
  7. 7. This study offers four distinct chapters providing a deep diveinto key aspects of the O2C outsourcing market; below arefour charts to illustrate the depth of the reportEnd-to-end O2C scope O2C market size and growth Quote-to-order Production Order fulfillment Billing/Invoicing to AR (Sales function) (Manufacturing) (Supply chain (Finance & accounting function) FAO market size by process function) Annual Contract Value (ACV) in US$ billion Projected CAGR Inquiry Scheduling Quotation Manufacturing Logistics 3 Dispute 1 2 Order resolution & Billing management deduction Order-to-cash management R2R Invoice-to-cash Order-to-invoice 5 4 O2C Accounts Aging & receivable collections P2P 6 Analytics & reporting 2011 2015 (Expected)Delivery footprint of O2C outsourcing O2C service provider delivery strength Relative maturity of O2C delivery centers O2C delivery strength and focus Percentage of service providers providing O2C services from the delivery location Focus on O2C (as % of FAO FTEs) Number of India O2C FTEs >80% 60-80% 40-60% 20-40% <20% Offshore South East Asia  Company A  Company H  Company J locations China Over 1,500  Company B  Company I  Company K  Company C  Company L Middle East / Africa  Company D  Company N Nearshore LATAM 500-1,500  Company O locations Eastern Europe  Company E  Company M  Company P  Company S North America Less than  Company F  Company Q  Company T Onshore locations 500  Company G  Company R  Company U Western Europe Market average =Source: Everest Group (2013) Copyright © 2013, Everest Global, Inc. 7 EGR-2013-1-PD-0816
  8. 8. 2012 FAO research agenda Published CurrentTopic Release dateFAO Service Provider Compendium July-2012The Paradox of FAO adoption in SMBs July-2012Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting October-2012Order-to-Cash (O2C) Outsourcing – Unlocking the Revenue Potential January-2013Unlocking Value From End-to-End Process Outsourcing: Focus on Procure-to-Pay (P2P) Q1-2013FAO Annual Report Q1-2013FAO Service Provider Landscape – Survival and Growth in the Crowded FAO Market Q2-2013FAO Service Provider Compendium Q2-2013Is there value in analytics as a stand-alone BPO segment? Q3-2013 Copyright © 2013, Everest Global, Inc. 8 EGR-2013-1-PD-0816
  9. 9. Additional FAO research referencesThe following documents are recommended for additional insight on the topic covered in this report. The recommended documents eitherprovide additional details on the topic or complementary content that may be of interest1. Finance and Accounting Outsourcing (FAO) Annual Report 2012: The FAO Market – Signaling Towards Maturity (EGR-2012-1-R-0680a); 2012. In this research, we review the global multi-process FAO market in 2011 and provide guidance on the market’s direction in 2012. We focus on market size and buyer adoption trends, FAO value proposition, contract characteristics across process scope, technology, global sourcing, pricing structures, and FAO service providers landscape covering service providers’ market shares and areas of investments2. FAO Service Provider Landscape – Survival and Growth in the Crowded FAO Market (EGR-2012-1-R-0699a); 2012. In this study, we analyze the global FAO service provider landscape in 2012. We focus on the position of 20+ service providers on the Everest Group PEAK Matrix for FAO, the Star Performers, and how service providers are innovating to differentiate themselves in an increasingly globalized FAO market3. Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting (EGR-2012-1-R-0754); 2012. This report analyzes the key trends in R2R outsourcing within the FAO market and provides an understanding of the business value, adoption characteristics, and service provider capability in R2R outsourcing4. Leveraging BPO to Drive Success in Utilities and Retail Energy Providers (EGR-2012-1-R-0658); 2011. Outsourcing (Meter-to-Cash) M2C processes is one of the options available to utilities and retail energy providers who are facing myriad and rapidly evolving challenges in the market place. This report examines the benefits of outsourcing M2C, and the considerations necessary to develop a long-term and constructive client-service provider partnership5. Industry-specific FAO and Deep Dive into the U.S. Healthcare Providers (EGR-2012-1-R-0650); 2012. This report provides an understanding of the need for industry-specific FAO, service provider investment themes in industry-specific FAO, and a deep dive into the U.S. healthcare providers market For more information on this and other research published by Everest Group, please contact us: Saurabh Gupta, Vice President: saurabh.gupta@everestgrp.com Vishnu Khandelwal, Senior Analyst: vishnu.khandelwal@everestgrp.com FAO Team: faoresearch@everestgrp.com Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Phone: +1-214-451-3110 Dallas, TX 75240 Email: info@everestgrp.com Copyright © 2013, Everest Global, Inc. 9 EGR-2013-1-PD-0816
  10. 10. Everest GroupLeading clients from insight to actionEverest Group is an advisor to business leaders on the next generation of global services with a worldwide reputation for helpingGlobal 1000 firms dramatically improve their performance by optimizing their back- and middle-office business services. With afact-based approach driving outcomes, Everest Group counsels organizations with complex challenges related to the use anddelivery of global services in their pursuits to balance short-term needs with long-term goals. Through its practicalconsulting, original research, and industry resource services, Everest Group helps clients maximize value from deliverystrategies, talent and sourcing models, technologies, and management approaches. Established in 1991, Everest Group servesusers of global services, providers of services, country organizations, and private equity firms in six continents across all industrycategories. For more information, please visit www.everestgrp.com and research.everestgrp.com.Dallas (Corporate Headquarters) Toronto India / Middle Eastinfo@everestgrp.com canada@everestgrp.com india@everestgrp.com+1-214-451-3000 +1-416-865-2033 +91-124-496-1000New York Londoninfo@everestgrp.com unitedkingdom@everestgrp.com+1-646-805-4000 +44-207-129-1318Stay connectedWebsites Twitter Blogswww.everestgrp.com @EverestGroup www.sherpasinblueshirts.comresearch.everestgrp.com @Everest_Cloud www.gainingaltitudeinthecloud.com Copyright © 2013, Everest Global, Inc. 10 EGR-2013-1-PD-0816