Finance,accounting,outsourcing,growth,Everest

F&A outsourcing reaches rapid growth stage according to Everest Research.

29 Sep 2005 | (Survey)

The finance & accounting outsourcing (FAO) sector, which primarily serves the Global 500 marketplace, has reached the rapid growth stage, according to Everest Research Institute, which estimates total contract value currently at US$12 billion.

In an in-depth report on the FAO sector between 1991, when the first FAO contracts were signed, and April 2005, Everest Research Institute analysts also found that 41 companies signed large, multi-process FAO contracts over the past 18 months, resulting in 58 percent market growth. Of the 108 multi-process FAO contracts signed since 1991, approximately 70 percent were signed in the past four years.

“CFOs are doing their fair share of cost-cutting by using outsourcing to drive down the transaction processing costs of the corporate finance function,” said Joe Fernandes, Managing Research Director at Everest Research Institute. “Unlike other areas of outsourcing, CFOs are not engaging in FAO relationships to gain access to advanced technology. Rather, they are leveraging outsourcing’s ability to deliver significant cost savings and improvements in the area of compliance – and it is the largest companies with the most complex corporate structures that are leading the way.”

The comprehensive Everest Research Institute report identifies emerging trends and examines their implications for buyers, suppliers, investors and technology providers. It also provides a detailed analysis of the FAO marketplace, including contracts, offshore locations, specialized technology, transparency and compliance issues, buyer selection criteria and experiences, and supplier capabilities and operating models.

“While much attention in the BPO marketplace has been given to HR outsourcing, F&A outsourcing, which has been experiencing a similar growth pattern, is quietly revolutionizing how CFOs manage the finance function,” said Michel Janssen, Managing Research Director at Everest Research Institute. “This is not a market of high-profile deals and game-changing technology. FAO has been and continues to be primarily focused on labor cost arbitrage, as CFOs seek to move transactional processing out of their organization. As a result, offshoring has become a key component of the majority of FAO contracts, which has opened the door to a large number of suppliers, especially those that missed windows of opportunity in HR outsourcing.”

Janssen will be presenting the report results at the upcoming SIG conference.

Related Content: