Key Service Providers

As of March 2005, Everest Research Institute transaction database indicates that Accenture and IBM have signed the most full-service contracts. Their overall market-share position is driven by their presence in all three functional areas of HRO, FAO and PO. Hewitt also has a strong overall showing, although a key difference is that Hewitt’s share is based on only the company’s strong presence in the HRO segment.

Interestingly, market-share numbers suggest that this emerging full-service market is being dominated by a long list of players that are not key leaders in the traditional IT outsourcing (ITO) market. Given this market is growing quickly, the resulting new market transactions and M&A activity could alter the supplier landscape.

Sourcing Functions Together or Separately

An important adoption pattern is that more than 90% of full-service transactions are currently limited to multiple processes within a single function, HR, F&A, or procurement. In other words, while we see strong growth in BPO deals bundling multiple “processes” together (for example: multiple HR processes being placed into a single outsourcing deal), we are not witnessing a widespread trend towards bundling HR, F&A and procurement “functions” together.

Our belief is that there is currently a limited value for customers to bundle processes across the three primary functions within the GAO market. While suppliers suggest that there could be value in bundling cross-functional BPO services with the same supplier, fundamental value drivers, both early and late stage, suggest that these functions require different kinds of focus and capabilities for success.

The absence of a clear trend favoring the bundling of multiple functions is likely a disappointment to companies