By: Ateendra Dabas, Saurabh Gupta, Katrina Menzigian

Everest Research Institute

Executive Summary

The present FAO market has witnessed nearly 400 multi-process contract signings, and more than 90 percent of these contracts were signed post 2000. Most of the early FAO contracts signed were structured on the basis of individual judgment, as the industry lacked access to a large enough sample set to improve decision making.  As the market evolved, the contract characteristics matured along with it.

Nearly 80 percent of the FAO contracts signed in the market are first- generation contracts, which are up for renewal over the next few years. In fact, renewals are poised to play a big role in shaping the FAO market, as contracts worth US$7 billion are up for renewal in the next three years.

As these first-generation buyers approach their end of term, they are looking to address the gaps in their engagements to effectively leverage the potential of a renewal opportunity. There are three key questions that buyers nearing an end-of-term event need answers:

1. How has the market changed since the start of the engagement?
2. How does the current engagement compare to the market?
3. How can the buyer leverage the end-of-term event to expand the value beyond the accomplishments of the first-generation engagement?

A strategy review near an end-of-term event not only identifies the potential risks and opportunities well in advance but also helps outline appropriate steps to maximize value creation through outsourcing. This white paper, aims to provide a broad-based answer to the first question – how has the market changed? It uses a best-practice framework for reviewing the engagement which includes the following four key dimensions:

1. Process
2. Solution
3. Supplier
4. Contract

The paper highlights four fundamental market changes in the last few years along the four dimensions identified above and the implications for buyers with an upcoming end-of-term event.

Click here to download the paper.