IBM Daksh bullish on finance, accounting business in India

India’s third-largest business process outsourcing (BPO) company, IBM Daksh, is sharpening its focus on the finance and accounting (F&A) segment in India, especially targeting business from the oil and gas, retail and consumer packaged goods sectors. 

IBM Daksh has three dedicated delivery centres in Bangalore, Chennai and Gurgaon for F&A of which the Bangalore facility is the largest F&A delivery location for IBM globally. “Though IBM’s journey in the F&A BPO space kicked off in 2002, it contributes significantly to IBM’s revenues. Though it is a small percentage of the total, we are seeing transformation al deals happening in the space,” says Eric Shander, VP, Global Delivery & Solutions, F&A, IBM. 

The full F&A footprint includes revenue cycle, accounting and book close, financial reporting, planning & analysis, cash disbursements and business advisory services. From India, IBM Daksh provides services in transaction processing and book closure. 

Pavan Vaish, CEO of IBM Daksh, corroborates: “We are looking to expand our footprint in Asia Pacific (APAC) and the Philippines besides having a balanced portfolio of non-core business like non-voice. In fact, most of our clients are in major emerging countries in APAC.” 

F&A is an area where the company has integrated back-office activities like finance procurement with all its verticals. The finance and accounting outsourcing (FAO) business is expected to rebound from pre-recessionary growth levels to clock 20 per cent plus growth to reach $3.7 billion, according to global consulting and research firm Everest Group. APAC (including India-to-India market) started to emerge as a source geography for FAO deals in 2009 registering a year-on-year growth of almost 45 per cent. 

Everest analysts add that the FAO market growth continues to see aggressive adoption across manufacturing, consumer packaged goods, retail and high-tech sectors. Telecom and pharma are emerging sectors with the highest growth rate. 

“F&A is a mature process and gets good volumes and the deal sizes can be anywhere between $10-100 million (Rs 45-450 crore). However, retail as an industry has not grown in the US and hence, outsourcing has also been impacted,” concurs Alok Shende, Principal Analyst and Founder Director of consulting firm Ascentius. 

However, Arvind Agrawal, IBM Daksh’s Executive Vice President, F&A explains that because F&A is nascent in India, only a few deals have happened so far.