Offshore PO sales slow

8 December 2008
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08 December 2008 | Paul Snell

Procurement heads are beginning to favour domestic outsource providers to foreign rivals, according to research.

A survey conducted by consultancy Brown Wilson Group as part of the 2008 Black Book of Outsourcing found 74 per cent of US and UK CFOs and procurement leaders are now requesting only domestic suppliers should respond to procurement outsourcing (PO) tenders.

In the US, preference for a domestic provider of PO has risen from 70.4 per cent in 2007 to 92.5 per cent this year. The UK saw a similar increase, with preference rising from 60.7 per cent last year to 83.9 per cent in 2008. In addition, 92 per cent of respondents said they would be more favourable to selecting domestic vendors when current offshore contracts expire.

Growth in transactional PO, particularly in countries such as India, was expected to be one of the major drivers of the market in the future. "In the past six months, a major shift forcing considerable thought toward homeshore alternatives is slowing Indian PO growth, although many offshore vendors who still have access to cash are ramping up more complex PO operations," said Scott Wilson, co-author of the report. He added underlying sentiment of national protectionism, particularly in the US, was working its way into buying decisions.

The 2008 Black Book also ranked the top 20 PO vendors. ICG Commerce was rated as the best supplier, ranking top in 11 out of the 18 categories studied. Xchanging continues to be rated the top European provider, in second place overall. Genpact, last year's winner, fell to eleventh in the poll.

The study also found that SMEs, healthcare and manufacturing and engineering are the top three sectors intending to boost the use of PO next year. See www.supplymanagement.com for the rest of the top 20.

SMdec2008

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