Rick Bertheaud, Finance and Accounting Managing Director, North America
Stan Lepeak, Managing Director, Global Research

When it comes to finance and accounting outsourcing (FAO), the tides are shifting from large, complex, multi-tower deals in which many processes are bundled into a single outsourcing transaction to fewer processes or even single-process outsourcing transactions. Many FAO buyers would like to outsource the bundle, but are opting to incrementally undertake the effort over time. That said, there are exceptions:

• We are seeing an increase in selective cross-tower deals in the area of integrated end-to-end business cycle outsourcing. An example of this is a source-to-pay deal that includes strategic sourcing, procurement operations and accounts payable – processes that tend to cross the procurement and finance functions in most client organizations.
• Other examples are order-to-cash, including customer call center operations coupled with the more traditional finance processes of accounts receivable and collections.
• Of course, we are still seeing broader bundled deals when “convulsive change” is required. These occur when the buyer is in “survival mode” and there is a need to dramatically and quickly lower total back-office cost or, in the case of a reorganization (such as a spin-off) where there is a need to quickly establish a brand new back office.

It may be low tide for multi-tower and large multi-process FAO deals, but they still have their place. Regardless, if buyers can achieve their FAO goals and improve their F&A capabilities as required through more incremental, smaller deals, the approach is preferable, even if less sexy, and more lucrative for large FAO service providers.

For more on the FAO market, read EquaTerra’s recently released global FAO service provider performance and satisfaction (SPPS) study.

Filed under: Finance & Accounting, Market Trends and News, Outsourcing by EquaTerra