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Procure-to-Pay (P2P) Outsourcing: Unlocking Value from End-to-End Process Outsourcing


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The Finance & Accounting (F&A) and Procurement functions comprise three end-to-end processes – Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on the third-party outsourcing of P2P activities – the downstream process within S2P.

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Procure-to-Pay (P2P) Outsourcing: Unlocking Value from End-to-End Process Outsourcing

  1. 1. Topic: Procure-to-Pay (P2P) Outsourcing –Unlocking Value from End-to-End Process OutsourcingFinance & Accounting Outsourcing (FAO) andProcurement Outsourcing (PO)Report: February 2013 – Preview Deck Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
  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 – Procurement Banking, financial Healthcare Finance & accounting services, insurance In addition to published research, a subscription may Information include analyst inquiry, data Procurement Cloud Vista technology cuts, and other services If you want to learn whether Human resources Recruitment process Global sourcing your organization has a subscription agreement or request information on pricing Service provider Transaction PricePoint and subscription options, Intelligence Intelligence please contact us: – Custom research capabilities – +1-214-451-3110  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-0819a
  3. 3. Background and sources of informationBackground of the research The Finance & Accounting (F&A) and Procurement functions comprise three end-to-end processes – Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on third-party outsourcing of P2P activities – the downstream process within S2P With increasing maturity of the FAO and PO markets, FAO contracts are expanding upstream beyond Accounts Payable (AP), while PO contracts are expanding downstream beyond S2C to include broader scope of P2P activities. This is resulting in increased convergence between the FAO and PO markets. Such an end-to-end process-driven approach to outsourcing as opposed to the existing piecemeal and functional approach is unlocking more value creation opportunitiesIn this study, we investigate the market state of P2P outsourcing. We focus on: Definition, value proposition, and challenges of P2P outsourcing P2P outsourcing market size and growth Emerging and current solution trends P2P service provider landscapeScope of the study and sources of information The scope of this study is third-party outsourcing and does not include internal shared services The study provides global and cross-industry coverage of P2P outsourcing The study is based on Everest Group’s proprietary database of over 1,000 FAO contracts and over 300 PO contracts signed till the end of 2011, and operational capability of 25 service providers who offer P2P services Copyright © 2013, Everest Global, Inc. 3 EGR-2013-1-PD-0819a
  4. 4. Table of contents (page 1 of 2)Topic Page no.Background and sources of information 5Summary of key messages 6Value proposition of P2P outsourcing 9 Summary 10 Definition 11 Value proposition 14 Typical challenges 17P2P outsourcing market size and solution trends 18 Summary 19 Size and growth 20 Adoption trends by industry, geography, and size 22 P2P inclusion 23 Degree of offshoring 26 P2P delivery locations 27 Role of technology 28 Service levels and performance metrics 30 Pricing models 31 Copyright © 2013, Everest Global, Inc. 4 EGR-2013-1-PD-0819a
  5. 5. Table of contents (page 2 of 2)Topic Page no.P2P outsourcing service provider landscape 32 Summary 33 Service providers classification 34 Scale as per FTEs 35 Delivery footprint 38 P2P investment themes 39Appendix 43 Glossary of key terms used in the report 44 FAO research agenda 46 PO research agenda 47 Additional FAO and PO research references 48 Copyright © 2013, Everest Global, Inc. 5 EGR-2013-1-PD-0819a
  6. 6. Overview and abbreviated summary of key messagesThis report analyzes the key trends in P2P outsourcing within the FAO and PO market. It provides anunderstanding of the business value, adoption trends, solution characteristics, and service provider capabilityin P2P outsourcing.Some of the findings in this report, among others, are:Value proposition  The P2P process typically accounts for nearly a third of the overall F&A andand key challenges procurement operational costs  An end-to-end P2P outsourcing approach also poses some unique challenges such as multiple stakeholders, technology fragmentation, and a more complex scope definition beyond common BPO challenges, given the overlap with both procurement and finance functionsP2P outsourcing  Technology is playing an increasingly important role in P2P outsourcing. Beyondsolution trends add-on tools, several platform-based / BPaaS solutions are emerging  India has emerged as the main offshore hub for P2P delivery. However, an onshore-nearshore-offshore blend is emergingP2P outsourcing There are three emerging themes of service provider investments related to P2Pservice provider outsourcing:capability  BPaaS- / Platform-based solutions  Analytics  Expansion from P2P to broader S2P capabilities Copyright © 2013, Everest Global, Inc. 6 EGR-2013-1-PD-0819a
  7. 7. This study offers three distinct chapters providing a deep diveinto key aspects of the P2P outsourcing market; below arefour charts to illustrate the depth of the reportExpected savings from the end-to-end P2P outsourcing P2P market size 70-75% additional savings over AP outsourcing by leveraging an end-to-end FAO & PO market size by process Projected CAGR process driven approach for P2P ACV in US$ billion AP outsourcing savings from cost arbitrage and process efficiency Savings by outsourcing other P2P activities including greater compliance S2C R2R Additional business impact due to an end-to-end approach O2C Total savings from integrated P2P P2P 100% approach 2011 2015P2P outsourcing service provider landscape P2P outsourcing global footprint 1. End-to-end P2P providers P2P outsourcing delivery locations with credible F&A and procurement offerings Central and Eastern Europe  Primarily leveraged as nearshore locations for Western Europe 2. FAO 3. PO providers North America and Western Europe  Leveraged for sourcing support and  Onshore locations for client facing roles providers focused  Leveraged local market knowledge for day-to-day purchasing China  Sourcing support and upstream P2P focused primarily on upstream P2P activities and S2C activities Western Europe primarily on upstream P2P Central & Eastern Europe  Also supporting Japanese and Nottingham Korean markets AP services services Glasgow Wroclaw Preston Lodz London Krakow China & North America Troy Southeast Asia Prague Budapest Detroit India Dalian San Jose Richmond Atlanta Shanghai Hangzhou Gurgaon Noida Guangzhou Mexico city Mumbai Pune Central & South America Bangalore Chennai Manila Central and South America  Primarily leveraged as nearshore Belo Horizonte India locations for U.S. Sao Paulo  Offshore hub and the most mature  Domestic LATAM market also delivery region for P2P emerging  Leveraged for providing end-to-end P2P  Leveraged for sourcing support and services day-to-day purchasingSource: Everest Group (2013) Copyright © 2013, Everest Global, Inc. 7 EGR-2013-1-PD-0819a
  8. 8. 2013 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 – Creating a Top-line Impact January-2013Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing February-2013FAO Annual Report Q1-2013FAO Service Provider Landscape Q2-2013FAO Service Provider Compendium Q2-2013Role of Analytics in FAO Q3-2013Growth of Horizontal BPO in LATAM Q3-2013Implications of IFRS Conversion in the United States on FAO Q4-2013Evaluation of BPaaS Solutions for FAO/PO Q4-2013 Copyright © 2013, Everest Global, Inc. 8 EGR-2013-1-PD-0819a
  9. 9. 2013 PO research agenda Published CurrentTopic Release datePO Service Provider Landscape – Investing in Building Expertise July-2012PO Service Provider Profile Compendium August-2012Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing February-2013Expansion of PO Into Broader Supply Chain Q1-2013From Strategic Sourcing to Contracting – Source-to-Contract (S2C) a High Value Driver in PO Q1-2013PO Annual Report Q1-2013Sourcing Contingent Workforce – Rise of MSP model Q2-2013PO Service Provider Landscape Q2-2013PO Service Provider Profile Compendium Q2-2013The Rise of Procurement and HR Collaboration – Effectively Managing HR-spend Q3-2013Growth of Horizontal BPO in LATAM Q3-2013Evaluation of BPaaS Solutions for FAO/PO/HRO Q4-2013Tail-end Spend Management Q4-2013 Copyright © 2013, Everest Global, Inc. 9 EGR-2013-1-PD-0819a
  10. 10. Additional FAO and PO research referencesThe following documents are recommended for additional insight into the topic covered in this report. These either provideadditional 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). 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. Procurement Outsourcing (PO) Annual Report 2012: The PO Market – Steadily Marching Forward (EGR-2012-1-R-0683a). This report provides an overview of the overall PO market in 2011, including the size and growth of the market, adoption trends, contract characteristics, value proposition, service provider landscape, and market outlook for 20123. 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 processes4. Order-to-Cash (O2C) – Unlocking the Revenue Potential (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 Everest Group, please contact us: Saurabh Gupta, Vice President: Abhishek Menon, Practice Director: Vikas Menghwani, Analyst: PO Team: Everest Group Two Galleria Tower Phone: +1-214-451-3110 13455 Noel Road, Suite 2100 Email: Dallas, TX 75240 Copyright © 2013, Everest Global, Inc. 10 EGR-2013-1-PD-0819a
  11. 11. 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 practical consulting,original research, and industry resource services, Everest Group helps clients maximize value from delivery strategies, talent andsourcing models, technologies, and management approaches. Established in 1991, Everest Group serves users of globalservices, providers of services, country organizations, and private equity firms in six continents across all industry categories. Formore information, please visit and (Corporate Headquarters) Toronto India / Middle +1-416-865-2033 +91-124-496-1000New York +44-207-129-1318Stay connectedWebsites Twitter @EverestGroup @Everest_Cloud Copyright © 2013, Everest Global, Inc. 11 EGR-2013-1-PD-0819a