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F&A Outsourcing Poised to Regain Traction after Recession

by: Karen Cayamanda

Tuesday, March 9, 2010 |

According to the Finance & Accounting Outsourcing Annual Report 2010 by global consulting and research firm Everest Group, 2010 will be a stronger year for F&A outsourcing (FAO) compared to the previous year.

Increase in global expenses to fuel FAO activity

It is predicted that the annual contract value (ACV) this year will reach about US$3.7 billion - a 20 percent increase from US$3.1 billion posted in 2009. This increase in global expenses is taken as a sign that the low activity in FAO, which involves outsourcing capital budget and internal audit, processing of payroll, and general accounting, is now over.

Compared to 20 percent annual increase from 2006 to 2008, FAO had seen a slow growth rate of only 11 percent in total value of contracts in 2009. However, Katrina Menzigian, Vice President, Research, said FAO is expected to regain traction this year as the economy bounces back from the crisis, with new contracts and scope expansions. “We foresee increased adoption across industries and geographies to continue. Beyond the United States, we expect contract signings in the domestic Asia-Pacific market as well as Rest of Europe to rise.”

Here are other key findings in the report:

  • FAO market growth continues to see strong adoption across manufacturing, consumer packaged goods, retail and high-tech sectors. Telecom and pharma are emerging sectors with the highest growth rates.
  • The financial services sector saw stronger activity than expected last year, and pent up demand will contribute to growth in 2010.
  • Asia Pacific started to emerge last year, capturing 35 percent 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.

New deals, contract renewals, and scope expansion show that 2010 is bound to be a much better year for the FAO market than 2009. As the economy continues to recover from the economic turmoil, it is with high hopes that FAO will register a growth rate which is similar to the rate seen before companies felt the impact of recession.

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