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May 20, 2007

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Thanks for response - insightful

Giles -

1) F&A BPO is still immature - buyers are looking at trimming obvious cost from administrative areas like accounts payable, receivable and general accounting;

2) The economy has been doing well and we are seeing a lot less of the "panic outsourcing" post 9/11 that was so synonymous of HRO. Companies are taking their time, taking less of a gung-ho approach and seeing how a smaller engagement works first before considering for more widespread approaches;

3) Service providers are getting much better at this and can start to compete effectively on smaller deals, whereas a couple of years ago they could only make the economics work on bigger deals;

4) The mid-market specialists are getting pretty good at this also, and are competitive aggressively on a number of fronts - and have much lower costs of sales than some of their illustrious global competitors. Look at OPI and VWA, for example, who have been able to go after deals with limited or no offshore elements and dig out cost savings for their clients;

5) The Indian vendors have stayed hard to their task and picked up a host of smaller deals - Wipro, WNS, Infosys and TCS are prime examples of offshore suppliers which gained a lot of traction in 2006.

Bottom line, finance leaders tend to have more control over their decisions than other functional heads, and tend to move more slowly and pragmatically when it comes to business change. They will adopt outsourcing services once they have seen success stories proven by their peers in other companies, and will want to conduct exhaustive due dilligence before making a move.

Interesting trend Phil - but my question is why? Are suppliers failing to convince the market of their abilities or is F&A following the wider outsourcing procurement trend? Glad to see you have finally found an outlet for all that high powered perception :) keep it coming.

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