Introduction

While India continues to be the location of choice for offshoring F&A services, the FAO delivery-location landscape now has a truly global footprint. In recent years, many service providers invested in expanding their delivery footprint, and multiple factors drove the FAO delivery location expansion. These factors include tapping into new buyer geographies, creating a truly global delivery network as opposed to an offshore-centric network, resource constraints at established locations, and avoiding location concentration risks. Many new locations emerged on the FAO delivery-location landscape in 2009-2010.

In this study, we analyze the emerging location trends in F&A outsourcing market. We focus on:

• Value proposition of global sourcing in FAO
• Expanding FAO delivery footprint
• New FAO delivery locations, with a spotlight on five emerging locations across the globe

Scope and methodology

• Third-party FAO deals; it does not include shared services or captives
• More than 500 multi-process FAO contracts signed as of November 2010 with a minimum of two F&A processes, over US$1 million in Annual Contract Value (ACV), and a minimum contract term of three years
• Coverage across 20+ FAO service providers with multi-process capability including Accenture, ACS, Capgemini, Cognizant, EXL service, Aditya Birla Minacs, Genpact, HCL, HP, IBM, iGATE Patni, Infosys BPO, Intelenet, KPIT Cummins, Sutherland Global Services, Steria, TCS, VWA, Wipro, and WNS

Content

This report will assist key stakeholders (buyers, service providers, industry enablers) understand trends in the FAO delivery-location landscape.  With increasing maturity of the FAO market, the FAO delivery-location landscape now has a truly global footprint. While India continues to be the preferred destination for offshoring F&A services, a variety of factors drive service providers to expand their delivery footprint to a global scale. In this backdrop, this report provides comprehensive coverage of the expanding FAO delivery footprint, and some of the newer locations emerging on the global FAO delivery-location landscape characteristics, and service provider landscape. Some of the findings in this report, among others, are:

• More than 90% of the FAO contracts leverage global sourcing today. Given that FAO is a mature market, most F&A processes have a high degree of offshorability, especially the transaction-intensive processes
• Offshoring can provide significant savings on the direct cost of the entire F&A function, primarily through labor arbitrage and productivity improvements
• The savings from labor arbitrage vary depending on the source geography and the choice of offshore location. Likewise, the impact of productivity improvements also depends on where the buyer organization stood when the initiative started i.e., level of operational effectiveness, automation, and initial scale
• Impact beyond direct cost savings due to an improved operating model and superior quality have made the offshore value proposition even more compelling
• India emerged as the global hub for FAO delivery, accounting for nearly 70% of the service providers’ offshore/nearshore FAO headcount
• However, the FAO delivery-location landscape now has a truly global footprint. In 2009-2010, expansion of the delivery footprint was a major investment theme among service providers
• More than 15 new locations emerged on the FAO delivery location landscape in 2009-2010. We focus on five in this report:
  • Jaipur in India
  • Montevideo in Uruguay
  • Johannesburg in South Africa
  • Guatemala City in Guatemala
  • Rabat in Morocco