Exclusive: F&A BPO deals continue to rocket…but they’re getting smaller

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You heard it first here folks…. In 2006 we saw 89 new F&A BPO deals signed (contracts with at least 2 core accounting processes bundled). This compares to 66 deals in 2005 – an increase of 35%. However, when we look at the Total Contract values, the 2006 deals averaged $30 million each, compared to $39 million for the 2005 deals – that’s 30% smaller.

And we have already seen another 24 deals so far in 2007 (until 2 weeks’ ago) – but the deal values are averaging only $24m.

So what does this initially tell us? Let’s get the debate going but my initial analysis is:

  • The “upper” middle-market is opening up (the 5-10K employee orgs)
  • Companies are taking the plunge, but scaling back the size of the commitment with fewer processes bundled
  • The big global deals are getting fewer – and further – between
  • Onshore/Nearshore services are becoming more critical as deals get smaller and the offshore component becomes less cost-effective in deals of this type. Offshore still plays a major role at the high-end, but to a lesser extent in the middle market

Rocket

The Rocket goes on….but there’s less juice with the special deliveries

Posted in : fa-bpo

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