Finance and Accounting Outsourcing (FAO) - Service Provider Landscape with PEAK Matrix Assessment 2013


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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

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Finance and Accounting Outsourcing (FAO) - Service Provider Landscape with PEAK Matrix Assessment 2013

  1. 1. 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
  2. 2. Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0927 2 Our research offerings for global services Subscription information  The full report is included in the following subscription(s) – F&A Outsourcing (FAO)  In addition to published research, a subscription may include analyst inquiry, data cuts, and other services  If you want to learn whether your organization has a subscription agreement or request information on pricing and subscription options, please contact us: – – +1-214-451-3110 Finance & accounting Procurement Human resources Recruitment process Service provider intelligenceGlobal sourcing PricePoint Contact center Transaction Intelligence Healthcare information technology Information technology Cloud Vista BFSI1 business process BFSI1 information technology Market Vista Global services tracking across functions, sourcing models, locations, and service providers – industry tracking reports also available 1 Banking, financial services, and insurance 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, contract assessment
  3. 3. 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.
  4. 4. 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.
  5. 5. 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
  6. 6. 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
  7. 7. 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)
  8. 8. 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
  9. 9. 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 Marketsuccess 25thpercentile High Low FAO delivery capability (Scale, scope, technology, delivery footprint, and buyer satisfaction) 25th percentile 75th percentile Low High Major Contenders Emerging Players Leaders 75thpercentile 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 MEAServing the SMB segment Industry-specific expertise Financial Planning & Analysis (FP&A)Analytics Onshore and nearshore deliveryMobility Compliance and risk managementRisk sharing 6 4 21 5 87 109 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% = Buyer-owned Service provider- owned 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
  10. 10. Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0927 10 FAO research calendar Topic Release date Published Current October-2012Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting January-2013Unlocking Value From End-to-End Process Outsourcing: Focus on Order-to-Cash (O2C) February-2013Procure-to-Pay (P2P) Outsourcing: Unlocking Value from End-to-End Process Outsourcing May-2013FAO – Annual Report 2013: Increasing Market Maturity Driving Cost+ Value Proposition August-2013FAO – Service Provider Landscape with PEAK Matrix Assessment 2013 Q3-2013FAO – Service Provider Compendium 2013 Q3-2013Role of Analytics in FAO Q3-2013Growth of Horizontal BPO in LATAM Q4-2013Implications of IFRS Conversion in the United States on FAO Q4-2013Evaluation of BPaaS Solutions for FAO/PO/HRO
  11. 11. 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: Everest Group Two Galleria Tower 13455 Noel Road, Suite 2100 Dallas, TX 75240
  12. 12. Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0927 12 Everest Group Leading clients from insight to action Everest Group is an advisor to business leaders on the next generation of 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 Dallas (Corporate Headquarters) +1-214-451-3000 New York +1-646-805-4000 Toronto +1-416-865-2033 London +44-207-129-1318 India / Middle East +91-124-496-1000 Stay connected Blogs Websites Twitter @EverestGroup @Everest_Cloud