Procurement outsourcing refers to the process of delegating or transferring the procurement functions of an organization to a third-party service provider. It offers advantages such as reducing procurement costs, improving efficiency, gaining access to expertise, and freeing up internal resources for core business activities. Organizations across industries are increasingly outsourcing procurement activities such as supplier management, procurement management, purchase-to-pay processes, and sourcing to focus on their core competencies.
The global Procurement Outsourcing Market is estimated to be valued at US$ 5.15 billion in 2023 and is expected to exhibit a CAGR of 6.5% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Opportunity:
The opportunity to reduce costs and increase efficiency is expected to drive the growth of the procurement outsourcing market. Outsourcing procurement activities allows organizations to benefit from the expertise, dedicated resources, advanced technologies, and economies of scale of third-party service providers. It helps reduce procurement costs through initiatives such as strategic sourcing, supplier negotiation, vendor management, and process automation. Outsourcing also improves procurement efficiency by enabling organizations to focus on strategic sourcing while outsourcing partners handle transactional procurement activities. This frees up internal resources to concentrate on core business responsibilities. By leveraging outsourcing partners’ analytics tools and technologies, organizations can gain real-time visibility into supplier networks and procurement spend which further aids in reducing costs and risks.
Porter’s Analysis
Threat of new entrants: The threat of new entrants is moderate. Barrier for the new company to enter the market is high as it requires good understanding of source to pay and category management and needs strong technical as well as domain expertise to manage end to end sourcing operations.
Bargaining power of buyers: Bargaining power of buyers is high. Large enterprise and corporate buyers have high bargaining power as they can easily switch between service providers and can demand lower costs and better services.
Bargaining power of suppliers: Bargaining power of suppliers is low. There are many procurement outsourcing service providers, so switching cost is low for suppliers.
Threat of new substitutes: Threat of new substitutes is low as there are no close substitutes for procurement outsourcing services.
Competitive rivalry: Competitive rivalry is high among existing players due to presence of many global and regional procurement outsourcing service providers.
SWOT Analysis
Strength: Procurement outsourcing helps enterprises to focus on core competencies, optimize costs, improve processes and ensure compliance. It provides enterprises access to domain expertise and advanced technology without major investments.
Weakness: Dependence on third party for critical sourcing activities, loss of control and visibility, contractual and cultural integration challenges. Privacy and security of sensitive organizational data is also a concern.
Opportunity: Growth in outsourcing of indirect category sourcing. Emerging technologies like AI, blockchain and advanced analytics provide opportunities for service providers to enhance their offerings.
Threats: Economic slowdowns can impact spend and demand for outsourcing. Regulatory changes especially related to data privacy and security.
Key Takeaways
The Global Procurement Outsourcing Market Share is expected to witness high growth during the forecast period of 2023 to 2030. Factors such as need to optimize indirect spend, access domain expertise, ensure compliance and focus on core functions are expected to drive the market growth. The global Procurement Outsourcing Market is estimated to be valued at US$ 5.15 billion in 2023 and is expected to exhibit a CAGR of 6.5% over the forecast period 2023 to 2030.
Regional analysis: North America is expected to dominate the market during the forecast period. Presence of large enterprises, technology adoption and focus on optimizing procurement functions are driving the market in the region. Asia Pacific is expected to witness fastest growth owing to growing outsourcing trend and increasing number of third party service providers in the region especially in India and China.
Key players: Key players operating in the procurement outsourcing market are Accenture, GEP, Genpact, HCL Technologies, IBM, Infosys, TCS, WNS, Capgemini, and Wipro. These players are focusing on strategic acquisitions and partnerships to enhance their service portfolio and geographical footprint. They are also investing in automation, analytics and other advanced technologies to improve their service capabilities.
For more details on the report, Read- https://www.pressreleasebulletin.com/procurement-outsourcing-market-demand-share-analysis/
