Framingham, Mass. (July 13, 2004) -- The market for worldwide finance and accounting outsourcing services, which reached over $30 billion in 2003, will reach $47.6 billion in 2008, according to research firm IDC.

IDC projects that finance and accounting business process outsourcing, one of the largest and fastest growing segments within the BPO offering, will grow at a 5-year compound annual growth rate of 9.6 percent, with spending on outsourcing of the transaction management function expected to grow the fastest, at 9.8 percent, over the next five years.

According to the report, “U.S. Finance and Accounting Outsourcing Market Forecast and Analysis,” the United States will remain by far the largest finance and accounting BPO market, while Europe, the Middle East and Africa will be the fastest growing region in terms of F&A BPO spending in the short to mid-term.

IDC said that transaction management services represent the largest opportunity within the F&A BPO space. Spending on outsourcing of the transaction management, tax management and general accounting functions is expected to grow the fastest, with these categories showing five-year compound annual growths rates of 9.8 percent, 9.3 percent, and 8.3 percent, respectively. Accounts payable remains the most widely outsourced F&A function.

While cost-cutting remains the primary reason for outsourcing F&A, IDC said the need to solve strategic business issues is increasingly driving F&A BPO spending globally.

However, the report also noted that finance and accounting won't become a fully outsourced business function in the foreseeable future, due to the strategic importance and the critical nature of the finance and accounting function and the complex regulatory environment. "Although growing in scope, F&A BPO is expected to remain just a component of enterprise finance and accounting operations," IDC said.

-- WebCPA staff

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