Outsourcing of Finance & Accounting Services – 2010 Trends

Recent research reports reflect a positive growth trend for the Finance & Accounting Outsourcing (FAO) industry in 2010. According to the FAO Annual Report 2010 [1] by Everest, a global Consulting and Research company, the market is set to achieve nearly US$3.7 billion in annual contract volume during 2010, which represents an impressive 20% growth rate over the preceding year. The FAO market reached US$3.1 billion in annual spending (ACV) last year, representing about US$24 billion in total FAO spending.

The Everest research report analyzes the global FAO supplier landscape – leaders, major contenders, emerging players, the 2009 star performers – and consists of supplier evaluations and relative market positions while drawing comparisons between relative market success and capability developments, thereby sharing details about the changes in the global FAO supplier landscape in 2009.

Other report findings include:

• FAO market growth continues to see strong adoption across manufacturing, consumer packaged goods, retail and high-tech sectors. Telecom and the pharmaceutical industry are emerging sectors with the highest growth rates
• The financial services sector saw stronger outsourcing activity than expected last year and pent-up demand will contribute to growth in 2010
• Asia Pacific started to emerge last year, capturing 35% of new contracts
• Adoption by the mid-market was unable to sustain momentum garnered from 2006 to 2007 primarily due to the economic climate and lack of proven successful FAO solutions

The growth trends as featured in the report confirm that FAO outsourcing is high on the agenda of many a CFO. Factors that support business growth, like access to talent & capabilities and maximizing business model flexibility, are key drivers in the search for the perfect outsourcing solution.

But success and growth are not without their challenges: customers continue to be held back by cost-benefit justification (i.e. the challenge of creating a business case where benefits are measured and delivered) and their own lack of experience, among other things. Nearly all feel challenged by one or more aspects of the outsourcing lifecycle and their first inclination is to blame service providers when projects fail. Service providers on the other hand, think the main cause of failure is poor collaboration with customers.

Fact is that success in outsourcing is not dependent of one single party: successful customers of outsourcing show good collaboration with service providers, and good collaborators tend to be effective outsourcers. Effective collaboration yields best practices in the capabilities and processes of outsourcing itself.

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Mar Hernandez m.hernandez@amicorp.com

[1]“Everest: FAO Growth Expected to Regain Traction This Year as Economy Recovers”; www.everestresearchinstitute.com; Everest Research Institute; Press release dated February 25, 2010; Web. July 20, 2010