Our first annual edition of the top FAO providers.

by Jay Whitehead

In the history of any market, there is always some brave soul who first ranks the leaders. Usually, the ranking is more art than science. This list is in the best of those first-list traditionsboth brave and artful. That is not to say that we failed to approach building this list scientifically. We did. Our ultimate goal will be to rank the top FAO providers by the most appropriate objective criteria: TCV, or Total Contract Value. TCV is analysts metric-ofchoice in the BPO world, since all providers get their revenues from multiyear, recurring-revenue contracts. The challenge is that at this early stage in the FAO markets development, some providers consider this metric a trade secret. They protect it with their lives. In our view, this attitude is horribly myopic and even customer-hostile. Knowing a providers TCV is a necessary component of a buyers decision making process. Here is the stark reality: In every market we know, when providers have been forthcoming with similar data, market growth has accelerated. Customers love daylight to shine on their choices. And we at FAO Today are committed to shedding plenty of light on these numbers. By next years Top 10 List, our rankings will include TCV, which we are committed to acquiring, even if it requires some strongarm tactics.

To put our ranking methodology challenge in even better perspective, every year, Forbes magazine ranks the worlds richest people. Both FAO Today and Forbes editors use both science and art to build our models. And we know that the methods we use can give wildly different results. For example, in 2004, Forbes showed Cuban leader Fidel Castro worth $150 million using one guestimation technique. Yet in 2005, the magazine used another formula, and it showed the Cuban President worth $550 million. Needless to say, Castro, like some FAO providers who are intensely private about their TCV, was unhappy both about being on any such list and about the publishers methodology. As a result of lacking TCV, this ranking is less absolutely correct than relatively accurate. That is to say, for example, that #1 is definitely larger than #2, and #8 smaller than #7. To verify our rankings, we checked with 25 discrete sources, including 18 providers, 5 sourcing advisors, and 2 industry analysts. We want to give special acknowledgement to Michel Janssen, President Supplier Solutions at Everest Group and the authors of The TPI Index, whose data are more detailed than just about any others currently available.

In our comments following each providers listing, we have typically listed one or more client names. While we could have listed more, the contracts we mentioned are representative, rather than exhaustive. Despite some providers shyness about disclosing their TCV, we fully expect some loud calls from listed organizations disputing their position on the list. We welcome those calls. But what we would welcome even more is a full disclosure of TCV from the providers who make up this list. OK, enough already with our disclaimers and whining. On to the 2005 FAO Today Top 10 Providers List.  

FAO Today Top 10 Providers

1. Accenture, accenture.com

Accentures leadership in FAO started back in 1991 (the firm was called Andersen Consulting thenit changed names in January 2001) with its groundbreaking contract with British Petroleum. After taking over BPs entire North Sea finance and accounting function, the firm went on to launch its Finance Solutions unit, which now stands as the FAO industrys largest. Brand-name clients (in addition to BP) include Delphi, Exel, and Thomas Cook.

2. IBM, ibm.com

It may surprise many that IBMs Global Finance & Administration solutions unit may have more client-facing CPAs than any other non-CPA firm, with well over 1,000. In July 2002, Big Blue declared its commitment to the FAO market by purchasing PWCs consulting arm, which added nearly 30,000 employees to IBMs 150,000. Led by IBM veteran Don Schulman, the FAO unit claims dominant strength in the energy sector, with Marathon Oil and Williams Energy, but is diversified as well with Unilever and Dun & Bradstreet.   

3. ACS, acs-inc.com

ACS has evolved from its original mission in ITO into leadership positions in FAO and HRO. FAO services span all 10 domains and have global capabilities with "centers of excellence" in Brazil, Jamaica, and India. ACS bundles IT services with many of its FAO contracts, which allows clients flexibility in supporting existing platforms. The firm signed GE and Office Depot as new clients in 2004, and expanded its 2003 FAO contract with GM to include a broader range of services in additional countries. In March 2005, ACS announced its acquisition of Mellon HR, which includes client contracts with FAO components, such as American Express.

4. EDS, eds.com

With the possible exception of IBM, no FAO vendor has more relationships in the public sector than EDS. And its client base and new client wins (U.S. Department of Education, BC Provincial Revenue Ministry) reflect the Plano,Texas-based companys strengths.

5. Capgemini, capgemini.com

This years contract with TXU, on the heels of other energy clients such as HydroOne and Ontario Power, make Capgemini an FAO leader in the power utility industry. A global provider, additional clients include DiaryFarm (China), International Paper (Poland), and BHP Steel (Australia).

6. HP, hp.com

While HP still counts on its printer business for the lions share of its profits, its FAO business got a huge vote of confidence in April 200,4 when Procter & Gamble signed a 10-year FAO pact with the technology giant. Under the leadership of Marc Schwarz, former head of global outsourcing for Deloitte Consulting, the sourcing advisory community tells FAO Todaythat HP is finding its way into the finals of some important new contract races.

7. Deloitte Consulting, deloitte.com

Among the few accounting firms to keep its consulting arm in the post-Sarbanes-Oxley era, Deloitte continues to show strength in FAO, although its FAO assignments are closely tied to ERP integration work.

8. (tie) Bearing Point, bearingpoint.com

To the casual observer, Bearing Points position in FAO is strong, with its legacy as KPMGs consulting arm and contracts with major clients such as Trinity Industries. But beneath the surface, questions about its commitment to FAO linger. On the Trinity account, for example, OPI (see below) is doing the vast majority of the work as a "partner" in the contract. Far stronger is Bearing Points commitment to ITO, with a recent $229 million Homeland Security contract among its wins.

8. (tie) OPI, opiglobal.com

Outsourcing Partners International, OPI for short, really vaulted into the global FAO market in May 2002 by buying the BPO division of KPMG LLP. Backed by $20 million from Trident Capital and $4 million from Cargill Ventures, the company has had several impressive FAO client wins including Cargill and railcar maker Trinity Industries, the latter of which it shares with BearingPoint. The company is led by charismatic former KPMG national managing partner and merchant banker Clarence Schmitz.

10. Convergys, convergys.com

2004 was a year of international FAO wins for Convergys, with U.K.-based WildBlue, Columbia-based Orbitel, and Romania Telecom. The Cincinnati-based company, which made its name originally in cal- center services, has made lots of headway in outsourcing since 2002; notable contracts include the States of Florida and Texas.