Magic Quadrant for Finance and Accounting BPO
This Magic Quadrant evaluates vendor capabilities in the comprehensive F&A business process outsourcing market among 18 providers. Use this Magic Quadrant to help identify and evaluate the right providers to support your organization.
This document was revised on 26 June 2012. The document you are viewing is the corrected version. For more information, see the Corrections page on gartner.com.
Comprehensive finance and accounting (F&A) business process outsourcing (BPO) consists of support for multiple business processes in the F&A domain through a single BPO contract. It typically includes three or more subprocesses associated with F&A from the following categories:
- Accounts payable
- Accounts receivable
- General ledger
- Financial reporting
- Treasury and cash management
- Specialist processes, including: yield management, shareholder accounting and risk analytics
Source: Gartner (May 2012)
Gartner estimates that overall BPO accounts for 14% of Accenture's revenue. In 1991, Accenture began providing F&A BPO, which is one of its larger BPO services. It employs approximately 12,500 full-time equivalents (FTEs) in F&A BPO. It operates more than 20 centers in locations including North America, Argentina, Western Europe (the U.K., Ireland, Spain, Norway and Italy), Central and Eastern Europe (Prague, Bratislava, Bucharest, Warsaw and Romania), India (Bangalore, Chennai and Delhi), Mauritius, South Africa, China (Shanghai, Chengdu and Dalian), and the Philippines. It acquired Zenta, a U.S. mortgage processing company in 2011, which expands it credit service capabilities, and it acquired the sourcing team from Ariba in 2010, which strengthens its end-to-end source-to-pay offerings. Accenture retains its position as a Leader in the 2012 Magic Quadrant due to its attention to vision and delivery execution and its wide range of processes delivered on a global scale.
- Gartner estimates that Accenture's' F&A BPO service revenue grew faster than the market average from both new deals and renewals of existing contracts during 2011. This makes it one of the fastest growing of the suppliers in this Magic Quadrant, demonstrating a strong ability to execute, retain and extend client relationships.
- Accenture has strengths in servicing consumer packaged goods, financial services and telecommunications sectors due to its number of strategic clients in these sectors.
- Accenture offers a highly scaled, well-balanced service offering covering a good range of F&A BPO services, with more than 4,300 FTEs delivering "record to report" services, which it supports across more than 120 countries; this makes it one of the largest providers in this type of F&A BPO.
- Some clients cited Accenture as being strong in partnering and disciplined at executing the processes with a good transition methodology.
- Some clients cited that process improvement could be delivered more consistently and that more cross-fertilization of best practices could be occurring between clients.
- Accenture has less revenue generated from F&A BPO in the public sector and in the service sectors.
- Some clients cited that Accenture could improve the ability of its centers to act as integrated suppliers to an account and that there could be a stronger handoff from the sales to the delivery teams.
Part of the Bertelsmann Group, arvato delivers multiple types of BPO, but it has been offering F&A BPO since 2003. It has more than 5,500 delivery staff for F&A BPO across 33 delivery locations in Ireland, Spain, Germany, Peru, the U.K., the Philippines, Singapore, Argentina and the U.S. Due to its strong ability to execute and its relative scale and range of F&A BPO operations, arvato is rated as a Challenger for its debut in this 2012 Magic Quadrant.
- Some clients cited arvato's transition skills as strong — notably at significant scale, in terms of complex processes, and across multiple countries. The company displayed good ability to manage risk and communicate with senior stakeholders.
- Several clients cited that arvato is strong at delivering the service, with a flexible approach to dealing with client change requests.
- The areas in which arvato's experience is strongest are communications, high tech, manufacturing and the U.K. public sectors.
- Sales executives in arvato are delivering a positive contribution to revenue growth; however, some clients cited arvato could improve its ability to communicate an aggregated and clear view of arvato's vision.
- Some clients cited that arvato needs to expand its ecosystem of partners that it collaborates with to deliver F&A BPO.
- Some clients cited that while arvato delivers the basic services excellently, it can encounter minor delivery issues, and exceptions can arise that impact the delivery of the service.
BPO is now a strategic business unit for Capgemini, generating 5% of total revenue. Capgemini started selling F&A BPO in 1996. Employing approximately 7,300 FTEs in F&A BPO, it has a good spread of centers internationally operating from 16 centers based in nine countries, including India (Bangalore, Chennai, Kolkata, Mumbai and Gurgaon), Poland (Krakow and Katowice), China, Brazil (Sao Paulo, Campinas and Gaspar), Chile, Guatemala, Australia, Canada and the U.S. In 2011, it acquired Vengroff, Williams & Associates (VWA), which added collection services and technologies to its portfolio. In 2010, it acquired a procurement platform, IBX, which strengthened its end-to-end source-to-pay offerings, and it acquired Strategic Systems Solutions for BPO work in capital markets, especially in Asia/Pacific. Capgemini remains positioned in the Leaders quadrant with a strong vision that it is executing on.
- Capgemini's ability to deliver was cited as strong by some clients. Capgemini has one of the broadest global delivery capabilities. It has a good spread of process activities across delivery locations, and it is well-integrated across sites to deliver an activity view back to global clients of both contract performance metrics and their financial performance.
- The greatest portion of Capgemini's F&A BPO revenue is derived from consumer packaged goods, manufacturing, utilities, media and financial services clients.
- Capgemini has recently built up a wide range of process enhancement technologies and services, including the Webcollect collections tool as part of its VWA acquisition and IBX for source to pay.
- Some clients cited that Capgemini's knowledge transfer processes could be improved.
- Appointing and retaining appropriate skill levels were challenges cited by some clients for high-level skills, such as record to report. Capgemini needs to improve its ability to find and deploy these skills. In addition, it needs to plan better for internal staff moves, getting the right people in the right place to appoint appropriately skilled people.
- Capgemini has minimal experience in the public sector for F&A BPO.
Capita is predominantly a BPO provider, with 80% of revenue generated in BPO. It has been delivering F&A BPO since 1999. Employing approximately 2,000 FTEs in F&A BPO, it has delivery locations in the U.K., Poland and India (Bangalore, Mumbai and Pune). In 2012, it acquired Smiths Consulting, which specializes in SAP and F&A consulting. In 2011, Capita's relevant acquisitions included contact center specialists Vertex's U.K. Private Sector business, Ventura and Right Document Solutions. Capita is listed as a Niche Player for its debut in this 2012 Magic Quadrant due to its current predominantly U.K. experience and its limited delivery experience using nearshore and offshore locations for F&A BPO.
- Capita has taken on a number of business-outcome-based deals, which has raised its level of experience in this contracting style beyond much of the competition. It also offers a good balance of value for price.
- Some clients cited Capita's transition capabilities as a strong, process-led activity with a smooth handoff of tasks.
- Capita's resources and services are strongest in the U.K.
- It has a balanced understanding across the public and private sectors. Strengths by industry include public sector for both local and central government, healthcare and police. It also has strong industry experience in the banking and service sectors.
- Capita's sales concentration and its experience to date are predominantly in the U.K. Capita performs almost all of its F&A BPO today for U.K. clients in the U.K.
- Although Capita is making an effort to grow its offshore resources in 2012, it currently remains limited compared with the Leaders and Challenges in this Magic Quadrant. This is a function of its heritage to date of servicing all its F&A BPO clients onshore in the U.K.
- Several clients cited that Capita can be slow in bringing best-practice processes from across its client base to revamp processing activities.
Gartner estimates that Cognizant's F&A BPO revenue represents approximately 4% of its total service revenue. It started selling F&A BPO in 2006. It employs approximately 3,000 FTEs in F&A BPO. It operates from five centers across India (Chennai, Hyderabad, Pune and Mumbai) and the Philippines. Since 2009, it acquired a project management and transition specialist known as PIPC and a captive center in India from UBS. Cognizant moved from the Niche Players category to the Visionaries category due to its strong grasp of the market and its investment in delivering business results; it is still operating at a lower scale of operations than the Leaders.
- Cognizant has strengths in delivering F&A BPO for financial services, communications, manufacturing, retail and services.
- Cognizant has developed a strong vision as to the future of the tools and services that will support finance in future organizations. It has built many internal tools. It also has formed a relationship with Oracle for supplying business process as a service (BPaaS), although there are no clients for this BPaaS delivery model as of yet.
- Some clients cited Cognizant's transition skills as very strong. Several clients also mentioned the high availability of senior management and their appetite for a strong relationship, demonstrated through responsiveness and a proactive approach.
- Cognizant has a staff of 3,000 delivering F&A BPO from the Philippines and India; the majority of the F&A BPO services are delivered in the English language. So, while it has several international customers from the U.K., U.S. and Norway, the delivery profile is yet to reflect this service using other language skills; furthermore, it has partnered for nearshore delivery capability in Europe but not in Latin America.
- Some clients cited Cognizant needs to improve its ability to find and deploy appropriate skills for some of the F&A BPO delivery teams.
- Cognizant has no public-sector experience for F&A BPO delivery.
EXL (ExlService Holdings) is predominantly a BPO and analytics company. It has been offering F&A BPO since 2001. EXL employs more than 18,000 FTEs in BPO in total, of which 5,400 FTEs are dedicated to F&A BPO. EXL successfully delivers services from its global delivery centers in Bulgaria, Czech Republic, India, the Philippines, Romania and the United States. While the acquisition of OPI brought it almost 300 resources in Bulgaria, EXL still has relatively less delivery experience for international services than the providers in the Leaders quadrant. EXL remains in the Challengers category despite its acquisition of OPI, which almost doubled its scale. This position is due to its relatively poor ability to articulate its vision in comparison with the Leaders; however, it has recently hired a new marketing team that will address these issues.
- Through its acquisition of OPI, EXL more than doubled in scale and revenue in 2011. OPI brought almost 4,000 F&A BPO resources, nearshore and offshore delivery locations, and a strong sales team.
- EXL has gained strengths in F&A BPO delivery for the banking, transportation and travel, services, insurance, and manufacturing sectors.
- Several clients mentioned the high levels of availability of senior management and their continuity of service (from the sales process to delivery), which was a hallmark of OPI's service style.
- EXL has yet to well-articulate its vision for the future of F&A BPO delivery, which is an area for improvement.
- Several clients cited that EXL can be slow in bringing best-practice processes from across its client base to revamp processing activities, especially where process enhancement technologies or services are required.
- EXL generates most of its work in the U.K. and the U.S.
Genpact is predominantly a BPO company, with 78% of its revenue generated by BPO. It started selling F&A BPO services in 1997. Genpact has approximately 15,400 staff working from 25 centers in 10 countries, including North America, Guatemala, Mexico, EMEA (Lublin, Cluj, Bucharest, Budapest and Rabat), South Africa, China, and India (Delhi, Gurgaon, Hyderabad, Jaipur, Kolkata and Bangalore), making it the largest F&A BPO employer. Genpact recently acquired Accounting Plaza, and in 2011, it acquired Akritiv Technologies to support its order-to-cash offering. It deploys a good mix of F&A BPO offerings. Genpact is again listed as a Leader due to its ability to win business and deliver against the business it has won to meet client expectations.
- Gartner estimates that Genpact's F&A BPO service revenue grew faster than the market average from both new deals and renewals of existing contracts during 2011. This makes it one of the fastest growing of the suppliers in this Magic Quadrant, demonstrating a strong ability to execute, retain and extend client relationships.
- Clients cited Genpact's clear ability to articulate the importance of process improvement, which was demonstrated in its strategy for the selection of process enhancement technologies and service partners, as well as its strong, clear vision.
- Genpact has strong industry experience in its largest industries for F&A BPO, which is the banking and insurance sector, followed by manufacturing.
- Genpact has fewer reporting systems to convey the status of service than other providers. It is addressing this with a new offering called "Smartview," but it is early days for this. It is catching up on technologies to support process improvement, but it has process improvement methodologies.
- Genpact has less experience in its portfolio in the public sector, healthcare and education verticals.
- Genpact needs to better manage how it sets expectations for what process improvement it can really deliver for the client and what the client needs to support itself.
The total BPO activities of HCL Technologies represent 5.5% of its service business; the rest is IT-related. HCL started selling F&A BPO in 2004. It employs 3,500 FTEs in F&A BPO. It operates from three centers in two countries, including India (Noida and Chennai) and North America. In the past 18 months, HCL moved from the Niche Players quadrant to the Challengers quadrant due to its vision being fledgling and its execution moderately increasing on a geographic rating.
- HCL has built up its F&A BPO expertise in the communications, transportation and travel, retail, utilities, manufacturing, and publishing industries.
- Some clients cited that HCL offers a cost-effective solution that meets their needs for F&A processing.
- Some clients cited that HCL has good delivery quality across its global delivery network.
- HCL is behind the Leaders in terms of its ability to articulate its vision for the future of its F&A BPO delivery. HCL generates most of its F&A BPO activity from the U.K. and the U.S. While it has experience delivering Pan-European projects, it has limited non-English language skills and relatively less experience than the Leaders.
- It has less experience in the public sector than in other industries.
BPO as a whole represents 7.6% of HP's total service business. In 1992, it started selling F&A BPO, which is a significant revenue contributor to its larger BPO division. It employs approximately 10,500 FTEs in F&A BPO. It operates from more than 20 centers in more than five countries, including India (Bangalore and Chennai), Poland, China and Costa Rica. In 2011, it acquired Autonomy, which will support data analysis and will be integrated into BPO solutions. HP has moved from the Niche Players quadrant to the Challengers quadrant, as it has delivered some complex projects on a global scale, although its customer satisfaction and process vision were still lacking when compared with the Leaders. HP has undergone a major restructuring of its organization in 2012, including appointing a new head of BPO who is bringing renewed focus to HP's BPO portfolio and has tripled the dedicated BPO sales force. A previous high turnover of senior executives and a lack of ability to harness the HP sales force had hindered this group's ability to grow and showcase its strengths. This appears poised to change for the better for current and potential HP clients with new management investment in the area.
- HP has invested in new operational benchmarks and a payment recovery partnership with KPMG.
- HP has built a good balance of services in transactional finance and higher-level finance skills in 16 comprehensive F&A BPO deals.
- Vertical-industry expertise is especially strong in the consumer packaged goods industries.
- Some clients cited that HP still struggles to state its vision clearly and demonstrate its insight for the future of process improvement and its process methodologies.
- Some clients cited that sales teams had set expectations that were not always delivered against.
IBM started selling F&A BPO in 1995, from its Global Process Services division. BPO as a whole now accounts for 4.5% of IBM's total service revenue. It employs approximately 14,000 FTEs in F&A BPO. It operates from more than 20 centers in more than eight countries, including the U.S., China, the Philippines, Brazil, Argentina, Poland, Hungary, and India (Delhi, Chennai and Bangalore). Since 2009, it has acquired Emptoris, Sterling Commerce, Lombardi, Clarity Systems, RedPill Solutions, Coremetrics, Cast Iron Systems, Datacap and SPSS. These acquisitions will improve its ability to offer cloud-based BPO services, business process management services and analytics. IBM remains positioned in the Leaders quadrant due to its scale of delivery locations, its strong customer experience and operations capabilities, and its broad range of F&A BPO services.
- IBM has built up a balanced portfolio of industry skills across the public-sector clients and the manufacturing, retail, banking, healthcare and communications sectors.
- IBM has invested heavily in its process methodologies, which it uses to demonstrate to clients what a good process looks like at a detailed process level.
- Subject matter experts for transition and transactional delivery were rated highly by some clients for their skills and flexibility.
- Some clients cited that IBM is not especially nimble to do business with, in that change orders, forms and procedures can be cumbersome, with too high a level of bureaucracy.
- IBM needs to better manage how it sets expectations for what process improvement it can really deliver for the client.
- Despite having access to a very broad range of process enhancement technologies and services, some clients cited IBM as having limited ability to fully resource and deploy them.
BPO as a whole now accounts for 7.2% of Infosys' total service revenue. Infosys started selling F&A BPO in 2004. It employs approximately 7,000 FTEs in F&A BPO. It operates from more than 11 centers in more than seven countries, including India (Bangalore, Pune, Chennai, Jaipur and Delhi), China, the Philippines, Czech Republic, Poland, Mexico and Brazil. In 2012, it acquired the Portland Group, which will strengthen its sourcing and procurement services. Infosys remains a Leader in the Magic Quadrant due to its understanding of clients' requirements, its global delivery presence and its operation skills.
- Some clients cited that Infosys is very collaborative and flexible in delivery support.
- Infosys has developed strengths in delivering F&A BPO for high-tech manufacturing, banking, communications, retail, and media and entertainment.
- Infosys has a strong vision as to the future of the tools and services that will support finance in future organizations, as seen in its value-added toolsets.
- Some clients cited transition skills as very strong.
- Infosys needs to improve on marketing capabilities to clearly present offerings to the market.
- It has limited experience in delivering F&A BPO to the public sector.
- Mixed experience of resources is a caution, as some clients cited that Infosys rotates its staff within the delivery role.
Serco is an international service company that runs services for governments and other public-sector organizations. In 2011, Serco acquired several BPO providers: Intelenet for BPO; and two customer service organizations — The Listening Company in the U.K. and Excelior in Australia. Serco has created a new management structure for this new combined BPO business, which is split by regions (that is, the U.S., Asia/Pacific and Europe), covering 30 countries. Intelenet has been providing F&A BPO since 2003. Serco employs approximately 3,500 FTEs in F&A BPO. It operates F&A BPO from six centers in three countries, including the U.S., the U.K. and India (Mumbai, Chennai and Delhi). Serco is in the process of implementing a new shared-service model to deliver procurement and F&A services to its own operating businesses, as well as clients.
Serco is rated in the Niche Players quadrant, as it has yet to fully realize the potential from the integration of its existing BPO activity with that of Intelenet. It is expected that, with the full integration of Intelenet's BPO business into the Serco Group, this will result in the provision of fully integrated consulting, outsourcing and technology services that enable full-finance function outsourcing. Serco plans to make further investments in scaling up its technology capabilities during the next few years to increase its use of process enhancement technologies and services.
- Some clients rated Serco's transition skills highly.
- Industries of strength today include banking, services, transportation and travel. In Serco's combined group, Gartner expects public-sector F&A BPO to emerge as a strength.
- Serco's resources and services are strongest in the U.K., the U.S. and the Indian domestic market for selling F&A BPO.
- Serco's global footprint spreads across the U.K., the U.S., Latin America, Europe, Australia, the Philippines, the Middle East and India, and the company offers clients an extensive combination of nearshore, offshore and onshore solutions.
- Serco has less international experience of delivering multiple languages than other providers, and it has no nearshore delivery location.
- Serco acquired Intelenet in 2011, and the integration process had largely been completed by April 2012. While some of the integration activities may take longer to complete, some existing clients contemplate that this may put extra pressure on middle management bandwidth.
- Serco's current vision and deployment of process enhancement technologies and services are weaker than the Leaders.
BPO accounts for 9% of Steria's total service revenue; the rest is IT services. Steria started selling F&A BPO in 2002. It employs approximately 2,000 FTEs in F&A BPO. It operates from more than 10 centers in two countries — the U.K. and India (Pune, Chennai and Noida). In 2010, it acquired a procurement service from the U.K. Department of Health, which strengthens its end-to-end source-to-pay offerings. Steria remains a Niche Player in this Magic Quadrant due to its U.K.-centric business, which means that it has less knowledge of servicing Pan-European or global requirements today. However, it is able to leverage its presence of operating in 10 other European countries, and it has created some centers of excellence (for example, expenses are managed out of its German business).
- Steria provides a balanced understanding across the public and private sectors. It has built up strong presence and deep vertical capabilities in the communications, healthcare, police and banking sectors, along with the public sector. Steria offers a competent set of core F&A BPO services to some of the U.K.'s largest private organizations and to more than 200 large and small U.K. public-sector healthcare trusts and to many other U.K. public-sector bodies.
- Change management skills are a strength, and Steria has implemented very good initiatives to support adhesion to new processes at certain clients. Some clients mentioned that Steria is very willing to support change requests, is highly responsive to business needs and is adept at delivering the core of the contract with flexibility.
- Steria has a good balance of skills across transactional and complex F&A BPO services, with 250 employees to report activities.
- Steria offers one of the few business-process-utility-style comprehensive F&A BPO deals in the world, with the U.K. Department of Health Shared Business Services joint venture that has more than 150 clients, using Steria's finance services, based on a shared Oracle platform.
- Steria's delivery centers are all in the U.K. and India; while Steria has a large Indian delivery presence, it has no experience with F&A BPO delivery from other locations, such as Eastern Europe, or for organizations with multiple language requirements. However, Steria could leverage its multilingual Polish and Moroccan delivery centers currently used for remote infrastructure management services to Pan-European clients.
- Vertical sectors with less experience include manufacturing and utilities.
- Some clients cited that transition methodology could be improved upon in some cases. More continuous improvement initiatives are required by clients; while these were cited as strong by some clients, these initiatives are not uniformly deployed.
Sutherland Global Services is a specialist BPO company, with the majority of its revenue generated in customer management BPO. It started delivering F&A BPO in 1995. It has 2,300 F&A BPO employees delivering from centers in Bulgaria, India (Chennai and Thane), Dubai and the U.S. (Tulsa). It acquired the Convergys F&A BPO division in 2011 and the analytics specialist Adventity in 2010. Sutherland has made its debut in this Magic Quadrant as a Niche Player due to its relatively smaller scale for F&A BPO and focus on small or midsize businesses (SMBs).
- It is launching a new service for SMBs (defined as companies with revenue between $200 million and $800 million), and while this service is yet unproved, Sutherland has invested in a new offering that it calls "Clarity." Clarity provides SMBs with Microsoft Dynamics AX, combined with F&A BPO, HR BPO and procurement services. For larger organizations or companies with an existing ERP environment, Sutherland provides, at no charge, its proprietary SWIFT workflow tool for accounts payable, accounts receivable and record-to-report functions. The advantages are that clients do not have to pay license fees and can rapidly deploy services. The disadvantage is these tools will not be as robust as those built by third-party tool specialists.
- Industries in which Sutherland has more experience include the airline sectors, banking services and transportation and travel.
- Sutherland's customer satisfaction scores from a small sample of customers were very high due to its proactive approach, transition skills and flexibility.
- Sutherland has its strongest sales presence for F&A BPO in the U.S. and the Middle East.
- Global servicing and delivery scale is smaller than leading firms. Sutherland has 2,300 people working in its delivery centers that are located in India (Thane and Chennai), the U.S., Dubai and Bulgaria. While it is servicing F&A BPO in 11 languages, this international capability is today a relatively small piece of its portfolio.
- Sutherland is lacking experience in the public-sector, energy and utilities and healthcare sectors.
- Sutherland is delivering record-to-report services, but this offering is a relatively smaller piece of its portfolio when compared with the leading providers.
Tata Consultancy Services (TCS) started selling F&A BPO in 2006. As a company, it sells both IT and BPO services. BPO services represent 11% of total service revenue, of which F&A BPO is a small proportion, given TCS's large industry-specific transaction processing deals. It employs approximately 10,125 FTEs in F&A BPO, of which 60% support accounts receivable activities. It operates from more than nine centers in five countries, including the Philippines, Chile, Ecuador, Hungary and India (Mumbai, Chennai, Delhi, Bangalore and Kolkata). It made no relevant acquisitions in 2011. TCS moves from a Visionary to a Leader in this 2012 Magic Quadrant. Its relationship with Oracle to deliver F&A BPO as a BPaaS offering positioned it in 2011 as a Visionary, and while this is still a strong element of its delivery, TCS's relative strength in sales in 2012 and execution moved it to the Leaders quadrant.
- TCS's resources are strongest in sales for F&A BPO in the U.K. and the U.S.
- Its partnership approach was described as a strength by clients who cited that TCS works collaboratively.
- Banking, insurance, retail and manufacturing are TCS's strongest sectors for F&A BPO experience.
- Some clients cited that their expectations of tools to aid transition were not met.
- Some clients cited that TCS has offered relatively fewer process enhancement technologies and services tools to support their F&A BPO activities. Clients also cited that TCS could be stronger at delivering insight to best-practice processes for F&A BPO.
- In terms of industries, TCS has no clients for the public sector in F&A BPO.
- TCS exhibits a less-coordinated global delivery management capability than other Leaders. While the global delivery network has grown rapidly recently for TCS, it has yet to articulate to clients its process improvement capabilities and has yet to build strong links between its diverse centers in Latin America, China, India and Hungary.
Wipro started selling F&A BPO in 2005. It is an IT and BPO provider, for which BPO as a whole represents 7.5% of service revenue. It operates from 16 centers in 10 countries, including Poland, Romania, Brazil, China, Mexico, the U.S., the Philippines, Mexico and India (Bangalore, Delhi, Chennai, Pune, Hyderabad and Mumbai). It employs approximately 6,000 FTEs in F&A BPO. It made no relevant acquisitions in 2011. Wipro remains a Leader in this 2012 Magic Quadrant because it is balanced in its performance for customers, operations and global delivery, but it slips back slightly due to its inability to communicate its vision to clients. It appointed a new head of BPO in 2011.
- Delivery execution was highlighted as a strength, with several clients citing a strong ability to deliver on transactional services and stating that Wipro will be flexible when faced with ad hoc requests and on-time delivery.
- Wipro has a strong technology vision that has led to new in-house-built technologies for F&A BPO delivery.
- Vertical market strengths for F&A BPO include communications, financial services, retail and breweries.
- Wipro has no F&A BPO clients in the public sector.
- Wipro is good at optimizing the processes that it is given, but clients suggested that it could be more visionary in anticipating the ultimate end state for the processes.
- Mixed experience of resources was an issue, as some clients cited that Wipro does not always place the optimum staff in the position and could be more proactive in taking ownership of and anticipating issues.
WNS started selling F&A BPO in 1996. It is a specialist BPO company, for which F&A BPO represents a significant share of total revenue. It employs about 7,000 FTEs in F&A BPO. It operates from 25 centers in seven countries, including India (Pune, Mumbai, Bangalore, Delhi, Nasik and Chennai), Sri Lanka, the Philippines, Romania, and Costa Rica. In 2011, it acquired Paxys' stake in a joint venture, and in 2008, it acquired BizAps, a specialist accounts payable service provider. In 2010, it acquired a procurement BPO tool from Paymetric that will strengthen its end-to-end procure-to-pay capabilities.
WNS remains a Leader in this 2012 Magic Quadrant because it is balanced in its performance for customers, operations and global delivery, but it slips back slightly due to its inability to communicate its vision. WNS has a relatively new CEO, and the company has realigned to sell to clients by specific vertical industry. This will ultimately strengthen its sales capabilities but has caused some short-term account management issues due to a period of uncertainty. It appointed a new head of F&A BPO in 2010 to strengthen this offering.
- WNS is regarded as flexible by clients as, for example, it is willing to support clients in their choice of transition style and methodology.
- Vertical expertise includes transportation and travel, financial services, consumer packaged goods, utilities, and media and entertainment industries.
- WNS sales team are stronger in the U.S. and the U.K. for F&A BPO.
- Some clients cited mixed transition experiences: Several clients cited that the transition could have been handled better; however, others rated WNS as being flexible and that WNS provided good service.
- Watch for mixed experiences with staff resources, as some clients cited that WNS does not always place the optimum staff in to position and that WNS could be more proactive in taking ownership of and anticipating issues.
- WNS has limited experience in the public sector for general F&A BPO.
Xerox acquired ACS in February 2010, and it spent 2011 combining the BPO offerings of both organizations. BPO now accounts for 57% of Xerox's total service revenue. ACS has been offering F&A BPO since 1996. Xerox has approximately 6,200 FTEs working directly in F&A BPO, and it has an additional 22,300 FTEs performing F&A services integrated with industry solution teams (for example, financial services and higher education). It operates from 90 centers in 47 countries, including North America (with 21 centers), Brazil, Mexico, Peru, Chile, Colombia, Jamaica, Guatemala, Dominican Republic, Western Europe (U.K., France, Germany, Spain, Italy, Malta, Nordics, Belgium and the Netherlands), Poland, Israel, United Arab Emirates (UAE), Ghana, India (Bangalore, Chennai and Kochi), the Philippines, China, Fiji, Japan, South Korea, Malaysia, Singapore, Australia, and New Zealand.
Xerox recently acquired Symcor's U.S. operations, adding lockbox and payment services to supplement its financial services offerings. Xerox has remained a Leader in the 2012 Magic Quadrant due to its well-articulated understanding of the clients' challenges, extensive global delivery capabilities, well-honed sales execution, and strong operational delivery score from clients.
- Clients cited that the transition team did an excellent job. Xerox has a methodology called "Total Recall," which strengthens this transition process.
- Xerox has invested in process enhancement technologies and services. For example, some clients rated highly Xerox's workflow tool named DART. It also has a good portfolio of partnerships for F&A BPO.
- The greatest portion of Xerox's revenue comes from the vertical industries of banking, healthcare, manufacturing and education.
- Watch for misaligned engagement expectations, as some client references criticized Xerox's ability to deliver against expectations set by sales.
- Poor exception handling was cited by some clients: Xerox delivers the basic services well when the processes are documented; however, a few clients cited that Xerox struggles sometimes to manage exceptions to the process.
- Xerox F&A BPO has less experience in the communications, energy and utilities, and government sectors.
We review and adjust our inclusion criteria for Magic Quadrants and MarketScopes as markets change. As a result of these adjustments, the mix of vendors in any Magic Quadrant or MarketScope may change over time. A vendor appearing in a Magic Quadrant or MarketScope one year and not the next does not necessarily indicate that we have changed our opinion of that vendor. This may be a reflection of a change in the market and, therefore, changed evaluation criteria, or a change of focus by a vendor.
New providers included since the 2011 publication are arvato, Capita and Sutherland Global Services due to these providers now meeting the inclusion criteria.
Note that the following providers were not dropped but were amalgamated into the profile of their new owner, as OPI was acquired by EXL, and Intelenet was acquired by Serco.
This Magic Quadrant evaluates suppliers on their F&A-related outsourcing services only. The criteria for inclusion of service providers for this Magic Quadrant are based on a combination of qualitative and quantitative measures.
A minimum threshold of $40 million — or above — (estimated for fiscal 2011) generated from relevant service provision to show establishment in and commitment to the F&A BPO market.
Overall market interest in and visibility of the provider, determined by serious consideration for selection from public- and/or private-sector clients.
Gartner analysts evaluate providers on the quality and efficacy of the processes, systems, methods and procedures that enable provider performance to be competitive, efficient and effective, and to positively impact revenue, retention and reputation (see Table 1). Ultimately, providers are judged on their ability and success in capitalizing on their vision. The following ability-to-execute criteria were used to evaluate vendors' positions.
Service: Core services offered by the provider that compete in/serve the defined market. This includes current service capabilities, quality, feature sets, skills and so on, whether offered natively or through partnerships as defined in the market definition and detailed in the subcriteria. Specifically, F&A BPO customer references focused on transition management and steady state of service levels of F&A process delivery.
Sales Execution/Pricing: The service providers' capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support and contracting expertise, as shown in number of and scale of contracts awarded.
Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve, and market dynamics change. This criterion also considers the provider's history of responsiveness and length of time servicing the market.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional activities, thought leadership, word of mouth and sales activities. Vendors' websites, presentations, service literature and a client survey contributed to evaluating this category.
Customer Experience: Relationships, products and services/programs that enable clients to be successful with comprehensive F&A BPO deals being evaluated. Specifically, this includes the ways customers receive operational F&A BPO service support.
Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, ability to manage attrition, tools and services capabilities, service methodologies and other factors that help the organization operate effectively and efficiently on an ongoing basis.
Gartner analysts evaluate technology providers on their ability to convincingly articulate logical statements about current and future market direction, innovation, customer needs and competitive forces, and how well they map to the Gartner position (see Table 2). Ultimately, providers are rated on their understanding of how market forces can be exploited to create opportunity for the provider. The following completeness-of-vision criteria were used to evaluate vendors' positions.
Market Understanding: Ability of the service provider to understand buyers' needs and translate these needs into comprehensive F&A BPO relationships. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those wants with their added vision.
Marketing Strategy: A clear, differentiated set of messages promoting F&A BPO, consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling F&A BPO that uses the appropriate network of capabilities, including marketing, service and communications affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: A service provider's approach to comprehensive F&A BPO development and delivery that emphasizes depth and breadth of F&A BPO services as they map to current and future requirements of use of technology, global delivery centers catering for multiple languages, and a good balance of transactional and high-end F&A delivery.
Vertical/Industry Strategy: The service provider's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets, which differs for many reasons, including the balance between types of public- and private-sector organizations serviced.
Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, or defensive or pre-emptive purposes. The service provider's reputation as a "thought leader" and innovator will also be evaluated.
Geographic Strategy: The service provider's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, including F&A BPO service delivery locations, directly or through partners, channels and subsidiaries, as appropriate for those geographies and markets.
Leaders are performing well today, both with a clear vision of market direction and by actively building competencies to sustain their Leaders position in the market. The comprehensive F&A BPO players in this quadrant generally share superior market understanding, have a global client base, an extensive network of well-distributed and highly populated global delivery centers catering for multiple languages, a good balance of transactional and high-end F&A delivery, and innovative well-communicated and marketed sales offerings.
Challengers execute reasonably well today, but they have yet to capitalize on their vision. For vendors in this quadrant, increased attention to sales and marketing will help improve future alignment to existing clients and new prospects.
Visionaries have a clear vision of market direction and are focused on preparing for that, especially with innovative technology solutions, but they still can improve the scale and scope of service delivery. For the vendor in this quadrant, time and attention to executing the visionary service and delivery plans will help it to capitalize on its visions with new prospects.
Niche Players typically concentrate on particular market segments, such as U.K.-based clients, public-sector clients, or manufacturing sector or midsize organizations, and they often support only those services that apply to those targeted segments. Among the comprehensive F&A BPO players in this quadrant, strengthening geographic sales and delivery strategy is a bigger consideration than in the past; targeting more vertical markets or more regional markets directly or via partners can therefore designate Niche Player status, as well as overall viability, innovation and time servicing the market. The relative number of installed bases of comprehensive contracts is also a factor. However, many of the providers in this segment were rated very highly for customer experience, and many can be considered to be leading players within their niche market focus.
Gartner defines comprehensive F&A processes as the outsourcing of three or more finance processes to a single provider. This report analyzes leading providers of F&A BPO that have met the criteria of $40 million or more in F&A BPO revenue. The market is differentiated by the scale of delivery that F&A BPO vendors have experience with; for example, several providers support complex, global deals, while others focus on supporting midsize corporations, or just one industry, or just one country, such as the U.K. These characteristics are important to weigh in making the right provider choice, and in the cases in which a provider supports only one country or limited services, then this has contributed to its rating in this system.
This Magic Quadrant offers a deep analysis of the competitive positioning for comprehensive F&A BPO services by showcasing the relative placing of the main players in the market according to a variety of criteria, and by offering detailed strengths and cautions for each of the included vendors. The ratings of the vendors represent a combination of research and client reference checks conducted specifically for the Magic Quadrant process, along with input from the Gartner BPO research community, ongoing vendor briefings, interactions with Gartner buyer clients and market developments.
Gartner's comprehensive F&A BPO Magic Quadrant (see Figure 1) is a useful starting point from which to identify and evaluate comprehensive F&A BPO services from a variety of vendors. Selection of a good provider for comprehensive F&A BPO services should be based on a detailed evaluation of an enterprise's end-to-end F&A needs and objectives compared with a service provider's capacity to fulfill those requirements and expectations over time. Therefore, enterprises must determine which comprehensive F&A BPO provider can best address their particular requirements.
Note: Just because a service provider falls into the Leaders quadrant, that position doesn't automatically make it the right choice for a buyer's needs.
In 2011, more than 150 new deals were signed and 120 were renewed. Thus, the market for F&A BPO is still growing strongly around the world, with these deals being signed at an average deal size of $10 million to $20 million. The market is extremely competitive, with more than 40 providers targeting selling the full, comprehensive F&A offerings, and many more specialists, such as NCO (with its specialist accounts receivable/collections), or Basware and Datamatics (with their accounts payable business process offerings). These and the following providers that supply F&A BPO are not included in this report due to either having less than three F&A BPO processes, or not meeting the required revenue threshold: NIIT Technologies, MphasiS, Datamatics, Quatrro, SourceNet Solutions, Xchanging, Caliber Point Business Solutions, Paramatrix Technologies, Aegis, Mahindra Satyam, NTT Data, Aditya Birla Minacs, iGATE, Acubor, Vee Technologies, Mouchel, BT Global Services, and Liberata.
Against this backdrop of a highly competitive market, providers are being influenced to try to differentiate their offerings by using process enhancement technologies and services (PETS), offering benchmarking services, process methodologies and new delivery locations, and adding consulting skills to the BPO offering.
Unfortunately, there are some challenges that most providers are finding hard to resolve, including attrition, obtaining U.S. visas and a general criticism that the providers are unable to tell clients early and often about bad news so that the clients could help fix the problem or mitigate the risk earlier. However, clients that treated their F&A BPO providers as partners (that is, as part of the team) had better experiences of F&A BPO versus those that kept the service provider and its staff at arm's length and that expected the service provider to be able to fix all issues related to finance in the whole end-to-end processes across the organization.
Competitive Differentiators Being Driven by a Highly Competitive Market in 2012
Still No Single "Global" Standard Way to Run or Price a Finance Process — Benchmarking
The reality of the world is that there is no one way to do any single finance activity, either within organizations or between organizations. Price benchmarking data is available — mostly only as the "going rate" for staff in certain locations — but this data does not reflect the issue of whether the provider "bought" the deal at below-market prices in the first instance. Process benchmarking is also hard to come by at a detailed and standardized process level across BPO providers. Several providers have made benchmarking across their client base available.
Process Enhancement Technologies and Services
Most F&A BPO providers have built a collection of best-in-breed or in-house tools, as well as have built relationships with specialist service providers, such as scanning or electronic invoice companies. This approach allows the processes to be delivered remotely, and enables process efficiency and process standardization. Workflow is one of the most common tools adopted. This workflow is where the actual "innovation" happens, by adding solutions that have not previously been deployed by clients. However, most F&A BPO providers are not able to articulate the value proposition of many of their F&A BPO PETS. This has resulted in low adoption of PETS. Reasons for clients not adopting more of their providers' PETS offerings included: lack of education on awareness and benefits by the service provider; use of existing in-house functionality; and lack of resources and money to evaluate PETS. Interestingly, many clients do not know what PETS solutions are being used on their account. Some F&A BPO providers have built a strong PETS strategy: Certain F&A BPO providers have built a two-tiered PETS strategy that has a range of PETS offerings for the more-process-efficient-focused clients and one for the more-cost-efficient-focused clients. The cloud-enabled PETS solution is emerging as a trend to use software as a service (SaaS) tools to enhance BPO providers' offerings in F&A.
Providers Integrating Consultancy Services Into BPO Activities
This has been a trend for the last 18 months with F&A BPO providers that have a commercial consulting organization. Several provides that do not have this capability in-house are either building it or partnering for the skills.
Vertical Market Expertise Is an Increasingly Large Part of Selection Criteria
"Yes, you can provide F&A BPO, but do you know my industry?" is a more frequent concern of buyers in selecting a provider. Today, most F&A BPO deals are with clients that want to source F&A administration processes from lower-labor-cost locations and garner better F&A practices. Buyers must look at a provider's quality, vertical market expertise (which is increasingly becoming important as providers learn about specific industries' finance needs, such as payment terms and supplier types), and global delivery models to ensure a full evaluation of the provider's abilities.
Global Delivery: Latin America and Eastern Europe Are Growing, but India Still Dominates
The F&A BPO delivery market is split between providers that can support multiple languages typically from delivery centers in Latin America and Eastern Europe and global corporations, and those that specialize in supporting English language only.
As buyers, you split the market again by those of you that have just bought access to less-expensive labor, versus those that have bought into a service of less-expensive labor and process improvement tools. Today, approximately 50% of delivery for F&A BPO is still from India, with onshore delivery in the U.S. or the U.K. still accounting for a significant amount of delivery.
Adding End-to-End Process Capabilities for Source-to-Pay and Order-to-Cash Services
To differentiate offerings, BPO providers are now looking at servicing end-to-end processes, such as source to pay and order to cash. In the last two years, Capgemini acquired IBX as a sourcing platform, Accenture acquired sourcing staff from Ariba, and Infosys acquired the Portland Group, which is a sourcing specialist company. Many F&A BPO providers have some level of sourcing or procurement support activities that they have delivered for a while, or they have partnered with a specialist for support, including Genpact, IBM and Wipro. Gartner expects this trend to expand dramatically during the next two years.
Key Challenges of F&A BPO Adoption in 2012
Attrition Still a Major Issue in Many Deals
Disappointingly, F&A BPO providers are not always quick off the mark to anticipate or address the attrition rate issue; they must work with the clients to suggest ways in which they can mitigate the issue. Key resolutions for staff turnover include:
- Moving as many staff members as possible off the night shifts in India. Highly mobile, younger and less-experienced staff members take these shifts most often, and they are the ones most likely to leave. Structuring the work so that fewer staff members work after midnight (in terms of India's time zone) significantly decreased attrition.
- Awarding prizes for good work.
- Allowing visits from sponsors.
- Putting delivery staff on your organization chart.
- Bringing staff to the onshore locations to learn more about the company, or to work on special projects or to swap jobs.
New buyers must be careful when evaluating bid responses for the following operational issues:
- Providers are regularly failing to attain visas for Indian nationals to enter the U.S. to work on knowledge transfer. The application for this needs to be seen as part of the time plan. Many of the client references we spoke with that were moving work from the U.S. to India in 2012 struggled with visa issues.
- Providers do not all have the same policy in regard to whether the transition staff will come to your location or you will send your staff to their location. Ensure that you are aware of who is paying for the entire transition costs in your contract and whether your staff can really travel and transfer their knowledge at a remote location.
- Transitions take time — months and months — and they vary by the complexity of the task, the diversity of the processes and the locations. A transition will take time, even if it is just a "lift and shift." Often, new buyers are unrealistic in their expectations and race to achieve benefits, which can set the whole project off on a bad start.
- As a buyer, you should establish whether providers have invested in strong knowledge capture tools that will speed the transition.
- As a buyer, you should understand whether providers have invested in process methodologies that lay out how the process should optimally be conducted, which can save time in transition, because a variance between the client's process and the provider's standard is calculated early.
Everyone Should Ban the Words "Innovation" and "Transformation" Because They Will Only Lead to Misaligned Expectations
Many prospective F&A BPO clients have not picked up on these outsourcing lessons because they are typically buying outsourcing for the first time and continue to make the same mistakes as seen previously in the market. Ensure that you do not fall into traps such as, believing that "my service provider is all-knowing and can fix everything," or "I will pick the lowest price deal" and then be left wondering where the innovation and transformation are. The most successful F&A BPO clients have carried out a baselining project with the business users of the current state of processing efficiency, and the processing effectiveness of established processes, and did not hope that the F&A BPO vendor will solve all the internal process issues, which may never have been addressed internally.
Ability to Execute
Product/Service: Core goods and services offered by the vendor that compete in/serve the defined market. This includes current product/service capabilities, quality, feature sets, skills and so on, whether offered natively or through OEM agreements/partnerships as defined in the market definition and detailed in the subcriteria.
Overall Viability (Business Unit, Financial, Strategy, Organization): Viability includes an assessment of the overall organization's financial health, the financial and practical success of the business unit, and the likelihood that the individual business unit will continue investing in the product, will continue offering the product and will advance the state of the art within the organization's portfolio of products.
Sales Execution/Pricing: The vendor's capabilities in all presales activities and the structure that supports them. This includes deal management, pricing and negotiation, presales support, and the overall effectiveness of the sales channel.
Market Responsiveness and Track Record: Ability to respond, change direction, be flexible and achieve competitive success as opportunities develop, competitors act, customer needs evolve and market dynamics change. This criterion also considers the vendor's history of responsiveness.
Marketing Execution: The clarity, quality, creativity and efficacy of programs designed to deliver the organization's message to influence the market, promote the brand and business, increase awareness of the products, and establish a positive identification with the product/brand and organization in the minds of buyers. This "mind share" can be driven by a combination of publicity, promotional initiatives, thought leadership, word-of-mouth and sales activities.
Customer Experience: Relationships, products and services/programs that enable clients to be successful with the products evaluated. Specifically, this includes the ways customers receive technical support or account support. This can also include ancillary tools, customer support programs (and the quality thereof), availability of user groups, service-level agreements and so on.
Operations: The ability of the organization to meet its goals and commitments. Factors include the quality of the organizational structure, including skills, experiences, programs, systems and other vehicles that enable the organization to operate effectively and efficiently on an ongoing basis.
Completeness of Vision
Market Understanding: Ability of the vendor to understand buyers' wants and needs and to translate those into products and services. Vendors that show the highest degree of vision listen and understand buyers' wants and needs, and can shape or enhance those with their added vision.
Marketing Strategy: A clear, differentiated set of messages consistently communicated throughout the organization and externalized through the website, advertising, customer programs and positioning statements.
Sales Strategy: The strategy for selling products that uses the appropriate network of direct and indirect sales, marketing, service, and communication affiliates that extend the scope and depth of market reach, skills, expertise, technologies, services and the customer base.
Offering (Product) Strategy: The vendor's approach to product development and delivery that emphasizes differentiation, functionality, methodology and feature sets as they map to current and future requirements.
Business Model: The soundness and logic of the vendor's underlying business proposition.
Vertical/Industry Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of individual market segments, including vertical markets.
Innovation: Direct, related, complementary and synergistic layouts of resources, expertise or capital for investment, consolidation, defensive or pre-emptive purposes.
Geographic Strategy: The vendor's strategy to direct resources, skills and offerings to meet the specific needs of geographies outside the "home" or native geography, either directly or through partners, channels and subsidiaries as appropriate for that geography and market.