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FAO Market Reaches Maturity, Changes Landscape

by: Sarah Joson

Monday, July 27, 2015 |

A post at EverestGrp.com shared the highlights of the latest Everest Group report called “Finance and Accounting Outsourcing (FAO) Annual Report 2015 - Generating Value through Innovation”.

Finance and accounting outsourcing nearing maturity

The study revealed that the finance and accounting outsourcing (FAO) market is nearing maturity as growth slows down from double digits in 2012 to approximately six percent in 2014. In addition to that, more contract renewals have been observed lately as the number of total contracts continues to decline, which is an indication that market maturity is well on its way.

The report also found that buyers are now more driven by value more than pure labor arbitrage. Some of the new technological innovations and process improvements seen in the FAO contracts are Robotics Process Automation (RPA), predictive and prescriptive analytics, judgment-oriented processes, and hybrid pricing models.

According to Swapnil Bhatnagar, Practice Director at Everest Group, more buyers are considering technology as a means to save on costs and generate value. He cited robotic process automation, a process which could reduce cost from 15 to as much as 60 percent. Contractual deals are also seen to gain traction focusing on analytics, expansion of process and geographic scope, and more advanced pricing models.

Other highlights in the report are:

- Growth is seen from smaller organizations, healthcare segment, retail industry, as well as hi-tech and telecom industry.
- Two-thirds of the FAO market is composed of the top service providers.
- Global sourcing continues to proliferate as buyers are looking for more value for their money.
- The coverage of contractual deals is expanding based on processes and locations.
- Service providers are adapting to the latest trends in technology solutions and process expertise.

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