40 Percent Increase in Finance and Accounting Outsourcing Contracts Over Last Year

Everest Research Institute reported today that the global Finance & Accounting Outsourcing (FAO) market has grown by 40 percent between Q2 2005 and Q2 2006, and will continue to advance this rampant growth for the foreseeable future.

The firm said that it expects the strong growth to continue for the next few years.  Currently, growth has been driven by the move to single outsourced providers from multiple processes as well as cost reductions achieved from offshoring.

The majority of high-end adopters are seeking 'wrap-around' technology solutions that build on their existing ERP.  However, an increasing proportion of mid-size organizations -- as well as companies that have legacy issues or have experienced extensive merger activity -- are considering entire system replacements.  Moreover, FAO service providers are becoming increasingly specialized at delivering industry-specific platforms that can be leveraged across multiple 'alike' organizations.

Phil Fersht, Vice President, Everest Research Institute said, 'Moreover, we have been observing a succession of successful FAO engagements with service providers that are quickly developing a critical mass of clients and achieving enhanced profitability for themselves.'

'As the market reaches maturity in the next three years, we see technology transformation emerging as the fundamental issue,' added Fersht. 'As buyers seek more value from their FAO relationships, they are starting to seek out providers with the capability to deploy technology solutions that underpin, orchestrate, and knit together their accounting processes.  The ability of FAO providers to manage both the application and the business process are delivering new synergies to the industry that are further driving down costs and improving efficiencies.'

With competition intensifying among FAO providers, buyers should be able to negotiate a powerful offering that bundles their financial processes with transformational technology within the scope of a well-defined contract.

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