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The Finance & Accounting (F&A) and Procurement functions comprise three end-to-end processes – Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on the third-party outsourcing of P2P activities – the downstream process within S2P.
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Topic: Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing
Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
Finance & Accounting Outsourcing (FAO) and Procurement Outsourcing (PO) Report: February 2013 – Preview Deck
Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
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Background and sources of information
Background of the research The Finance & Accounting (F&A) and Procurement functions comprise three end-to-end processes –
Record-to-Report (R2R), Order-to-Cash (O2C), and Source-to-Pay (S2P). This report focuses on third-party outsourcing of P2P activities – the downstream process within S2P
With increasing maturity of the FAO and PO markets, FAO contracts are expanding upstream beyond Accounts Payable (AP), while PO contracts are expanding downstream beyond S2C to include broader scope of P2P activities. This is resulting in increased convergence between the FAO and PO markets. Such an end-to-end process-driven approach to outsourcing as opposed to the existing piecemeal and functional approach is unlocking more value creation opportunities
In this study, we investigate the market state of P2P outsourcing. We focus on: Definition, value proposition, and challenges of P2P outsourcing P2P outsourcing market size and growth Emerging and current solution trends P2P service provider landscape Scope of the study and sources of information The scope of this study is third-party outsourcing and does not include internal shared services The study provides global and cross-industry coverage of P2P outsourcing The study is based on Everest Group’s proprietary database of over 1,000 FAO contracts and over 300 PO
contracts signed till the end of 2011, and operational capability of 25 service providers who offer P2P services
Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
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Table of contents (page 1 of 2)
Background and sources of information 5 Summary of key messages 6 Value proposition of P2P outsourcing 9 Summary 10 Definition 11 Value proposition 14 Typical challenges 17 P2P outsourcing market size and solution trends 18 Summary 19 Size and growth 20 Adoption trends by industry, geography, and size 22 P2P inclusion 23 Degree of offshoring 26 P2P delivery locations 27 Role of technology 28 Service levels and performance metrics 30 Pricing models 31
Topic Page no.
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Table of contents (page 2 of 2)
P2P outsourcing service provider landscape 32 Summary 33 Service providers classification 34 Scale as per FTEs 35 Delivery footprint 38 P2P investment themes 39
Appendix 43 Glossary of key terms used in the report 44 FAO research agenda 46 PO research agenda 47 Additional FAO and PO research references 48
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This report analyzes the key trends in P2P outsourcing within the FAO and PO market. It provides an understanding of the business value, adoption trends, solution characteristics, and service provider capability in P2P outsourcing.
Overview and abbreviated summary of key messages
P2P outsourcing solution trends
Technology is playing an increasingly important role in P2P outsourcing. Beyond add-on tools, several platform-based / BPaaS solutions are emerging
India has emerged as the main offshore hub for P2P delivery. However, an onshore-nearshore-offshore blend is emerging
Some of the findings in this report, among others, are:
Value proposition and key challenges
The P2P process typically accounts for nearly a third of the overall F&A and procurement operational costs
An end-to-end P2P outsourcing approach also poses some unique challenges such as multiple stakeholders, technology fragmentation, and a more complex scope definition beyond common BPO challenges, given the overlap with both procurement and finance functions
P2P outsourcing service provider capability
There are three emerging themes of service provider investments related to P2P outsourcing: BPaaS- / Platform-based solutions Analytics Expansion from P2P to broader S2P capabilities
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This study offers three distinct chapters providing a deep dive into key aspects of the P2P outsourcing market; below are four charts to illustrate the depth of the report
Source: Everest Group (2013)
Expected savings from the end-to-end P2P outsourcing
P2P outsourcing service provider landscape P2P outsourcing global footprint
P2P market size FAO & PO market size by process ACV in US$ billion
2011 2015
P2P
O2C
R2R
S2C
Projected CAGR
AP outsourcing savings from cost arbitrage and process efficiency
Savings by outsourcing other P2P activities including greater
compliance
Additional business impact due to an end-to-end approach
Total savings from integrated P2P approach
70-75% additional savings over AP outsourcing by leveraging an end-to-end process driven approach for P2P
100%
MumbaiManilaBangalore Chennai
Prague
Noida GuangzhouHangzhou
Gurgaon
Pune
DalianShanghai
Belo HorizonteSao Paulo
Mexico city
Budapest
GlasgowNottingham
London
San Jose Atlanta
DetroitRichmond
Krakow
Wroclaw
Troy
Preston Lodz
India
China &Southeast Asia
Central & South America
Central & Eastern Europe
North America
Western Europe
China Sourcing support and upstream P2P
and S2C activities Also supporting Japanese and
Korean markets
India Offshore hub and the most mature
delivery region for P2P Leveraged for providing end-to-end P2P
services
North America and Western Europe Onshore locations for client facing roles Leveraged local market knowledge for
upstream P2P activities
Central and South America Primarily leveraged as nearshore
locations for U.S. Domestic LATAM market also
emerging Leveraged for sourcing support and
day-to-day purchasing
Central and Eastern Europe Primarily leveraged as nearshore
locations for Western Europe Leveraged for sourcing support and
day-to-day purchasing
P2P outsourcing delivery locations
3. PO providers focused primarily on upstream P2P services
1. End-to-end P2P providers with credible F&A and procurement offerings
2. FAO providers focused primarily on AP services
Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
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2013 FAO research agenda
Topic Release date Published Current
October-2012 Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting
February-2013 Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing
January-2013 Order-to-Cash (O2C) Outsourcing – Creating a Top-line Impact
July-2012 The Paradox of FAO adoption in SMBs
July-2012 FAO Service Provider Compendium
Q1-2013 FAO Annual Report
Q2-2013 FAO Service Provider Landscape
Q3-2013 Role of Analytics in FAO
Q3-2013 Growth of Horizontal BPO in LATAM
Q2-2013 FAO Service Provider Compendium
Q4-2013 Implications of IFRS Conversion in the United States on FAO
Q4-2013 Evaluation of BPaaS Solutions for FAO/PO
Copyright © 2013, Everest Global, Inc. EGR-2013-1-PD-0819a
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2013 PO research agenda
February-2013 Procure-to-Pay (P2P) Outsourcing – Unlocking Value from End-to-End Process Outsourcing
Q1-2013 Expansion of PO Into Broader Supply Chain
Q2-2013 Sourcing Contingent Workforce – Rise of MSP model
Q4-2013 Tail-end Spend Management
Q2-2013 PO Service Provider Landscape
August-2012 PO Service Provider Profile Compendium
Q1-2013 From Strategic Sourcing to Contracting – Source-to-Contract (S2C) a High Value Driver in PO
Q1-2013 PO Annual Report
Q2-2013 PO Service Provider Profile Compendium
Q3-2013 The Rise of Procurement and HR Collaboration – Effectively Managing HR-spend
Q3-2013 Growth of Horizontal BPO in LATAM
Q4-2013 Evaluation of BPaaS Solutions for FAO/PO/HRO
Topic Release date Published Current
PO Service Provider Landscape – Investing in Building Expertise July-2012
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For more information on this and other research published by Everest Group, please contact us: Saurabh Gupta, Vice President: Abhishek Menon, Practice Director: Vikas Menghwani, Analyst: PO Team:
Additional FAO and PO research references
The following documents are recommended for additional insight into the topic covered in this report. These either provide additional details on the topic or complementary content that may be of interest 1. Finance and Accounting Outsourcing (FAO) Annual Report 2012: The FAO Market – Signaling Towards Maturity
(EGR-2012-1-R-0680a). In this research, we review the global multi-process FAO market in 2011 and provide guidance on the market’s direction in 2012. We focus on market size and buyer adoption trends, FAO value proposition, contract characteristics across process scope, technology, global sourcing, pricing structures, and FAO service providers landscape covering service providers’ market shares and areas of investments
2. Procurement Outsourcing (PO) Annual Report 2012: The PO Market – Steadily Marching Forward (EGR-2012-1-R-0683a). This report provides an overview of the overall PO market in 2011, including the size and growth of the market, adoption trends, contract characteristics, value proposition, service provider landscape, and market outlook for 2012
3. Record-to-Report (R2R) Outsourcing – Moving Beyond General Accounting (EGR-2012-1-R-07054); 2012. This report looks at outsourcing of the judgment intensive F&A processes, Financial Planning & Analysis, regulatory reporting and compliance. Record-to-Report, Order-to-Cash, and Procure-to-Pay cover the entire F&A function as three end-to-end processes
4. Order-to-Cash (O2C) – Unlocking the Revenue Potential (EGR-2013-1-R-0816); 2013. Similar to the R2R report, this report looks at outsourcing a separate end-to-end F&A process called Order-to-Cash, covering mostly the transactional activities within the function on the customer side
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