Enterprises are automating financial processes and adding analytics tools, elevating FAO partners to more strategic roles, ISG Provider Lens™ report says
Finance and accounting departments around the world are carrying out digital transformations to make processes more frictionless and automated, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.
The 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report finds that COVID-19 lockdowns accelerated the digitalization trend, as many companies were forced to abandon traditional processes to accommodate remote work requirements. As this trend spreads, more enterprises are turning to outside providers for services and help in planning digital strategies.
“Organizations are creating connected finance teams with the technology to collect and analyze larger data sets for long-term decision-making,” said Robert Stapleton, partner and Business Operations Services lead with ISG. “CFOs, with the added power of technology, have increasingly strategic roles in the leadership of their organizations.”
Many companies are pivoting toward new ways of operating in response to constant business disruptions since the pandemic, especially those caused by ongoing macroeconomic challenges, including inflation and supply-chain issues, the report says. Providers are helping these companies understand and adopt new financial operations technologies to make these transitions successful.
The flood of new technologies affecting finance and accounting has become overwhelming for some organizations, ISG says. Many are implementing major new capabilities, including SAP S/4HANA, while making early investments in generative AI and evaluating the potential of other tools, such as blockchain and the metaverse. Leading providers are developing expertise in these areas to guide clients toward effective plans for modernization.
Seeing the danger of vulnerabilities that could come with introducing new technologies in their financial operations, enterprises are also stepping up cybersecurity projects, often with assistance from service providers, the report says. These initiatives aim both to protect privacy and business continuity and to comply with the growing number of regulations in these areas.
Companies engaging with FAO providers increasingly are seeking outcome-based contracts in which the providers share the risks and rewards of digital transformation, ISG says. These are taking the place of traditional engagements based on service-level agreements or the number of full-time employees available for projects.
“FAO providers are becoming strategic partners that collaborate with clients in addition to delivering services,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “These engagements are starting to include outsourcing of higher-level processes such as record-to-report and financial planning and analysis.”
The report also explores other FAO trends, including the importance of global delivery models for FAO services and the growing need for clarity and effective strategies around environmental, social and governance (ESG) initiatives.
For more insights into financial and accounting challenges, such as a shortage of skills for some high-level processes, and advice on how to work with providers to address them, see the ISG Provider Lens™ Focal Points briefing here.
The 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report evaluates the capabilities of 28 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, Deloitte, EXL, Genpact, HCLTech, IBM, Infosys, TCS, Wipro and WNS as Leaders in all four quadrants. It names Sutherland as a Leader in two quadrants.
In addition, Conduent and Tech Mahindra are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
The 2023 ISG Provider Lens™ global Finance and Accounting Outsourcing (FAO) Services report is available to subscribers or for one-time purchase on this webpage.
About ISG Provider Lens™ Research
The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.
A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.
ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit www.isg-one.com.