Scope
- Third-party FAO deals
- Over 1,000+ multi-process FAO deals signed as of 2015, with a minimum of two F&A processes, and over US$1 million in ACV
- Coverage across 25+ FAO service providers with multi-process capability including Accenture, Aegis, Arvato, Capgemini, Cognizant, Datamatics, Dell, EGS, EXL, Genpact, HCL, HPE, Hexaware, IBM, Infosys, IQ BackOffice, Minacs, Quatrro, Serco, Sutherland Global Services, TMF Group, TCS, Wipro, WNS, Xchanging, and Xerox
- Global surveys and one-on-one executive-level buyer interviews to understand how organizations perceive their FAO engagements
Content
This report is meant to provide FAO buyers, service providers, and third-party enablers (technology vendors, investment firms, etc.) a detailed view of the current state of affairs of the market. As part of this, the current report provides insights into market growth & activity, adoption trends, buyer satisfaction results, and key changes in the contract characteristics (in terms of technology, analytics, global sourcing, process scope, and pricing). It also throws light on the landscape in terms of service provider market share and investment trends.
Some findings of the report:
- Market overview and buyer adoption trends
- Though exhibiting characteristics of a maturing market, the FAO market grew at an accelerated pace of 7%+ in the year 2015
- Renewals continue to be the major driver of the FAO market growth, supported by a spurt in new contractual activity
- Contract terminations have stabilized over the last few years, driven by increased provider focus to retain existing clients
- The traditional sectors of manufacturing and financial services continue to register robust demand, though with an overall declining share
- SMB and mid-market buyer segments are driving the new contractual activity
- North America leads the FAO market growth, along with a spurt in demand from the UK market
- Besides cost reduction, buyers attach high importance to process improvement and business outcome-driven insights from their service providers
- Impact of changes in FAO value proposition on contractual characteristics
- Value proposition of labor arbitrage is commoditized (though still important)
- New value levers are increasingly centered around technology, RPA, process transformation, analytics-driven insights, and ability to address the pain-points of the CFO’s office
- With high traction for RPA solutions, especially among mature buyers, some of the providers are now focused on developing the next-generation technologies with cognitive capabilities
- Operational analytics has registered steady demand across industries to help improve the core operations
- Inclusion of judgment-intensive processes, especially during the renewal phase, is resulting in contractual scope becoming highly end-to-end in nature
- Providers are striving to achieve a balanced onshore-nearshore-offshore delivery mix
- Output- and outcome-based pricing models are being leveraged in combination with FTE-based constructs, to better align buyer objectives with those of the service provider, and include appropriate incentives and penalties for each party
- Service provider landscape
- The top five service providers have consolidated their position in the market and comprise nearly two-thirds of the FAO market
- The service providers’ investments are primarily targeted towards developing/improving their capabilities related to technology, delivery presence, and domain- and process-expertise
- Partnership route to gaining new capabilities, especially related to technology/tools, is gaining share in the overall pie of investments
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