More enterprises are turning to service providers for finance and accounting functions as CFOs take on more strategic business roles, ISG Provider Lens report says
Enterprises are seeking more third-party services and technology transformations in finance and accounting as those functions rapidly change in the wake of the COVID-19 pandemic and other disruptions, according to a new research report published by Information Services Group, a leading global technology research and advisory firm.
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“FAO outsourcing customers are now looking for partners with deep domain expertise that will commit to sharing the risks and rewards of transformation”
The 2022 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report finds that CFOs in many organizations are now setting strategic direction and leading business transformation initiatives as companies recognize the importance of finance in improving customer experience for competitive advantage.
“Financial data and processes have become tightly integrated with sales, marketing and procurement,” said Scott Furlong, partner, global business services, with ISG. “With the ubiquitous adoption of emerging technologies such as blockchain, IoT, intelligent automation and advance analytics, the lines between front, middle and back office are increasingly blurred.”
Furlong said companies that need to transform their business processes on a deadline are outsourcing many functions to partners that can provide “scarce and essential skills.”
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ISG finds the role of outsourcers is expanding as many enterprises transform higher-level finance-related functions. Companies that have already outsourced core transactional processes, such as order to cash (O2C) and procure to pay (P2P), are now partnering with service providers on judgment-led processes such as budgeting, forecasting and risk management. Providers offer high-level professional talent for analysis of fast-changing business and economic conditions that drive this level of decision-making.
As companies seek to optimize their operations through digital transformation and cloud-based solutions, they are also outsourcing expertise in areas including predictive analytics, automation, AI, machine learning and blockchain, the report says. In addition, many enterprises are turning to providers for effective environmental, social and governance (ESG) reporting.
Organizations seeking FAO services increasingly demand ready-made solutions, crafted for specific industries, that can be deployed with little customization, ISG says. Clients also expect shorter cycles to complete RFP responses, solution designs and delivery. A growing number of companies now favor outcome-based provider engagements judged by tangible business results rather than fixed costs such as number of full-time employees.
“FAO outsourcing customers are now looking for partners with deep domain expertise that will commit to sharing the risks and rewards of transformation,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research.
The report also explores other trends in FAO outsourcing, including the growing number of provider partnerships with technology specialists and ongoing provider initiatives to reskill employees to meet evolving client needs.
The 2022 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report evaluates the capabilities of 27 providers across four quadrants: Procure to Pay (P2P), Order-to-Cash (O2C), Record-to-Report (R2R) and Financial Planning and Analysis (FP&A).
The report names Accenture, Capgemini, Cognizant, EXL, Genpact, HCL, IBM, Infosys, TCS, Wipro and WNS as Leaders in all four quadrants.
In addition, Conduent is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. Arvato and OneSource Virtual are named as Rising Stars in one quadrant each.
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