F&A service providers expected to handhold enterprises through their transformation journey; FAO experiences double-digit growth in 2018.
The waves of digital transformation are crashing down the siloed walls around the traditional finance and accounting function (F&A), as enterprises demand more from F&A in an effort to remain competitive. According to Everest Group, as enterprises shift from legacy to digital-first business models, F&A departments are being held accountable for not only reducing costs but also increasing operational efficiency and making a greater business impact.
However, the F&A transformation journey is not an easy one. Typically, F&A functions are beset with many challenges from the outset, such as siloed operations, fraudulent transactions, lack of visibility, changing macroeconomic factors, multiple dependencies and touchpoints, fragmented technology architecture, delayed reporting and suboptimal cash flow.
In its recently published report, “Finance and Accounting Outsourcing (FAO) Annual Report 2019: Why, What, and How of F&A Transformation,” Everest Group explains why the traditional, siloed process improvement efforts of the F&A function must give way to a holistic, end-to-end transformational approach in order to reap sustainable benefits. Everest Group also elevates a critical component of F&A transformation efforts: a strategic service provider partnership.
“Service providers play a critical role in helping F&A departments make the transformation journey,” said Shirley Hung, vice president of Everest Group. “Service providers with strong capabilities in process improvement, digital transformation and talent management can handhold the enterprise as it moves through the process. In fact, the ideal partner is one who offers a platform-led approach, where all the digital levers are integrated, implemented and orchestrated with the right mix of process improvement and talent management to deliver optimal outcomes.”
Everest Group’s FAO Annual Report 2019 provides an in-depth discussion of what it takes to transform the F&A function and how a service provider partnership driven by business outcomes rather than service-level agreements (SLAs) achieves better outcomes.
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The report also offers an overview of the FAO market and service provider landscape, including the FAO Service PEAK Matrix™ Assessment 2019, which identifies Leaders, Major Contenders and Aspirants in the market based on providers’ vision, capabilities and market impact.
Highlights of the FAO Market Overview:
- The global multi-process FAO market witnessed a strong growth of 8-10% in 2018 to reach US$8.6 billion, driven primarily by an increase in first-generation outsourcers, large-scale transformation deals and scope expansion in existing contracts.
- Traditional industries such as financial services, manufacturing, high-tech & telecom, and retail continue to hold major share of the FAO market, while energy & utilities and healthcare sectors witnessed the maximum growth.
- North America and Europe still dominate the market (with a decline in the United Kingdom), while the highest growth in adoption is seen in the Asia Pacific (APAC), Latin America (LATAM) and Middle East & Africa (MEA) regions.
- Offshore/nearshore delivery continues to increase, with the majority of F&A services being delivered from India, the Philippines, and Poland.Although FTE-based pricing is still dominant, hybrid pricing models are increasingly being leveraged due to the growing adoption of technologies such as automation and a greater focus on achieving business outcomes.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services and sourcing. We are trusted advisors to senior executives of leading enterprises, providers and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility, and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at http://www.everestgrp.com.