Market consolidation 'key trend in procurement outsourcing'

14 April 2016

Market consolidation and the inclusion of extra services will be among the most significant trends driving the global procurement outsourcing market, according to research.

Market research company Technavio analysed emerging trends to find the biggest factors that will influence the sector up to 2019.

The top four trends included increased adoption of “third platform” technology, such as social media, mobile computing, analytics and cloud adoption. Technavio said that social media networking sites were creating awareness about outsourcing services, influencing clients’ opinions, and acting as points of connection to share information and settle procurement outsourcing contracts.

Increased adoption of procurement-as-a-service was another trend, according to the research, acting as a catalyst in the business process outsourcing industry, providing end-to-end on-demand software solutions and reducing firms’ IT investments.

The report also said that there were many mergers and acquisitions in the global procurement outsourcing market, leading to market consolidation. Larger firms were benefiting and many global companies were increasing their market presence through inorganic growth.

Cost remains the biggest priority but clients are looking for innovation and value added features, the report concludes. Procurement service providers are increasing their focus on spend analytics, procurement knowledge process outsourcing, and risk analytics. With increasing market competition and improving financial environments, vendors are offering innovative solutions for procurement outsourcing.

Amit Sharma, a lead analyst at Technavio for ITO and BPO sector, said that analytics played an important role in procurement, which included “working capital optimisation and profit recovery”.

“The global procurement analytics market was valued at approximately $7.8bn in 2014, which is expected to grow by 12-15% year-on-year,” he said.

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