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Apr 09, 2008

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Phil;

If you've got the net to capture that level of deals ... superb! I agree that the market for F&A is in the very low dollar thresholds!

Peter

Peter - thanks for the input. The methodology used here is "any two core F&A processes from the following bundled within a single-vendor multi-year services / outsourcing contract" :

Accounts Payable
Travel and Expense
Procurement
Accounts Receivable
General Ledger Accounting
Accounts Reconciliations
Fixed Asset Accounting
Tax Filing
Payroll
Inter Company Accounting
Regulatory / Statutory Reporting
Management Reporting
Risk Management / Treasury Internal Auditing
Financial Planning & Analysis
Business Intelligence

The threshold was also a minumim TCV of $1m, which largely explains the difference in our stats. Having said that, I do count 43 F&A BPO contracts over $25m TCV, so we should connect offline on that one.

I'm focusing on the smaller deals also, as we are seeing large enterprises go for smaller deals - often "testing the water", and also mid-market firms doing deals under your $25m threshold, which may not fall under the TPI radar. Many of these fall into the methdology I have used here.

PF.


Phil;

The great thing about research is that different researchers come to different conclusions. Maybe we should amalgamate the research?

By OUR counting ... admittedly using a $25M contract value threshold and only considering commercial deals (no public sector) ... we saw only 19 F&A Outsouricng deals awarded in 2007. That was down from 26 in 2006.

Again, with nuances of sampling techniques ... we look for true "outsourcing" identified by: defined services + defined prices + defined service performance commitments. Many of the F&A relationships put into play recently have been labor arbitrage in nature with no real "service" orientation.

The other indicator of a difference in our measurement technique is the fact that the 19 deals we counted had an average contract value of almost $120M.

Your $33M average value, if spread over a typical 5-year term, would imply about $6M/year in spend for F&A services.

The nice thing is ... we could BOTH be right!

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