By: Ateendra Dabas, Saurabh Gupta, Katrina Menzigian, Ankur Sahni

Everest Research Institute

Introduction

Latest research from Everest reveals that 2008 witnessed new contract signings in excess of US$3billion – the strongest year ever for new FAO spending.

Approximately 68 new contracts were signed in 2008 paralleling the number achieved in 2007. Overall market spending continues to grow at an impressive 20% annually in terms of Annual Contract Value (ACV).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.

Scope

• The report includes multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of 3 years
• Everest analyses includes all multi-process FAO contracts signed as of November 2008

Suppliers with multi-process FAO capability include Accenture, ACS, Capgemini, Genpact, IBM,  EDS, Infosys, OPI, Steria, TCS, VWA, Wipro, WNS, CGI, Cognizant, Compass BPO, EXL Service, iGate, Intelenet, RMS, HCL, NCO, and SourceNet

Contents

This report examines the global FAO market and provides insights, detailed analyses and implications for stakeholders along three key dimensions: market size and buyer adoption; FAO value proposition and contract characteristics and suppliers landscape. Each dimension is discussed in detail (and illustrated with supporting data and analysis) to provide the reader an in-depth and accurate overview with clear identification of the trends observed. For example, FAO market size and buyer adoption offers the following insights, among others

• Size and growth: FAO registered the highest year in terms of contract spending as it signed more than US$ 3billion in new TCV in 2008 despite economic uncertainty. Approximately 68 new contracts and 35% YOY growth in TCV. Everest predicts that the market will continue to grow at 20%+ in the near term
• Buyer adoption trends: 2008 saw several changes to the buyer adoption patterns
  • Traditional FAO adopters like manufacturing along with new industries like 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
• Contract growth & renewals: Beyond new contract signings, growth in the FAO market is also being driven by organic growth of existing engagements and through the contract renewal process

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