Vengroff, Williams and Associates Identifies Outsourcing Trends for 2009

Vengroff, Williams & Associates, Inc., the leading provider of receivables management and business process outsourcing solutions, forecasts an increase in outsourcing market activity as well as some major paradigm shifts to the outsourcing framework in 2009. Increased adoption by mid-size firms and financial institutions of BPO and more stringent governance expectations will be driving factors for the year ahead. The capability to manage relationships for mutual value is what will differentiate the top providers in an increasingly commoditized environment.

Looking back, VWA saw 2008 as a pivotal year for the credit markets and as such predicated that CFOs would elevate receivables to their list of priorities to ensure that their cash flow was optimized to ride out the anticipated tough economy in 2008. According to VWA president Robert Sherman, the company has in fact seen a 32% increase in new business in 2008. More than 30% of VWA’s new client acquisition through September 30, 2008 is related to third party collection contracts.

Mark Vengroff, CEO of VWA, states that "We see a greater emphasis being placed on creating a buyer-provider relationship that improves not only short-term benefits, but also creates new opportunities through innovation in 2009. VWA sees companies operating with legacy infrastructure and tools who are under tremendous pressure for productivity gains. These companies have been looking to modernize and run their operations using state of the art infrastructure and tools, and now more than ever have a reason to look at BPO service providers."

Four key trends identified in this release are:

The credit squeeze-induced economic crisis will undoubtedly have an effect on the outsourcing industry. In fact, once the dust settles in the first half of 2009, we can expect to see an increase in market activity. CFOs are paying close attention to both the payment terms their suppliers are demanding and the credit terms of their customers. Since the credit-crisis began to hit its crescendo in mid-September, CFOs at companies of all sizes have been paying ever closer attention to the cash streaming through their businesses and keeping careful watch on their suppliers’ credit terms and their customers’ viability. There is a tremendous pressure for productivity gains.

EquaTerra Advisor’s BPO/ITO Service Provider Pulse Survey for 3Q08 shows that the demand for BPO and IT outsourcing amid the existing economic uncertainty is on the rise. The combined growth rate of IT and business process outsourcing in Europe and the U.S. stood at 64 percent and 25 percent, respectively, during the quarter. Stan Lepeak, Managing Director, EquaTerra, explained that outsourcers are expected to increasingly adopt a global, cross-functional or portfolio-based governance approach. He further added that the key reasons behind attaining business goals for outsourcers will include developing and adopting standardized outsourcing governance operational models; investing in skilled personnel; and using software tools for automating and enhancing governance operations.

As mid-market firms emerge and grow stronger in the market they are quickly becoming a major player. Historically, midsized businesses with smaller transactional processing have been limited in their ability to leverage business process outsourcing (BPO), due to the steep costs and lengthy implementation times associated with full-scale outsourcing projects. But with maturing finance and accounting outsourcing solutions (FAO) allowing down-scaling for the mid-market and increasing supplier competition; this has opened the door for these size firms to embrace outsourcing.

With less than a 1% worldwide penetration, the mid-market represents a significant growth opportunity. It is estimated to grow nearly US $9 Billion at a penetration of 15% according to Everest Global, Inc. 2008.

Maintaining visibility into the client’s environment and making sure that contractual obligations are met is why governance is of top concern for outsourcing professionals. Good governance and effective relationship management is what distinguishes outsourcing deals that deliver value from those that disappoint. Governance helps buyers go beyond just managing the risk of the deal, to realizing and exceeding their business case. The capability to manage relationships for mutual value is what differentiates the top providers in an increasingly commoditized environment.

The service provider universe will certainly grow through creative combinations — an asset purchase with a companion, long-term, services agreement. It also sets the tone for what’s likely to become the agenda in 2009 for the financial services industry and certain outsourcing service providers. With tightening access to scarce capital, it will be those providers who carry little debt and lots of cash that are in the prime position to step up to such an arrangement.

Vengroff added, "These are a few of the key topics we think will be consistently discussed during the conferences and industry events in 2009. We look forward to engaging our industry peers and business partners in the discussion; and to the ways these shifts will impact the outsourcing industry."

About Vengroff, Williams & Associates, Inc.
Founded in 1963, and with $23 billion dollars under its management, Vengroff, Williams & Associates is a leading provider of receivables management business process outsourcing (BPO) solutions for Fortune 1000 companies such as Ford Motor Company, Federal Express, Kodak, Microsoft, Yamaha and others. Named a Top 21 enterprise-level FAO service provider by FAO Today Magazine and to the Global Services Top 10 in the FAO Category, to learn more about the award-winning Vengroff, Williams and Associates, please visit www.vwainc.com or telephone (866) 393-4892.