GS: How do you compare FAO market performance in 2010 and what’s the outlook for 2011?

MG:The FAO market has attained maturity with respect to the large North American buyers and most of the growth for this segment in 2010 was related to contract renewals. As per Aditya Birla Minacs market intelligence, only 30 new large deals were signed in 2010 which is 15-16percent higher compared to 2009.

The EMEA saw 10-12 new large deals that was similar to NA, rest of the growth in this market was due to contract renewals and scope expansion.

Mid-market (both in NA and EMEA) witnessed unprecedented growth in 2010 and this trend will continue to been seen until 2015.

Based on our market survey, 2011 will be the FAO year for mid-market customers; this segment has started focusing on profitability and is looking at all possible avenues for cost reduction.

FAO in APAC has continued to lag behind rest of the world.  However, we believe that from 2011 onwards we expect the APAC FAO market to get onto a growth trajectory which will gain further momentum 2012 onwards.  FAO in APAC will not mature until 2016. Client F&A operations in APAC continue to be primitive in comparison to NA or EMEA. The processes are paper based, limited use of technology, decentralized and mostly non-standard. We have already started noticing an increased interest in setting up Shared Service Centers (SSCs) which will pave way for FAO.
SMB is another market segment that has huge market potential, but given the nuances, it might take a significant time for large service providers to make a significant impact. Given our recent acquisition (Compass BPO) in the FAO space we have made a silent entry into the SMB space and are well poised to ride the growth.

We believe that with respect to industry segment, healthcare, insurance, retail, energy & utilities will witness maximum growth in 2011.

GS: What are the top trends seen in FAO for this year?

MG:The market would witness increased alliances between pure play BPO players and F&A technology providers. There are multiple drivers behind this strategy including the need for non-linear growth, higher revenue productivity & ability to provide value added services. This would also result in additional platform based offerings, mostly targeted towards mid-market customers.

Increased demand for analytics and other high-end F&A services (e.g. FP&A type services).Service providers will have to develop industry specific analytics capabilities in order to show differentiation in this market.

FAO market consolidation - Increase in acquisition of captive FAO SSCs by third party service providers and also M&A activities in the specialized FAO service provider space.

Increased investment in building onshore capability by traditional offshore (India) origin service providers. Similarly increased traction in Tier 2/3 cities in the offshore market for FAO delivery so as to nurture new talent and reduce costs.

GS: What is your strategy to push your services for 2011?

Minacs has adopted a Blue Ocean* FAO strategy for developing the FAO market

1) Process & Domain Led - This allows us to offer niche solutions focused not only on outsourcing but more importantly address CFO pin points.

2) Target Market Led - Minacs targets its solutions towards Mid-Market & SMB customers allowing us to create sole source opportunities.

3) Technology Led - Minacs offers technology led FAO solutions and end-to-end managed platform for Automating Legacy Processes
                                                        
* Blue Ocean Strategy is a business strategy book first published in 2005 and written by W. Chan Kim and Renée Mauborgne. Blue oceans denote all the industries not in existence today—the unknown market space, untainted by competition. In blue oceans, demand is created rather than fought over. There is ample opportunity for growth that is both profitable and rapid. In blue oceans, competition is irrelevant because the rules of the game are waiting to be set. Blue ocean is an analogy to describe the wider, deeper potential of market space that is not yet explored.