by Harry Feinberg

Enter the 2005 HRO Today Resource Guide and discover what you only thought you knew about HRO. Then learn about an entirely new $33 billion market—“FAO.”

After 21 issues of HRO Today and 4 issues of HRO Europe, here is what we know: The magazines have advanced the $55 billion HRO industry and moved HRO from the secret realm of “early adopter” to household name used by buyers who are among the “early majority.” Finally, we can say that HRO is here to stay. With the arrival of the early majority, otherwise known as the middle market, huge HRO growth is upon us. We know from our successful 2004 HRO World Conference that buyers are more plentiful than ever before. Compared to last year at this time, we are getting a much higher volume of calls and e-mails asking our advice concerning quality providers and charting a path to outsourcing success.

This issue’s Resource Guide is an indicator of the robust growth phase that we now find ourselves in. Last year’s guide listed approximately 850 providers. This year’s list includes almost 1,100 providers. Each year, HR and Finance professionals keep this issue on their desks all year (and it can also be accessed online at www.hrotoday.com). It is the most comprehensive, one-of-a-kind, HRO provider guide.

And in addition to the new Resource Guide, there is a completely new phenomenon we want you to know about.

Last year, we added a new category to our guide, finance and accounting outsourcing (FAO), which featured 39 of the top providers. We included FAO because we saw significant crossover between HRO and FAO. Many HRO contracts include FAO functions, such as travel expense reporting and payroll-related or benefitsrelated functions. And many FAO contracts include HRO pieces, mostly payroll and benefits.

This year, we feature 50-plus Tier 1 FAO providers— these are the companies who have clients for which the vendor has completely taken over the finance and accounting function. FAO and HRO are “kissing cousins,” closely related, and getting closer every day. This closeness is a reminder of the tight relationship that often exists between CFOs and Chief HR Officers. It also reminds us that now that CFOs have had significant success outsourcing HR functions, they are now outsourcing finance and accounting functions, creating a $33 billion FAO market as a result. IDC tells us that today’s $33 billion FAO market will grow to a $47 billion market by 2008.

In addition to the Tier 1 FAO providers that you can read about in this issue, to our great surprise and satisfaction, we have identified another 425 Tier 2 and 3 FAO providers. A total of 475 significant providers in any category is strong evidence of significant intelligent life, and of gobs of money being saved by companies going the FAO route.

As it turns out, FAO is now the number-one BPO growth market, outpacing HRO. Just as in HRO, there is a tremendous gap between FAO provider knowledge and FAO buyer understanding. We predict FAO will follow the same path as HRO. Many “early adopter” CFOs that have already experimented with such functional areas as HRO are now eager to experiment with FAO.

Here at Outsourcing Today, we see the BPO trends with crystal clarity and we tell you about them every month. It is for these reasons that Outsourcing Today is ready to announce that the market is ready for another first-to-market magazine, FAO Today, and we will be the ones to publish it. FAO Today will debut in November of 2004 and is edited for senior business leaders who recommend, specify, and buy finance and accounting outsourcing services for their corporate (Fortune 500 or large and mid-market) and public-sector (federal and state) organizations. This bimonthly publication will circulate to 30,000 readers in North America and Europe. FAO Today will exclusively provide the stories, features, columns, and news from the perspective of today’s finance and accounting executive who is looking to realize economies and gain productivity in back-office functions.

So, fasten your seatbelt, make sure your tray tables are up and your seatback is in the upright position, because Outsourcing Today is about to embark on a journey with you into the world of FAO.