1DRAFT–CONFIDENTIALNOTTOBEDISTRIBUTEDJuly2003MarketAttractivenessFinanceandAccounting(F&A)BusinessProcessOutsourcing(BPO)2DRAFT–CONFIDENTIALNOTTOBEDISTRIBUTEDF&Aisarelativelynewmarketwhichissizedat$28billiongloballyandisprojectedtogrowat13%forthenextfewyearsManylargeandsmallcompaniesaroundtheworldareexpressingstronginterestinF&Aoutsourcing,notjusttocutcosts,butmoreimportantlytodrivebusinesstransformationLong-termcontractswithrecurringrevenueyieldattractivefinancialreturnsThemarketishighlyfragmentedwithverydiverseplayersrangingfromlargemulti-processconsultingfirmstosmallone-processtechnologyfirmsThereisalimitednumberofqualifiedcompetitors,asfewcompanieshaveyetdevelopedthecapabilitiestoofferaholisticsolutionforF&AoutsourcingManycompaniesareinvestingindevelopmentofoff-shorecapabilities,especiallyinIndiaF&ABPOpresentsalargeandF&ABPOpresentsalargeandgrowingopportunitywithgrowingopportunitywithattractiveeconomicsattractiveeconomicsWhilemanycompaniesWhilemanycompaniescompete,andnewplayersarecompete,andnewplayersareentering,severalbarriersexistentering,severalbarriersexistandthereisnoclearleaderyetandthereisnoclearleaderyetOpportunityisgoodfitOpportunityisgoodfitwithcurrentCGEY/DiversifiedFinancialwithcurrentCGEY/DiversifiedFinancialInstitutecapabilities,customerbaseInstitutecapabilities,customerbaseandstrategyandstrategyAccordingtoGartner,BPOis“thedelegationofoneormoreIT-intensivebusinessAccordingtoGartner,BPOis“thedelegationofoneormoreIT-intensivebusinessprocessestoanexternalprovider,thatinturnowns,administratesanmanagestheselectedprocessestoanexternalprovider,thatinturnowns,administratesanmanagestheselectedprocess(es)basedondefinedandmeasurableperformancemetrics”process(es)basedondefinedandmeasurableperformancemetrics”Source:Gartner,UsersofBPOreporthighsatisfactionwithexistingrelationships,October2002BothDiversifiedFinancialInstitutionandCGEYhavenoticedanincreasedinterestfromsomeoftheirmajoraccountsandcouldleveragetheircurrentrelationshipstoacceleratemarketpenetrationF&ABPOwouldallowDiversifiedFinancialInstitutionandCGEYtoleverageexistingcapabilities,facilitiesandskillstogenerateattractivereturnsGapsincurrentofferingcanbefilledthroughpartnershipswithand/oracquisitionsofsmallerplayersDiversifiedFinancialInstitute&CGEYHavetheOpportunitytoBecomeOneoftheLeadingPlayersintheGrowingF&AOutsourcingMarket3DRAFT–CONFIDENTIALNOTTOBEDISTRIBUTEDF&ABPOisarelativelynewmarket,sizedcurrentlyasa$28billionmarketgloballywithagrowthrateof13%till2005LargecompaniesacrossindustrieshavedemonstratedthatF&ABPOisanacceptableandattractiveoptiontoreducecostsandimproveefficiencyintheF&AfunctionandserveasmodelandincentiveforothercompaniesBothlargecompaniesandmidsizecompaniesformanattractivetargetmarketforF&Aoutsourcingproviders,primarilyintheUSandUKmarketsStrongandStrongandgrowingdemandgrowingdemandDemandingDemandingcustomerscustomersLargeandsmallLargeandsmallfirmsareinvestingfirmsareinvestingnownowCustomersarelookingtoF&Aoutsourcingtosolvemanycriticalneedsatonce(e.g.,reduceandvariabilizecosts,improveefficiencyandstandardizeprocesses)toturnthefinanceorganizationintoastrategicassetSavvybuyersforceproviderstogothroughalongandrigorousselection,whichmanytimesresultsinkeepingtheprocessesin-house,iftherisksinherentinoutsourcingcannotbesufficientlymitigatedMajorityofcompaniesar...