Cambridge, MA - May 2, 2006 -- FAO Research, Inc., the only research firm focused exclusively on the Finance & Accounting Outsourcing (FAO) market, today released a new study concluding that improved financial performance, better process efficiency and access to specialized expertise are the driving factors behind a potential 100 percent increase throughout this year in the number of FAO contracts involving procurement services versus those signed in 2004 and 2005 combined.
Procurement - a company´s purchase of goods and services - is typically managed in-house by specialized procurement officers, purchasing directors or logistics managers. According to FAO Research´s study, however, chief financial officers (CFOs) are taking an increasingly active role in initiating "current state versus future state" analyses to assess the functions and costs related to the corporation´s full procurement activities, with outsourcing as a viable operational alternative.
According to FAO Research, IBM leads the industry in winning the most full-scale procurement outsourcing contracts worldwide, with Accenture also showing a strong presence in the market. Although other F&A Outsourcing suppliers, such as ACS, Capgemini, EDS and Hewlett-Packard have procurement practices, niche vendors like ICG Commerce and software solution providers like Ariba attribute strong financial performance to their procurement outsourcing offerings.
"Our research indicates that 33 percent of all companies exploring F&A Outsourcing will assess procurement services as part of their requirements," said Lisa M. Ross, CEO and founder, FAO Research, Inc. "Although procurement is quickly becoming an active outsourcing growth sector, we were surprised to find how quickly traditional F&A services and procurement services have converged. Procurement, at least on an outsourced basis, seems to be entering the mainstream of finance and accounting activities. We see huge growth in this area and conclude that FAO service providers will intensify their efforts to satisfy the growing demand."
The report, "Into the Fold: Procurement Outsourcing Makes Its Way into the Finance & Accounting Outsourcing Market," cites more than 20 multi-national corporations currently outsourcing their procurement activities, including Avaya, British Airways, Colgate Palmolive, DaimlerChrysler, Deutsche Bank, NiSource and Unilever. It also outlines why companies outsource procurement, how services are delivered, how the competitive supplier landscape is set up, and what trends FAO Research predicts for the union of FAO with procurement-related activities and vice versa.
"Companies are evaluating the outsourcing of processes versus functions and doing increasingly more multi-functional deals which result in the convergence of procurement outsourcing and finance & accounting outsourcing," said Tom Schramm, vice president/client executive for EquaTerra, a leading advisor for organizations seeking more efficient IT and business processes through outsourcing, internal transformation and offshoring.
"Into the Fold: Procurement Outsourcing Makes Its Way into the Finance & Accounting Outsourcing Market" can be purchased for $500 or as part of an annual subscription package. Additional information and a detailed Table of Contents are available at www.faoresearch.com. Upcoming 2006 research reports will address how FAO service providers and prospective customers can work better with outsourcing consulting firms, buyer demand for FAO services in the Financial Services industry, and the role of outsourcing in non-traditional FAO destinations, including Dubai, Malaysia, China and Canada.
About FAO Research
FAO Research, Inc. is the only independent research firm worldwide focused exclusively on the Finance & Accounting Outsourcing (FAO) market. Headquartered in Cambridge, Massachusetts, FAO Research conducts market research and performs custom consulting services for FAO service providers, advisors and companies worldwide that want to better understand FAO market activity, the supplier landscape and buyer needs. With frequent publishing of reports and independent, unbiased viewpoints, FAO Research is a trusted source for impartial research and opinions. For more information, visit www.faoresearch.com.
Joyce Radnor
Spice Communications