Finance & Accounting Outsourcing (FAO)
Annual Report: March 2009 – Preview Deck
Topic: Strategically Tackling the FAO Market in 2009:
Maximizing Opportunities
Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Background and scope of the research
Latest research from Everest reveals that 2008 witnessed new contract signings in excess of US$3billion – the
strongest year ever for new FAO spending. These results emphasize that FAO market fundamentals continue
to be strong and the value drivers for FAO continue to hold significance in times of economic uncertainty.
As 2009 unfolds, the clients and providers of FAO are well positioned to take advantage of key opportunities.
Ranging from an ever expanding value proposition, to an active period for contract renewals, to the broadening
scope of FAO solutions, FAO stakeholders must make strategic decisions on the future direction for their
engagements.
In this backdrop, this report provides comprehensive coverage of the global FAO market including market size
buyer adoption patterns and sources of growth. It provides insight into the changing contract characteristics,
process scope, global sourcing, technology, and pricing structure. The report also evaluates the supplier
landscape and the modes of differentiation being used by the suppliers to ensure greater success in the market.
This report will assist buyers and suppliers understand the changing dynamics of the FAO market and will help
them identify value creation opportunities as well as identify potential risks involved.
Scope
The report includes 375+ multi-process FAO contracts signed as of November 2008 with a minimum of two
F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of
three years
Coverage across 20+ suppliers with multi-process FAO capability including Accenture, ACS, Capgemini,
Cognizant, Compass BPO, EXL Service, Genpact, HCL, HP-EDS, IBM, iGate, Intelenet, Infosys, OPI, RMS,
Steria, TCS, VWA, Wipro, and WNS
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Table of contents (page 1 of 3)
Topic Page no.
Section I: Introduction and overview 6
Everest overview 7
Multi-process FAO definition 9
Section II: Key insights 12
Market size and buyer adoption 13
Value proposition and contract characteristics 13
Supplier landscape 14
Section III: Market size and buyer adoption 15
Summary 16
Size and growth 17
Snapshot of new contracts, TCV, and ACV 17
Average size of FAO contracts 20
Impact of financial crisis on FAO 21
Market health of FAO 22
Buyer adoption trends 23
Adoption by industry 24
Adoption by buyer size 25
Adoption by geography 26
Contract growth and renewals 28
Organic growth of FAO contracts 28
Renewals 29
End of term strategy 30
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Table of contents (page 2 of 3)
Topic Page no.
Section IV: Value proposition and contract characteristics 32
Summary 33
FAO value proposition 35
Traditional vs. advanced FAO value proposition 35
FAO drivers vs. impact 36
Buyer challenges 37
Process scope 38
Degree of outsourcing of F&A processes 39
Industry-specific FAO 40
Global sourcing 41
Degree of offshoring 41
Delivery location landscape 42
Multi-region sourcing in FAO 44
Technology 45
Technology ownership trends 45
Technology landscape in FAO 46
Tools and platform approach 47
Pricing structure 51
Pricing structure trends 51
Emerging best practices 52
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Table of contents (page 3 of 3)
Topic Page no.
Section V: Value proposition and contract characteristics 53
Summary 54
Capability-success matrix 55
Leaders, major contenders, and emerging players 55
Capability-success matrix for 2008 56
Market shares 57
Global FAO supplier market share by number of contracts, ACV, and TCV 57
Global FAO supplier market share over time 58
FAO supplier market share for contracts signed in 2008 59
Modes of differentiation 60
Industry-oriented 62
Process-oriented 64
Value-lever oriented 65
Investments 66
M&A activity 66
New delivery centers 67
Section VI: Implications for key stakeholders 68
Implications of FAO trends for buyers 70
Implications of FAO trends for suppliers 72
Appendix 74
2007-2008 key FAO-related investments 75
Dimensions of Everest proprietary supplier rating methodology 77
Glossary of terms 78
References 82
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Overview and abbreviated summary of key messages
(page 1 of 2)
This report will assist key stakeholders (i.e., buyers, suppliers, and technology providers) understand the
changing dynamics of the FAO market and will help them identify value creation opportunities as well as
identify potential risks involved. In this backdrop, this report provides comprehensive coverage of the
global FAO market including detailed analyses on market size and buyer adoption, transaction
characteristics, and supplier landscape.
Some of the findings in this report, among others, are:
FAO continued to thrive in 2008 despite economic uncertainty. 2008 witnessed
Market size and
new contract signings in excess of US$3billion – the strongest year ever for new
buyer adoption
FAO spending. Everest predicts that the market will continue to grow at 20%+ in
the near term
2008 saw several changes to the buyer adoption patterns
Traditional FAO adopters like manufacturing along with new industries such
as media were the key drivers. Financial services witnessed a slowdown
The buyer base for FAO continues to spread beyond its initial concentration in
USA and UK
The current economic conditions proved to be inhibitors for the mid-market
but a driver for the large market
Beyond new contract signings, drivers for growth in the FAO market also include
organic growth of existing engagements and the contract renewals
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Overview and abbreviated summary of key messages
(page 2 of 2)
FAO value proposition is incrementally expanding beyond direct cost impact
Value
Transaction-intensive processes are most commonly outsourced. Analytics and
proposition &
industry-specific processes are increasingly getting bundled in FAO deals
contract
Global sourcing in FAO continues to evolve from a value proposition focused
characteristics
primarily on cost savings to one focused on value enhancement
Augmentation of existing functionality is the prevalent technology approach;
suppliers are testing platform-based BPO offerings in the market
Most FAO contracts continue to be priced on a per FTE basis; transaction-based
pricing is gaining ground
While the leading FAO suppliers are holding on to their market position, the
Supplier major contenders are closing the gap. Emerging players are feeling the squeeze
landscape Accenture, IBM, and HP-EDS were the top three players in terms of market
activity in 2008. Other players that reported a strong 2008 include ACS,
Capgemini, Infosys, TCS, Wipro, and WNS
As the competitive intensity in FAO increases, the need to differentiate offerings
is extremely high. There are three emerging areas for creating differentiated
FAO value proposition – industry-oriented offerings, process-oriented offerings,
and value-lever oriented offerings
The FAO market continued to witness significant investments in capability build-
up. Captives and niche technology vendors were the key targets in 2008.
Expansion of delivery footprint also continued to be strong in 2008, especially in
Central & South America and S.E. Asia
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

This study offers four distinct chapters providing a deep
dive into key aspects of the FAO market; below are four
charts to illustrate the depth of the report ILLUSTRATIVE
Multi-process FAO market snapshot over time Frequency of inclusion of processes
New TCV signed per year, number of new contracts Percentage of contracts
Judgment-intensive
Regulatory reporting & compliance
Internal audit
Budget/forecast
Treasury & risk management
Analytics
Tax
Transaction-intensive
Payroll1
Fixed assets
Accounts Receivable (AR)
General Ledger (GL)
Accounts Payable (AP) and T&E
Maturity of offshore & nearshore delivery locations Supplier capability-success matrix
Source: Everest Research Institute (2009)
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

Appendix: Additional FAO research recommendations
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 which may be of interest
1. Industry-Specific FAO Solutions – Moving Beyond the Bottom-Line (ERI-2009-1-R-0322); 2009. This research study tracks and
analyzes this new development in the FAO market. As the market matures and evolves further, the Everest Research Institute predicts that
the industry-specificity in FAO offerings will increase especially in the services sector and the Order-to-Cash (O2C) process. Also, industry-
specific FAO will emerge as an opportunity for FAO suppliers to create distinctive positioning in an increasingly competitive market
2. Understanding the Waking Giant: The Mid-Market and FAO (ERI-2008-1-R-0279); 2008. The emerging mid-market in FAO presents a
new set of challenges and opportunities for both buyers and suppliers. The objective of this report is to assist key stakeholders in
understanding the changing dynamics of the mid-market for FAO and help them identify value creation opportunities as well as identify
potential risks involved
3. FAO Market Growth Targets a Broader Value Proposition – A mid year review (ERI-2008-1-W-0278); 2008. Over the past several years
we have seen the market expand its circle of appeal to include a wide-range of industries, geographies, and buyer sizes. Driven by evolving
market circumstances, the FAO curve has lasted longer than expected. This whitepaper summarizes the highlights of the FAO market in the
first half of 2008 and offers some guidance on what to expect in 2009
4. Finance & Accounting Outsourcing (FAO) Contract Characteristics (ERI-2008-1-R-0259); 2008. This research provides a
comprehensive coverage of the characteristics of FAO contracts. The report includes detailed analyses of FAO market size and buyer
adoption, FAO contract profiles and FAO solution design. Finally, the report discusses key implications for buyers and suppliers
5. Finance & Accounting Outsourcing (FAO) Annual Report (ERI-2008-1-R-0245); 2008. This research includes comprehensive coverage
of the 2007 FAO market including market size and buyer adoption, current contracts characteristics, supplier landscape, emerging growth
drivers. The report also summarizes the key insights and implications for the stakeholders
For more information on this and other research published by the Everest Research Institute,
please contact us:
kmenzigian@everestgrp.com
Katrina Menzigian, Vice President::
sgupta@everestgrp.com
Saurabh Gupta, Research Director:
adabas@everestgrp.com
Ateendra Dabas, Senior Research Analyst:
asahni@everestgrp.com
Ankur Sahni, Research Analyst:
FAOresearch@everestgrp.com
FAO team:
Everest Research Institute
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13455 Noel Road, Suite 2100 Phone: +1-214-451-3110
Dallas, TX 75240 Email: info@everestresearchinstitute.com
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Copyright © 2009, Everest Global, Inc.
ERI-2009-1-PD-0324

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ERI-2009-1-PD-0324