The ISS Group (2013 revenues of DKK 78,056m, ~$14.5bn, EBIT margin of 4.3%) is highly decentralized, with multiple subsidiaries across different geographies. The Nordics is its second largest region, accounting for 21% of global revenue and one of its most mature; it is also one of the group's most profitable regions. So why was the region the first to select F&A BPO as a sourcing strategy? Global F&A initiatives tend to start with smaller, less mature regions. The answer is it started as a regional rather than a global initiative. During 2013, the Nordics management reviewed the region’s organizational structures and also the capabilities and focus of the support functions with a few to a more lean and cost-efficient cost structure.

Cognizant is about two thirds of its way through shifting F&A processes to its COE (there is no personnel transfer involved), having completed the transition in the following country order: Sweden, Norway, Finland and Denmark. Outsourced sub- processes across P2P, O2C & R2R are equally distributed with a significant opportunity within A/P to reduce the labor intensive stream of invoice processing. Once transition is complete, the focus will shift to process standardization and leveraging enabling tools to generate process efficiencies.

While this contract was instigated at regional rather than group level, there is a real opportunity for Cognizant to expand to relationship to other regions in the ISS Group. The largest region at ISS Group is Western Europe (51% of overall revenues). The decision is likely to be locally led and thus depend on local readiness to outsource F&A services and agree with chosen best practices after seeing the cost savings achieved by the Nordics division. A more global contract would enable Cognizant to better serve ISS’ business as a whole and generate benefits beyond the standard Lift & Shift cost savings that exist within this contract from more global standardization in F&A processes and reporting. 

This is the second signifcant contract win for Capita driven by the Cedar HR acquisition. The other was in May 2012, an award by Leicestershire, Nottinghamshire and Derbyshire police forces to share back office services under a collaborative agreement. The deal involved Capita deploying Origin to manage all three forces’ data for HR, training, duty management, and health and safety under a contract worth £2.3m over 5 years.

More opportunities are to be expected in the U.K. polic sector, as forces deal with further budget cuts.