AI drives transformation in the finance outsourcing sector: ISG
CONNECTICUT, UNITED STATES — A growing number of enterprises are outsourcing their finance and accounting operations to service providers, demanding specialized capabilities.
According to report by research and advisory firm Information Services Group (ISG), this shift reflects a move towards comprehensive services that go beyond traditional outsourcing models, incorporating advanced analytics, strategic consulting, and industry-specific expertise.
“Finance and accounting require complete digital transformation to optimize processes and improve data accuracy,” stated Robert Stapleton, ISG partner in Business Outsourcing Services.
Service providers are now integrating advanced tools to help clients achieve operational excellence and growth.
AI and technology revolutionize financial processes
The report highlights the transformative impact of technologies such as artificial intelligence (AI), machine learning (ML), robotic process automation (RPA), and cloud computing on finance and accounting processes. These technologies enhance efficiency and accuracy through real-time data analytics.
Although generative AI (GenAI) holds the potential for improving data analysis and planning, its applications remain largely in the proof-of-concept stage. The collaboration between finance and accounting outsourcing (FAO) services, software as a service (SaaS), and finance platform providers could accelerate the GenAI trend.
Shift towards advanced outsourced functions
While traditionally focused on procure-to-pay (P2P), enterprises are now outsourcing more sophisticated functions like record-to-report (R2R) and financial planning and analysis (FP&A).
“Companies are automating R2R with the help of service providers and dramatically reducing manual effort,” noted Jan Erik Aase, ISG Provider Lens Research’s global leader. “This shortens their closing cycles and cuts down on errors.”
Consulting services gain importance in FAO
As enterprises adopt complex technologies such as ERP and cloud solutions, consulting and advisory services have become central to FAO engagements.
Providers are also expanding services around environmental, social, and governance (ESG) practices and sustainability reporting, driven primarily by regulatory demands.
Emerging trends in FAO services
The report also identified trends such as the increasing use of outcome-based models in FAO contracts and co-innovation between providers and clients.
It evaluates 31 providers across four quadrants — Procure to Pay (P2P), Order to Cash (O2C), Record to Report (R2R), and Financial Planning and Analysis (FP&A) — naming Accenture, Capgemini, Cognizant, Deloitte, EXL, Genpact, HCLTech, IBM, Infosys, Tata Consultancy Services, Wipro, and WNS as leaders in all quadrants.
Sutherland was also named as a leader in two quadrants and Tech Mahindra as a leader in one quadrant.
Meanwhile, Datamatics, Tech Mahindra and Teleperformance are named as Rising Stars — companies with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant each.
