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Opinions and views from expert CFOZone members.

Mar 25

Finance and accounting outsourcing to grow 15-20 percent

Posted by Stephen Taub in Record to ReportR2RProcure to PayP2PoutsourcingOrder to CashO2CFinance and accounting outsourcingCashCareers/Management

Stephen Taub
Finance and accounting outsourcing is surging once again.

Annual contract value (ACV) for this specialized category of outsourcing is expected to grow by 15 percent to 20 percent this year, to more than $4 billion, according to the Everest Group.

This growth comes on the heels of a 15 percent increase in 2010, suggesting the market is surging once again.

In 2008 and 2009, ACV growth was closer to 10 percent, reflecting the weaker overall economy.

Nearly 55 percent of the ACV growth in 2010 was contributed by contract renewals and expansion rather than purely a function of new contracts, according to Everest, rather than new business.

"Buyers continue to be cautious," Everest stresses. "The big-bang approach has given way to a phased approach."

The study notes that the trend towards end-to-end solutions such as Procure to Pay (P2P), Order to Cash (O2C) and Record to Report (R2R) continued to gain momentum as opposed to a traditional piecemeal solution.

Everest identifies six service providers in its "Leaders" category. They include what he calls established FAO leaders such as Accenture, IBM, and Genpact, as well as Capgemini, Infosys BPO, and Hewlett-Packard.

Last November, a study from EquaTerra found that 85 percent of all respondents said they will continue to outsource financial and accounting tasks at the same or higher levels, with 72 percent indicating they will probably or certainly outsource more.

In addition, 97 percent of F&A outsourcing buyers surveyed said they would recommend their service provider to a peer.

In the EquaTerra study, Procure to Pay was the most frequently outsourced process, outsourced by 85 percent of participants. At the time 16 percent of these organizations said they have plans to outsource more in this process. P2P was followed by Order to Cash (O2C) and Record to Report (R2R) which were both outsourced by 69 percent of respondents. Another 22 percent of these organizations are considering increasing their outsourcing levels for both O2C and R2R.           

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