Procurement outsourcing sector must evolve to change negative perception

Gurjit Degun
11 November 2013

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The procurement outsourcing industry needs to evolve if it is to change negative perceptions and meet customer demands.

 

That’s according to Xchanging Procurement Services, which questioned 450 sourcing and procurement decision-makers across Europe.

 

It found 23 per cent of companies currently outsource elements of their sourcing and procurement activity. Of those, 45 per cent said service providers are “unable to match their specific requirements”, and 68 per cent would prefer in-house initiatives to improve the function.

 

Nick Ford, business development and market director at Xchanging, said this means many European businesses are missing out on “cost reduction, spend control and the streamlining of operations that are enjoyed by their American counterparts, and this can affect their competitiveness”.

 

But satisfaction among companies which have outsourced is generally high, with 90 per cent saying they will increase or maintain their level of outsourcing activity.

 

“The high level of satisfaction among those who are already using external providers suggests that the European market should be stronger,” said Ford.

 

“However, when nearly half of all companies say that service providers are unable to match their requirements then it is definitely a call to action for the industry to ensure we are working with our clients in the pre-contract stage to assess their needs and offer them more bespoke solutions tailored to their business.“

 

Of the respondents who said they do not outsource, 93 per cent are not considering it. A similar percentage said they would prefer opting for in-house initiatives to improve their sourcing and procurement capability.

 

Half of those who do not outsource said they see loss of control as a barrier to outsourcing, and the other half believe that staffing issues would make outsourcing “economically inefficient”. 

 

Other obstacles include a “dispersed organisational structure and multiple locations and systems”, which makes outsourcing too complex, and service providers unable to match their specific requirements. Almost half (47 per cent) of the respondents who do not outsource agreed with both points.

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