Our CEO congratulates the Baker’s Dozen companies, while ruminating on the need for a communal standard among providers and buyers in view of current trends and recent scandals.
 
by Elliot Clark
 
Each year FAO Today Magazine undertakes a survey of the customers of the top FAO providers. This year we received more than 90 responses making this a comprehensive view of the buyer sentiment in the market. We have developed indices that rate the providers, on whom we had sufficient data, in three key metrics that buyers look at in selecting a vendor. These dimensions are quality of service, breadth of service and size of engagement. The survey results are confirmed via IP tracing and e-mail addresses to ensure accuracy and honesty.

This year is a particularly interesting one for FAO and BPO in general. Much of the industry grew out of the banking and financial services sector of the economy. Questions of financial practices, reporting, and compliance now pervade any discussion of the banking sector, and how does that relate to FAO?

This is the year Satyam International, one of the largest ITO and BPO firms in the world, admitted to a massive accounting fraud. The company’s chairman stepped down and likely will face prison time in the wake of his confession. The implications of this scandal are covered extensively in this issue of FAO Today, as well as its impact on the market.

This year we saw the FAO industry breadth of services index change dramatically. Last year fewer than 3 percent of respondents were utilizing an outsourcing provider for compliance management. This year, that percentage has now risen to 9 percent. This is nowhere near the nearly universal use of outsourced services for accounts payable. What this trend suggests is that more and more companies are comfortable placing this critical aspect of financial infrastructure in the hands of external providers.

By extrapolation, if these external providers, such as in the unfortunate case of Satyam, are not accurately reporting their own results, can they be counted on to properly manage yours?

The answer is probably yes, but it does beg the issue of the professional standards that all of these providers adhere to and whether they subscribe to a single standard. There is a need for “professionalization” of the FAO space and a contextual framework around standards of performance and integrity. We will cover that need in more extensive detail in upcoming issues, but we recognize the need is pressing. This is not to suggest that all of the providers profiled in the 2009 FAO Enterprise Bakers Dozen do not have standards of performance, but that there needs to be a single standard that everyone can agree upon and that buyers can recognize as a starting point. If the outsourcing of compliance, treasury, and more strategic services continues, we will need this to move the industry forward and also to bind new players entering the industry in a way that prevents them from confusing buyers with a value proposition that does not adhere to the standards needed for accuracy and integrity.  

We congratulate the top players in the Bakers Dozen and offer the list to buyers who may wish to study the criteria for an upcoming RFP. I also welcome comments about the need for professional standards at eclark@crossingmedia.com.