Procurement Outsourcing Services Market

According to Stratistics MRC, the Global Procurement Outsourcing Services Market is accounted for $5.7 billion in 2024 and is expected to reach $12.5 billion by 2030 growing at a CAGR of 13.7% during the forecast period. Procurement outsourcing involves hiring an external provider to handle some or all of an organization's procurement functions and activities. This can include sourcing and selecting suppliers, negotiating contracts, managing purchase orders and invoices, and even strategic procurement planning. The main benefits of procurement outsourcing include reducing costs, improving efficiency, and allowing the organization to focus on its core competencies. 

Market Dynamics: 

Driver: 

Focus on core competencies

As organizations prioritize their core competencies, they are more likely to outsource non-core activities like procurement. This shift drives demand for procurement outsourcing services, as companies seek to offload these functions to specialized providers. Moreover procurement outsourcing providers are expected to offer specialized knowledge and expertise that organizations may lack internally. This requirement elevates the standards and capabilities of outsourcing services, pushing providers to continually enhance their offerings to stay competitive drives the growth of the market.

Restraint:

Confidentiality and security risks

Handling sensitive procurement data and confidential business information through third-party providers raises serious concerns about data breaches and privacy violations. Companies fear that outsourcing could expose them to potential leaks of proprietary information, trade secrets, and strategic plans, which could be detrimental to their competitive position. Moreover, any breach of data security can lead to financial losses, regulatory penalties, and reputational damage, deterring businesses from outsourcing procurement functions. The complexity of ensuring data protection across different jurisdictions and compliance with varying regulatory standards adds to the challenge.

Opportunity:

Cost reduction and efficiency

Companies increasingly turn to outsourcing to cut expenses and streamline operations. By leveraging the expertise and economies of scale that outsourcing providers offer, businesses can significantly lower their procurement costs. Outsourcing providers utilize advanced technologies like AI, RPA, and data analytics to optimize procurement processes, reducing manual intervention, errors, and processing times. This technological edge enhances operational efficiency and ensures faster, more accurate procurement activities propelling the growth of the market.

Threat:

Integration challenges

Merging outsourced procurement functions with existing internal systems, such as ERP and CRM platforms, can be complex, time-consuming, and costly. Inadequate integration can lead to data silos, process inefficiencies, and communication breakdowns, undermining the benefits of outsourcing. These challenges can result in operational disruptions, delayed procurement activities, and reduced overall efficiency, deterring companies from adopting outsourcing solutions. Additionally, the need for continuous support and maintenance to ensure seamless integration further adds to the costs and complexity.

Covid-19 Impact

The COVID-19 pandemic has been affecting global economies and businesses in different countries due to lockdowns and travel bans imposed by the government. Closure of several manufacturing plants has affected the global supply chains and adversely affected the manufacturing, shipment schedules, and sales of products in the market. With the adoption of latest technologies during the pandemic to improve efficiency of the business operation and reducing the cost has positively impacted the procurement outsourcing market. The companies are integrating artificial intelligence and machine learning to automate the process of procurement. 

The procure-to-pay (P2P) segment is expected to be the largest during the forecast period

The procure-to-pay (P2P) is expected to be the largest during the forecast period as P2P streamlines the entire procurement process, from requisitioning to payment, by automating tasks and centralizing data. This reduces manual work, shortens procurement cycles, and minimizes errors, leading to overall cost savings for outsourcing companies. Moreover P2P solutions often include features for supplier onboarding, performance tracking, and communication. This fosters better supplier relationships and potentially leads to more favorable pricing and terms thus propelling the growth of the market.

The finance and accounting segment is expected to have the highest CAGR during the forecast period

The finance and accounting segment is expected to have the highest CAGR during the forecast period as finance and accounting are responsible for managing financial risks and ensuring internal controls. Outsourcing can raise concerns about control over procurement spending. However, effective financial oversight by the company and clear service level agreements (SLAs) with the outsourcing provider can mitigate these risks. This transparency allows companies to identify areas for potential savings through outsourcing, making a compelling case for utilizing procurement outsourcing services.

Region with largest share:

North America is projected to hold the largest market share during the forecast period owing to the presence of well-developed economies in the US and Canada fosters a strong foundation for procurement outsourcing services. These economies have a large number of companies seeking ways to optimize their operations. Additionally North America boasts a robust IT infrastructure, crucial for running and integrating complex procurement outsourcing solutions. This infrastructure enables seamless data flow and efficient process management.

Region with highest CAGR:

Asia Pacific is projected to hold the highest CAGR over the forecast period owing to the increasing adoption of procurement outsourcing services across multiple industry verticals such as healthcare, energy and utilities, life sciences, and others. The manufacturing sector is likely to be the largest adopter of procurement outsourcing market in the region. Developing countries in the region like China, India, and others are projected to become the evolving procurement outsourcing markets during the forecast period. Some of the developed countries like Japan and Singapore have already emerged as potential growth markets for procurement outsourcing and have observed steady growth for the last few years.

Key players in the market

Some of the key players in Procurement Outsourcing Services market include IBM, Broadcom, Oracle, Accenture, Infosys Limited, GEP, Genpact, Proxima, WNS Ltd, Capgemini, Wipro Limited, HCL Technologies Limited, Tata Consultancy Services Limited., DXC Technology Company, AEGIS Company, Corbus, LLC. and Aquanima S.A.

Key Developments:

In June 2024, Rapidus and IBM Expand Collaboration to Chiplet Packaging Technology for 2nm-Generation Semiconductors. Rapidus will receive packaging technology from IBM for high-performance semiconductors, and the two companies will collaborate with the aim to further innovate in this space.

In May 2024, IBM to Acquire SKYARCH NETWORKS INC. to Strengthen Amazon Web Services Consulting Capabilities in Japan. The planned acquisition will extend IBM Consulting’s ability to support clients in this key market on their end-to-end cloud transformation journeys, and it reinforces our commitment to strategic partners, like AWS.

In May 2024, Accenture Completes Acquisition of Customer Management IT and SirfinPA. A pair of jointly-owned Italian consultancies that operate in close synergy and offer innovative services and technology solutions in the justice and public safety sectors

Service Types Covered:
• Procure-to-Pay (P2P)
• Source-to-Contract (S2C)
• Category Management
• Supplier Management
• Procurement Administration
• Other Service Types 

Deployment Models Covered:
• On-Premises
• Cloud-Based

Organization Sizes Covered:
• Small and Medium Enterprises (SMEs)
• Large Enterprises 

Applications Covered:
• Finance and Accounting
• Marketing
• Human Resources
• Facilities Management & Office Services
• Other Applications 

End Users Covered:
• Energy and Utilities 
• Banking, Financial Services and Insurance (BFSI) 
• Healthcare 
• IT and Telecom 
• Manufacturing 
• Retail 
• Logistics 
• Other End Users 

Regions Covered:
• North America
o US
o Canada
o Mexico
• Europe
o Germany
o UK
o Italy
o France
o Spain
o Rest of Europe
• Asia Pacific
o Japan        
o China        
o India        
o Australia  
o New Zealand
o South Korea
o Rest of Asia Pacific    
• South America
o Argentina
o Brazil
o Chile
o Rest of South America
• Middle East & Africa 
o Saudi Arabia
o UAE
o Qatar
o South Africa
o Rest of Middle East & Africa

What our report offers:
- Market share assessments for the regional and country-level segments
- Strategic recommendations for the new entrants
- Covers Market data for the years 2022, 2023, 2024, 2026, and 2030
- Market Trends (Drivers, Constraints, Opportunities, Threats, Challenges, Investment Opportunities, and recommendations)
- Strategic recommendations in key business segments based on the market estimations
- Competitive landscaping mapping the key common trends
- Company profiling with detailed strategies, financials, and recent developments
- Supply chain trends mapping the latest technological advancements

Free Customization Offerings: 
All the customers of this report will be entitled to receive one of the following free customization options:
• Company Profiling
o Comprehensive profiling of additional market players (up to 3)
o SWOT Analysis of key players (up to 3)
• Regional Segmentation
o Market estimations, Forecasts and CAGR of any prominent country as per the client's interest (Note: Depends on feasibility check)
• Competitive Benchmarking
o Benchmarking of key players based on product portfolio, geographical presence, and strategic alliances