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NelsonHall FAO Insight: December 2011

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Dear #FIRSTNAME

Latest News & Developments

  • Accenture Awarded F&A BPO Contract by The Hartford

    Dec 09, 2011 | Contracts by Rachael Stormonth
    industry: Life Insurance

    Accenture has been awarded a finance & accounting (F&A) BPO contract by The Hartford.

    As well as F&A BPO services, services to be provided by Accenture include management and technology consulting from Accenture Finance & Risk Services on simplifying and standardizing processes and tools to add efficiencies and performance improvements.

    Analyst comments:

    Take up of F&A BPO in the insurance sector is still somewhat unusual. There is a strong transformational focus in this outsource and the choice of BPO partner is no surprise: The Hartford has been an Accenture client since 1995 for a range of services including systems integration and consulting.

  • iQor Awarded BBC Collections Contract Renewal as Subcontractor to Capita

    Dec 05, 2011 | Contracts by Mike Friend
    industry: Media

    iQor has been awarded an £80m, 8-yr sub-contract by Capita acting as prime contractor of a consortium that will administer the BBC TV Licensing service. iQor previously held a contract directly with the BBC.

    Services that iQor will continue to provide include collection of TV Licensing fees.

    The new contract will commence on July 1, 2012.

    Analyst comments:

    This is the second renewal of iQor's contract with the BBC, the last renewal havng been awarded in 2005. BBC has now consolidated separate contracts with Capita, iQor and CSC into a single master contract led by Capita.

    The contract awarded to Capita for ~£560m over 8 years represents a cost saving of over £220m (~30%) for the BBC over the life of the contract. The annual value of iQor's own contract is expected to be down by a similar percentage relative to its previous contract with the BBC. However this in part reflects the growing proportion of BBC TV license payers who are now paying via direct debit or using self-serve channels such as the BBC website.

    • Total BBC licence fee revenue collected has risen over the past three years, from 24.7m licenses issued and £3.4bn in revenues in 2007/08 to 25m licenses and £3.6bn in 2009/10
    • Collection costs (which include call centers, field force, detection and over the counters services) have risen at a similar level, from £87.3m in 07/08 to £93.8m in 09/10 (equivalent to 2.6% of license fee revenue).

  • Capgemini Awarded €42m F&A BPO Contract Extension by International Paper

    Nov 30, 2011 | Contracts by Mike Friend
    industry: Other Process Manufacturing

    Capgemini has been awarded a 5-year €42m F&A BPO contract extension by International Paper (IP).

    Services to be provided include management of the following process areas: order to cash, procure to pay, record to analyze and treasury services.

    Capgemini is supporting IP's primary markets and manufacturing operations in North and Latin America, Europe, Asia and North Africa with services delivered by 480 personnel out of Krakow (Poland), Nanhai (China) and Guatemala City. Capgemini is supporting seven languages.

    Analyst comments:

    Capgemini's relationship with IP extends back to 2003, when the then Capgemini acquired two of PwC BPO's nearshore and offshore delivery centers, in Krakow, Poland and Guangzhou, China. At that time the two centers employed 350 staff primarily delivering F&A outsourcing services to Dairy Farm out of Guangzhou and to IP out of the Krakow center.

    IP's original F&A BPO contract with PwC dates back to 1999. The 5-year contract renewal announced today will see Capgemini's outsourcing relationship with International Paper extend to 15 years and IP's own history of F&A outsourcing extend to 19 years.

    Given the increasingly competitive market for F&A BPO services and the cost of new client acquisition, Capgemini's renewal of the IP and Danfoss contracts this year is a cause for real optimism about F&A BPO. With the cost and efficiency savings targets of 2nd and 3rd generation BPO contracts proving challenging for all vendors, Capgemini's mix of near and offshore delivery centers, process optimization and innovation will however be crucial to maintaining or indeed increasing contract margins in its BPO business.

    2011 has been another successful year for Capgemini's F&A BPO business with 5 new signings and 4 renewals or contract extensions. In July 2011, Capgemini announced a new 13 year F&A BPO contract with Algar in Brazil and in March 2011 a 7-year €15m F&A BPO contract renewal by component manufacturer Danfoss. These contracts are being primarily served out of Capgemini's delivery centers in Poland, China, India and Guatemala.

  • Accenture Awarded 5-Year Multi-Process BPO Contract Extension by Enbridge Gas Distribution

    Nov 28, 2011 | Contracts by Mike Friend
    industry: Utilities

    Accenture has been awarded a 5-year F&A BPO contract extension by Enbridge Gas Distribution Inc. This extends until 2017 the existing contract which was signed in 2007. Terms of the agreement were not disclosed.

    Services that Accenture will continue to provide from its global delivery network include:

    • Order to cash activities related to billing, payment processing and collections functions
    • Related customer management services
    • Other back office services including HR activities.

    Enbridge Gas Distribution is a subsidiary of Enbridge Inc. In 2010, Enbridge Inc generated revenues of $15bn. Enbridge is organized into four principal SBUs: Liquids Pipelines (2010: $1,672m revenue), Gas Distribution ($2,611m), Gas Pipelines, Processing & Energy Services ($10,518m) and Sponsored Investments ($326m). Gas Distribution consists of the company's natural gas utility operations, the core of which is Enbridge Gas Distribution Inc. (EGD) which serves 2m residential, commercial and industrial customers, primarily in central and eastern Ontario as well as northern New York State. This business segment also includes natural gas distribution activities in Quebec and New Brunswick.

    Analyst comments:

    Accenture will deliver services to Enbridge Gas Distribution via its Accenture Utilities BPO Services (AUBS) unit. AUBS serves ~9 clients in North America (the largest being BC Hydro). Much of AUBS activity is related to billing and customer care services. However, AUBS also offers IT services, HR, F&A and procurement services to the wider utility community.

    Accenture's relationship with Enbridge dates back to 2002 when ~1,100 employees from the CustomerWorks Partnership facility jointly owned by Enbridge and BC Gas transferred to Accenture. At that time the facility provided billing and customer care services to various BC and Enbridge divisions. Since that time there has been extensive offshoring of non-customer facing activities.

    This third generation outsource continues its trend of 5-year agreements.

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