Introduction

The Finance & Accounting (F&A) function comprises three end-to-end processes – Procure-to-Pay (P2P), Order-to-Cash (O2C), and Record-to-Report (R2R). This report focuses on the third-party outsourcing of O2C activities.

Today, with increased maturity of the FAO market, the value proposition is expanding beyond cost reduction to creation of favorable business outcomes such as enhanced customer experience, reduced DSO, optimized working capital, effective cash management, and reduced revenue leakage. Therefore, buyers are increasingly looking to outsource activities beyond AR and taking an end-to-end process-driven approach.

In this research, we analyze the O2C outsourcing market across the following dimensions:

• Definition, value proposition, and challenges of O2C outsourcing
• O2C outsourcing market size and growth
• Emerging and current solution trends
• O2C service provider landscape and capability assessment

Scope of analysis

• The scope of this report is non-voice,  third-party O2C outsourcing
• The scope excludes internal shared services
• The report is based on Everest Group’s proprietary database of over 1,500 FAO contracts signed till mid-2012 and operational capability of more than 25 FAO service providers that offer O2C services

Content

With growing maturity witnessed in the FAO market, buyers are willing to expand the scope to include end-to-end processes that impact metrics related to business outcomes, such as O2C. Also, service providers continue to make significant investments to meet buyer demands and create a differentiated offering. This report analyzes the key trends in O2C outsourcing within the FAO market. It provides an understanding of the business value, adoption trends, solution characteristics, and service provider capability in O2C outsourcing. Some of the findings in this report are:

• O2C outsourcing has a strong cost+ value proposition. It enables enterprises to address several business pain-points such as inefficient cash flow management, revenue leakages (bad debt), and receivable management
• Beyond common BPO challenges, O2C outsourcing has some specific underlying issues arising from inter-functional dependencies, industry-specific requirements, disparate technological landscape, and direct exposure to end customer
• O2C inclusion across all customer segments (by geography, industry, and size) is high, though end-to-end coverage is low
• While most O2C outsourcing contracts continue to be AR-focused, an end-to-end O2C scope is an emerging trend
• Technology augmentation is a more prevalent approach in O2C vis-à-vis platform-based approach
• The service provider landscape for O2C outsourcing is diverse, spanning global majors, BPO pure-plays, IT-BPO providers, and O2C specialists
• There are three key themes of recent service provider investments in O2C capabilities technology & analytics, onshore/offshore delivery expansion, and overall capability enhancement