NEW YORK and DALLAS, March 2, 2006 (PRIMEZONE) -- Offshoring has become fundamental to finance & accounting outsourcing (FAO), with every multi-process FAO contract(see note) signed in 2004 and 2005 featuring an offshore component. This and other key findings were reported by Everest Research Institute in its FAO Market Update, released today.
"Finance & accounting outsourcing is mostly about direct cost savings, and offshore -- offering a significant labor arbitrage opportunity -- has become a fundamental component of the FAO model," said Joe Fernandes, Managing Research Director at Everest Research Institute. "This is the case across virtually all major geographic markets and industry segments. We're finding that after call centers, F&A is the most offshored business process."
A graph indicating increase in India-based offshore employees is available at: http://media.primezone.com/cache/6149/file/2753.html
To meet growing demand, FAO suppliers have been steadily expanding their offshore capabilities. The graph and table above show the increasing investments that the largest FAO suppliers -- Accenture, Computer Sciences Corporation (CSC), Electronic Data Systems (EDS) and IBM Global Services have made in the past three years.
According to the report, direct cost savings captured through offshoring include lower labor costs, lower costs of real estate and overheads, and greater utilization of labor and infrastructure as a result of increased work hours and multi-shift operations. "These cost savings vary significantly by offshore location," Fernandes added. "Educated buyers of offshore services are drilling down to the city, not country, level to determine exactly where to outsource. Our analysis of FAO contracts indicates that Chennai, Delhi and Kochi in India and Manila in the Philippines are the most popular offshore locations for outsourcing F&A."
Editor's Note: Multi-process FAO contracts are defined as involving two or more processes, a minimum of three years in contract length and at least $1 million in annual contract value. FAO contracts that do not meet these minimum requirements tend to have marginal impact on the changing market landscape, and are therefore not included in Everest Research Institute's market analysis.
About Everest Research Institute
Everest Research Institute (www.everestresearchinstitute.com) serves as a central source of strategic intelligence, analysis and actionable insight for corporate buyers, service providers and investors in the global business process outsourcing and information technology outsourcing marketplace. The Institute is dedicated to providing the global outsourcing community with the information it needs to build highly productive outsourcing relationships and programs, focusing on the drivers that are continually reshaping the industry landscape and analyzing how they impact member organizations and the success of their outsourcing strategies. The Institute's distinguished Board of Advisors, all senior executives and thought leaders in global outsourcing, oversee the Institute's research agenda to ensure that it fully supports the business information needs of corporate buyers, service providers and investors.
Everest Research Institute members gain unique and highly personalized analytical and advisory services, not available elsewhere, including:
-- Unlimited analyst access -- In addition to a full-day strategic
planning session for in-depth, face-to-face discussions, Everest
analysts are available for ongoing consultation to address members'
immediate issues and concerns. Such access is unprecedented in the
industry, and gives members a distinct competitive advantage as
they seek to take advantage of emerging opportunities, changing
market conditions and unforeseen developments.
-- Visionary research with actionable insight -- Members receive
in-depth reports on major outsourcing topics, supplemented by
quarterly updates and monthly research notes on market-shaping
events, including regulatory developments, technological
advancements and emerging sources of risk and value. These
forward-looking reports not only cover important trends and
developments, but also project future scenarios and outcomes of
outsourcing decisions made today. This comprehensive
interpretation of data provides members with actionable insights
to support decision-making.
-- Wealth of knowledge and experience -- Members benefit from the
domain expertise and perspectives that come from Everest's direct
involvement in structuring and negotiating more than 530 ITO and
BPO transactions and more than 800 best practice case studies.
Everest analysts have intimate knowledge of the strengths and
weaknesses of service providers in different markets, processes,
industries and geographies. They also have a first-hand
understanding of how buyers approach the vendor selection process
and, ultimately, of the factors essential to outsourcing success.
In addition, the Institute has tapped multiple market sources and
collected proprietary information to assemble the industry's most
comprehensive database.
Everest Research Institute was established by the Everest Group, which provides strategic advisory services that help companies harness the power of outsourcing. Since its formation in 1991, Everest Group has served as business advisors for hundreds of IT and business process outsourcing transactions worldwide.