Are FAO Offshore Hubs Different from Other BPO Offshore Hubs?
All offshored processes have one thing in common: they are located where there is an opportunity for labor arbitrage. For finance and accounting (F&A) work, India has emerged as the leader with the largest number of scaled FAO centers. Bangalore is the hub of F&A outsourcing in India, with almost one-third of the F&A workforce of third-party service providers. Chennai, Pune, Mumbai, and the National Capital Region have also emerged as preferred Tier-1 locations for delivery of F&A services. Service providers are also opening centers in Tier-2 Indian cities like Jaipur, Nasik, Kochi, and Kolkata, which are relatively lower cost than Tier-1 locations. Figure 1 Other factors beyond labor arbitrage also create a unique value proposition for FAO global hubs. In fact, the global hub-and-spoke model is arguably better suited to finance and accounting than other processes due to three factors: standardization, scale, and location independence. Standardization: F&A processes are more standardiz
