What's happening today with financial and accounting BPO? What are the present trends?

Finance and accounting outsourcing is now one of the fastest growing segments of the BPO market. In 2002, F&A services accounted for $40 billion of total BPO spending in the U. S., a substantial increase from $36 billion in 2001. This year, F&A services are expected to reach $65 billion, a 12.3% 5-year annual compound growth rate!

With increasing globalization, F&A “offshore” outsourcing is also spreading quite rapidly - with companies trying to find the right mix of people, skills and capabilities and cost structures from a worldwide network of resources. Following the trend to diversify risk by moving work through low-cost facilities in multiple regions around the world, larger companies are even adopting a version of the outsourcing strategy called “best shore”, which involves rotating services for the same client among sites around the world so that outsourced functions are available 24-7. The largest BPO industry firm, for example, now provides services to its customers through 21 delivery centers in various parts of the world.

In a 2003 survey of more than 200 senior finance executives conducted by the Economist Intelligence Unit and the BPO industry’s largest firm, 71% of respondents expected finance and accounting outsourcing to increase over the following three years, 30% already outsourced finance and accounting functions and 57% thought their outsourcing arrangements had been successful. In a recent 2006 study, strategic advisory firm The Hackett Group found that companies expect to more than double F&A outsourcing in the next three years. Another recent 2006 survey by research firm Everest Group, which polled 107 companies with a median annual revenue of $300 million, concluded that F&A outsourcing is indeed growing quite rapidly - with 37% of survey participants already offshoring one or more business processes to another country, 1/3 expecting to increase offshoring in the next two years, 39% indicating accounts payable as the F&A process most commonly offshored (which was also second to IT as the most commonly offshored company-wide function, per 49% of respondents) and 20% expecting to offshore additional accounts payable work in the next two years (slightly more than IT, per 19% of respondents).

Companies can now choose from a variety of BPO providers that either focus on several different processes or are multi-process suppliers, some of which operate globally and some of which concentrate only on regional markets.