6 Ways FAO’s Changing Value Proposition Is Impacting Contracting Structure
As the FAO market matures, many buyers are looking to technology as a source for added value and cost savings.
Dallas, Texas (PRWEB) July 15, 2015
The FAO market is approaching maturity, with growth rates tapering to approximately 6 percent in 2014 from double-digit growth in 2012. Market maturation is also evident from the increasing share of contract renewals among a slightly declining number of total contracts in 2014.
With market maturity, buyer expectations have become more value-centric instead of pure labor arbitrage driven. As a result, the FAO contractual characteristics are evolving to include technologies such as Robotics Process Automation (RPA), predictive and prescriptive analytics, judgment-oriented processes, and hybrid pricing models.
These results and other findings are explored in a recently published Everest Group report: Finance and Accounting Outsourcing (FAO) Annual Report 2015 – Generating Value through Innovation.
“As the FAO market matures, many buyers are looking to technology as a source for added value and cost savings,” said Swapnil Bhatnagar, practice director at Everest Group. “One example is robotic process automation, which can yield a cost reduction ranging from 15 percent to as much as 60 percent. We also see other contractual trends in a maturing market, such as increased emphasis on analytics, expansion of process and geographic scope, and more advanced pricing models.”
Other key findings:
- Growth is coming from new buyer segments, including emerging markets (such as Asia Pacific and Middle East & Africa), smaller organizations, and industries such as healthcare, retail and hi-tech and telecom.
- The top five service providers comprise nearly two-thirds of the FAO market.
- With increasing pricing pressure from buyers, global sourcing is on the rise.
- The contractual scope is increasing, both in terms of processes and geographies.
- Service providers are increasingly investing in technology solutions and process expertise in order to meet the evolved expectations of buyers.
***Download Complimentary 15-page Preview Report Here*** (Registration required.) This preview summarizes report methodology, contents and key findings and offers additional resources.
The full report analyzes the global FAO market, focusing on:
- Market overview and buyer adoption trends
- Impact of changes in the FAO value proposition on contract characteristics
- Outlook for the FAO market
- Service provider landscape, covering 20+ service providers with multi-process capability, including Accenture, Capgemini, Cognizant, Datamatics, Dell, EXL, Genpact, HCL, HP, IBM, IGATE, Infosys, IQ BackOffice, Minacs, Quatrro, Serco, Sutherland Global Services, Tech Mahindra, TCS, Wipro, WNS, Xchanging and Xerox.
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High-resolution graphics illustrating key takeaways from this report can be included in news coverage, with attribution to Everest Group. Graphics include:
- Market maturation is changing the FAO landscape
- Six ways FAO’s changing value proposition is impacting contracting structure
- By the Numbers: Robotic Process Automation in FAO
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 research.everestgrp.com.