GS100: 2011 Global Services Compendium
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Recently, Serco signed an agreement to acquire Intelenet, an India-based BPO provider. Highlighting on how this acquisition will benefit Serco, Chris Hyman, chief executive of Serco, commented, “The acquisition of Intelenet supports our ambitions. The international BPO market is growing quickly as companies seek out new ways to improve their service and reduce costs. Intelenet's high value capabilities and customer base, together with its economies of scale, means we can access new markets and strengthen our existing propositions.”


What's Driving the FAO Market?

F&A Outsourcing Market to Grow 15-20% in 2011

Second tier vendors are eying the mid-market and are distinguishing themselves by creating differentiated offerings. Their focus areas will be innovative value propositions such as industry-specific solutions, end-to-end processes solutions, specialized process offerings etc, strategic alliances between pure-play FAO service providers and technology providers to offer platform/SaaS-based offerings and increasing presence and foray into emerging destinations such as Africa, Latin America.

 Steria, one of Europe’s providers of outsourced Finance and Accounting (F&A), embraced a number of landmark contracts.  Steria manages and controls over approximately $80.56B payments per year, $20B collections and over 3.5M payroll transactions.

Sachdev Ramakrishna, director marketing, Steria India said, “We understand that regulations, systems and processes are not static. Our finance specialists actively look at the future of finance and leading best practice. We design and run excellent finance operations and platforms that ensure a reliable, controlled and flexible service that can deliver change. This enables our public and private sector clients to dramatically improve control, cost and service.”

The Models:

In recent years, phased approach of scope migration has replaced the big-bang approach. Buyers are increasingly focusing on cost and value proposition in terms of optimizing process. To maximize value creation from FAO contracts, buyers are starting to follow end-to-end process-driven approach to FAO as opposed to a traditional functional and piecemeal approach.

Chambliss spoke about how many companies are moving from just a transactional basis of
BPO toward outsourcing higher value added functions in their decision making and F&PM areas. He opined, “Access to better information to communicate to their line of business owners seem to be driving more value add for the F&A organizations and making the opportunities to grow analytics and improvements in the bottom line for companies. Value propositions are centered around improvements to cash performance.”

There are several models of implementing centralized finance operations. Saurabh Gupta, vice president Everest Group, stated:

• Building captive finance shared service operations
• Build-Operate-Transfer (BOT) model – Buyer engages a third-party service provider to build dedicated F&A operations offshore. Service provider then operates the F&A operations for buyer in steady state. Once steady state operations and required scale are achieved, service provider transfers operations to the buyer organization that can then run it as a captive
• Third-party
outsourcing – Buyer outsources part of F&A operations completely to a third-party service provider, the classical FAO engagement model.
Organizations often leverage hybrid or mixed approach leveraging more than one model described above.

WNS has adopted several models of implementations such as- lift and shift, shift and fix, and a combination of fix whilst lifting and shifting. Tasneem Lakdawalla, business unit leader, Finance and Accounting shared, “WNS delivers a full range of
FAO processes to support all functions in the CFO’s office. We perform over 650 processes ranging from simple transactions to complex analytical processes including industry-specific processes such as royalty and passenger revenue accounting. Specifically, we deliver end-to-end services across the full spectrum of finance and accounting functions, including procure-to-pay, order-to-cash and record-to-report.”  

 GS100: 2011 Global Services Compendium
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