The Fortune at the Bottom of the Fortune

04 December 2008

Ever since Accenture won the historic British Petroleum (BP) deal for its finance and accounting (F&A) franchise in the early 90s, a hitherto unknown third party service offering opened up almost overnight: finance and accounting outsourcing (FAO).

Much of the hype surrounding FAO since the BP deal has been around the pursuit of Fortune 500 (F500) companies, especially in the formative years. This was a natural and logical step in the right direction. F500’s offered scale, geographic reach and setting up of a global delivery model. It also met the fixed costs of service providers elegantly and created huge front-end heavy execution engines.

As time passed by, the nature of these deals changed with the F500’s showing a clear affinity towards passing on more risk and onshore liability. What started as pure playtime and materials deals now began to include complex and burgeoning onshore service provider capability in mailroom, scanning and logistical services, and in many cases, even HR and front office capabilities. In return the service provider demanded and got away with fixed price and long term contracts – some going up to even nine years.

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