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Everest Sees Fast Growth for Finance/Accounting, Procurement Outsourcing, Mixed Growth for HR
30 October 2009:
As can be expected in challenging times there is increased interest in outsourcing. Financial and accounting outsourcing (FAO) and procurement outsourcing (PO) is expected to grow annually by 20 percent and 25 percent respectively.
Meanwhile human resources outsourcing will see a mixed bag with slow growth for multi-process but demand hikes for single-process projects, reports The Everest Group.
Here is a breakdown of the key trends:
FAO
Organic growth through scope expansions and renewals will contribute significantly to the overall FAO market growth as nearly 15 percent of all multi-process FAO contracts come up for renewal in 2010. The demand for analytics and other specialized services such as regulatory compliance, internal audit will increase.
Demand will come from a diverse set of industries and geographies. Besides manufacturing other industries such as financial services, media and utilities, services will emerge as FAO clients, and from Asia Pacific and Continental European countries as well as from the United States.
The sales cycle will continue to be long, though with slow and careful decision making. Ramp-ups will also be slower than expected. Buyer adoption will continue to favor a phased as opposed to a “big-bang” approach. Average contract sizes will remain stable with potentially a modest shift towards slightly larger deals. While the market will continue to see a push beyond cost arbitrage, there will be a renewed focus on cost reduction thanks to the difficult economic climate.
The competitive intensity will be high. Major contenders will challenge the dominance of the leaders. 2010 will be a buyers’ market.
Offshoring levels will continue to be high but buyers will look for balanced multi-shore solutions. New delivery centers will open in Tier 2 and Tier 3 cities in mature destinations such as India and Eastern Europe. Latin America, China, Asia, Southeast Asia and other emerging locations will come up on the global delivery network of FAO suppliers.
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Source: TMCnet