Introduction

The multi-process FAO market has grown at nearly 25% CAGR over the last few years and 2008 witnessed new contract signings in excess of US$3 billion. The supplier landscape is also maturing with 20+ established FAO suppliers capable of providing multi-process FAO services to their clients. The last year has witnessed significant buildup of supplier capability through M&A and new center opening.

On a delivery capability – market success matrix, the FAO supplier landscape can be categorized into three groups – leaders, major contenders, and emerging players (see exhibit 1).

Exhibit 1: FAO delivery capability – market success matrix

While the leading FAO suppliers continue to hold their position, the major contenders are closing the gap. The FAO market is intensely competitive with intra-group differentiation (within leaders or major contenders or emerging players) becoming increasingly difficult on the basis of scale, scope, and delivery footprint. FAO suppliers will need to create distinctive market positioning. Everest sees three areas for creating differentiated offerings – industry-specific FAO, process-specific FAO, and technology-focused FAO (see exhibit 2)

Exhibit 2: Modes of differentiation in FAO

The Global FAO Supplier Landscape research report provides actionable insights through in-depth analyses of shifts in the global FAO supplier landscape.  It provides an overview of the FAO market in 2008, examines the supplier positions and market shares, and assesses supplier delivery capability across scale, scope, technology, and delivery footprint. The report also discusses the emerging modes of differentiation in the FAO market.

Scope    

• The report includes multi-process FAO contracts with a minimum of two F&A processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of 3 years
• Everest analyses includes all FAO contracts signed as of November 2008
• Suppliers with multi-process FAO capability including Accenture, ACS, Capgemini, Cognizant, Compass BPO, EDS-HP, EXL Service, Genpact, HCL,HOV services,  IBM, iGate, KPIT Cummins, Infosys BPO, Intelenet, Patni, OPI, RMS, Steria, TCS, VWA, Wipro, and WNS

Contents

In this research study, we analyze the fast-changing global FAO supplier landscape and its impact on the FAO market. We focus on FAO market overview, supplier position and market shares, supplier delivery capability assessment, modes of differentiation, and implications for key stakeholders. Some findings in the report include:

• The FAO practice for most suppliers across suppliers are growing at a rate faster than the overall growth, reflecting healthy market fundamentals
• The top five leaders (Accenture, ACS, Capgemini, Genpact, and IBM) account for almost 70% of the FAO market in terms of ACV. However, the major contenders, which accounted for 55% of new contracts signed in 2008, are beginning to challenge their dominance
• Accenture, IBM, and EDS-HP drove the new contract growth in 2008 accounting for nearly 60% of the new TCV signed in 2008
• Leaders achieved non-linear growth in 2007-08 by growing their TCV faster than their FTE growth rate
• While the leaders have a clear advantage in terms of number of FTEs, the composition of supplier strength remains the same across supplier groups - ~90% transaction-intensive and ~10% judgment-intensive
• The expanding globalization of FAO is driving the emergence of tier-2 and tier-3 locations