Prospects for finance and accounting outsourcing have been high as more businesses seek to focus more on core processes to grow their business. As research firm Everest, predicted early this year, finance and accounting outsourcing, which includes processing of accounts receivable services, accounts receivable follow-up, as well as general accounting and back-up, will grow steadily this year.
In the Everest Research report which came out last February, it was predicted that the Finance and Accounting Outsourcing (FAO) market would revert back to pre-recession levels by the end of the year. As Katrina Menzigian, VP of Research for Forrester stated, as the global economy continues its path towards recovery, we expect to see the FAO market regain traction, driven by new deals and scope expansions, as well as more than 45 contracts up for extension this year. We foresee increased adoption across industries and geographies to continue. Beyond the United States, we expect contract signings in the domestic Asia-Pacific market as well as Rest of Europe to rise. The company predicted growth of as much as 20% up from the 11% growth in 2009. A second report from Everest on the 9th of June was also released wherein Saurabh Gupta, Everest Research Director, stated that, the mature FAO market is getting increasingly competitive with players vying to carve out unique value propositions to differentiate themselves.
While the FAO market in 2009 saw massive deals among large players such as Genpact (NYSE:G), Accenture (NYSE:ACN) and IBM (NYSE:IBM), given the increasing demand for FAO in the past few months, new players in the FAO market have emerged or are emerging in order to take advantage of the growth in the market.
One such company is private equity firm, Huntsman Gay Global Capital, who announced on the 30th of September that they have made a majority investment in iQor Holdings Inc. The investment by Huntsman Gay in iQor, the second largest accounts receivable services provider in the world, will allow iQor to increase its share in the accounts receivable (A/R) outsourcing market, while introducing Huntsman Gay into the A/R outsourcing market.
Regional growth meanwhile in the FAO sector has seen expansions, notably in key areas including the Latin Americas and the Philippines.
Latin American countries such as Guatemala, has been pinpointed by outsourcer, Genpact, as a key area where finance and accounting talent can be found. The company announced plans of expanding its workforce in the city of Guatemala by opening a second facility. Aside from that, the company also advised that they are looking into other Latin American countries, Colombia and Brazil, who, along with Guatemala, were previously unknown in the FAO market.
Meanwhile the WNS (NYSE:WNS) reaffirmed its confidence in the Philippines when the company announced expansion plans in the country following increased demands for its services. WNS Global Services CEO Keshav Murugesh, cited that their Philippine site will serve as a hub for its clients in the banking and financial industry for the APAC region. He further states that, considering the quality of talent available in the country and the demand for our services, we believe that 10 percent of WNS workforce could be based in the Philippines over the next few years.
While Everest seems to have predicted the finance and accounting outsourcing (FAO) market accurately so far, it will be interesting to see whether the market will continue to grow as predicted as the year nears its conclusion.
Audrey B is a member of the content writing department of Infinit -O, a finance and accounting outsourcing firm that puts together a boutique approach to provide accounts receivable outsourcing services, accounts payable and general bookkeeping outsourcing services giving small and medium-sized companies a long-term competitive advantage.