November 6, 2008

Cost Pressures and Mature Solutions Driving Mid-Market FAO Growth

FAO Mid-Market Global Adoption Growth Rate Greater Than 30 Percent

DALLAS, November 6, 2008 – Rising cost pressures on mid-market companies, increasingly mature supplier solutions and leveragability of technology solutions are driving broader adoption of Finance & Accounting Outsourcing (FAO) adoption by mid-market companies, according to the Everest Research Institute. The Institute estimates the FAO mid-market business could potentially grow to nearly US$9 billion should worldwide market penetration, currently at 1 percent, reach a steady state of about 15 percent.

The Everest study, FAO Update: Understanding the Waking Giant – The Mid-Market and FAO, includes analysis of mid-market adoption patterns and trends, solution and delivery models and supplier landscape. Information sources includes 290-plus multi-process contracts and interviews with Accenture, CompassBPO, Genpact, IBM, Infosys BPO, HOV Services, OPI, RMS, Softtek, TCS, VWA, and WNS.

“Many of the long-standing inhibitors to mid-market adoption of FAO solutions have been addressed and most FAO suppliers are now beginning to serve the mid-market and offer mature, compelling value propositions,” said Katrina Menzigian, Vice President, Everest Research Institute. “Mid-market clients are seeking a broader value proposition from FAO that focuses less on cost savings and leans more towards gaining process enhancements, accessing skills and talent and achieving business improvements.”

Other high-level study insights from the in-depth analysis include:

• The upper end of the mid-market is growing at nearly 40 percent CAGR, today accounting for about 20 percent of spending on multi-process FAO contracts
• FAO adoption by mid-market companies cuts across a wide range of industries, including: manufacturing, high-tech and telecom, energy and utilities, travel and logistics, retail, healthcare services, and media and entertainment
• In building a compelling FAO business case, mid-market buyers often target process scope similar to or broader than large buyers
• Technology plays a significant role in mid-market FAO solutions as standardized technology tools help mid-market clients minimize up-front investments and reduce transition costs
• The mid-market is the most hotly contested segment of the FAO market, with the top four suppliers (Accenture, IBM, Capgemini, and TCS) holding only 48 percent of total current annual spending