Procurement Outsourcing Trends and Forecast
The future of the global procurement outsourcing market looks promising with opportunities in the marketing related services, IT related services, HR related services, and facilities management & office services markets. The global procurement outsourcing market is expected to reach an estimated $6.8 billion by 2030 with a CAGR of 10.4% from 2024 to 2030. The major drivers for this market are the growing requirement for new IT solutions in line with current consumer trends and increased requirements to handle compliance laws and agreements and increased demand from businesses to streamline the procurement process.
• Lucintel forecasts that, within the services category, business process outsourcing services will remain the larger segment over the forecast period due to efficiency improvement and reduced costs.
• Within the application services category, HR related services will remain the largest segment due to a strong pool of HR outsourcing service providers.
• In terms of regions, North America will remain the largest region over the forecast period due to the high adoption of advanced technology.
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Emerging Trends in the Procurement Outsourcing Market
The procurement outsourcing market is undergoing significant changes that need to be highlighted among the main trends in this market. Some of these trends are technology-related, some are business-oriented, and some are due to the changing international environment.
• Digital Attention: The shift in spending policies motivates organizations to invest in advanced tools and automation technologies aimed at improving procurement processes. This trend includes the application of such technology in procurement processes where machines replace human labor, reduce bottlenecks, and minimize mistakes made by procurement personnel when making procurement decisions.
• Increased Focus on Strategic Sourcing: Competitive pressure is forcing organizations to adopt strategic sourcing. This trend involves handing over procurement activities to companies whose core business is procurement and who can analyze the market efficiently, negotiate favorable terms, and lower costs in the process.
• Risk Management and Compliance: With the globalization of trade, there is an increased focus on risk management and compliance, factors that are often sacrosanct in corporate pursuits. Procurement management has advanced to a point where procurement is being outsourced to remain compliant, curb supply chain risks, and control supplier performance.
• Sourcing and Sustainability: Attention is also being directed towards sustainability and ethical practices in procurement outsourcing. More organizations are considering a green approach to their business operations and the management of the supply chain, prompting the embrace of solutions for sustainable and responsible sourcing.
These phenomena are persisting and modifying the landscape of procurement outsourcing by acting as catalysts for further innovations, greater strategic focus, and resolving issues of international trade and compliance.
Recent Developments in the Procurement Outsourcing Market
Recent developments in procurement outsourcing are shaping the future of the procurement outsourcing market. These developments emphasize improvements in technology, strategizing, and global operations.
• Integration of AI and Machine Learning: With the introduction of machine learning and AI, the adoption of procurement strategies is changing the market. These technologies allow for the use of predictive analytics, automated decision-making, and better information regarding suppliers, resulting in strategic and efficient procurement activities.
• Increase in Use of Cloud-Based Solutions: Cloud-based procurement systems are increasing due to their effectiveness. These solutions accommodate growth, change, and urgent data, helping companies execute procurement processes and work with suppliers in various parts of the world.
• Shift Towards Integrated Procurement Platforms: Companies are focusing on using integrated procurement platforms that allow the cumulative use of several procurement functions within a single system. This development simplifies the procurement cycle, enhances data visibility, and improves overall efficiency.
• Growth of Global Procurement Networks: The trend of global procurement networks is noteworthy. Businesses are utilizing international know-how and tools to enhance supply chain integration, address global sourcing, and realize cost savings.
• Specific Management of Supplier Relationships in Procurement Outsourcing: Supplier relationship management garners more attention in procurement outsourcing. Organizations are now concentrating on strengthening partnerships with high performers to manage risk, ensure compliance, and enhance business growth.
These developments impact the procurement outsourcing market by fostering growth in technology, improving operational efficiency, and enhancing purchasing outsourcing capacity.
Strategic Growth Opportunities for Procurement Outsourcing Market
The procurement outsourcing market presents several strategic factors for further growth in different applications. Such opportunities are dictated by changes in the modern business and technology landscape.
• Investments in Digital Procurement Solutions: There is significant potential for growth in the sector by investing in electronic trading and procurement solutions. Organizations wish to incorporate sophisticated applications to facilitate and expedite procurement cycles, such as in the case of AI, automation, and cloud-based applications.
• Strategic Sourcing Services: There is a rising business need in the market for strategic sourcing services that cover sourcing optimization, market intelligence, supplier negotiations, cost-saving measures, and more. Companies specializing in these services are sought to enhance competitive advantages over procurement strategies by offloading such activities to them.
• Management of Supply Chains on a Global Level: The rise of global supply chains is opening doors for sourcing arrangements. There is a trend where companies want to find ways to capitalize on global sourcing networks, learn how to manage unrealized supply chains, navigate international trade, and achieve cost savings.
• Sustainability and Ethical Sourcing Solutions: Sustainability and ethical sourcing are increasingly on the agenda, supporting the growth of the market for clean and socially responsible procurement solutions. Corporations are increasingly purchasing outsourced services that fit into their ESG strategies.
• Compliance and Risk Management: There is a growing demand for compliance and risk management services within procurement outsourcing. Firms are looking for help in various areas, including legal compliance, risk management in the supply chain, and supplier performance management.
These growth opportunities are shaping the procurement outsourcing market by inducing innovation, promoting strategic capabilities, and addressing global and sustainability challenges.
Procurement Outsourcing Market Driver and Challenges
The procurement outsourcing market is influenced by a few key drivers and challenges that impact the growth and development of the market.
The factors responsible for driving the procurement outsourcing market include:
• Technological Advancements: The use of complex technologies like AI, machine learning, and web-based purchasing is a significant driver. These technologies improve efficiency, simplify procedures, and provide more insights, making procurement outsourcing an appealing market.
• Cost Reduction Goals: To save costs, companies continually offshore their procurement activities. The downside is that businesses can utilize the skills and resources of specialized external firms, thus reducing operational costs and enhancing profitability.
• Global Supply Chain Complexity: The increased complexity of global supply chains fuels the need for procurement outsourcing. Due to interconnected businesses, it is common for foreign procurement professionals to seek control and manage trading and procurement restrictions.
• Focus on Strategic Sourcing: Companies aim to focus on sourcing strategies to gain a competitive advantage. By outsourcing organizational procurement processes, they can access specialized expertise and techniques for managing suppliers, which can improve costs.
• Increased Regulatory Compliance: Companies are compelled to outsource procurement activities due to complicated regulatory requirements and compliance issues. This protects them from legal and industrial obligations that may be too risky.
Challenges in the procurement outsourcing market include:
• Data Security and Privacy Concerns: Procurement data may be stored by third-party providers, raising concerns about the adequacy of privacy and security policies. Maintaining appropriate security and compliance with data privacy laws is challenging.
• Integration with Existing Systems: Integrating outsourced procurement services with existing systems and procedures can be challenging. Companies must manage interoperability issues and ensure information exchange between organizational and foreign systems.
• Supplier Relationship Management: Maintaining good supplier relationships while outsourcing procurement functions can be difficult. Outsourcing firms must ensure that third-party suppliers effectively manage supplier performance and relationships.
These drivers and challenges shape the procurement outsourcing market by influencing adoption trends, operational practices, and strategic focus.
List of Procurement Outsourcing Companies
Companies in the market compete on the basis of product quality offered. Major players in this market focus on expanding their manufacturing facilities, R&D investments, infrastructural development, and leverage integration opportunities across the value chain. through these strategies procurement outsourcing companies cater increasing demand, ensure competitive effectiveness, develop innovative products & technologies, reduce production costs, and expand their customer base. Some of the procurement outsourcing companies profiled in this report include-
• International Business Machines
• Accenture
• GEP
• WNS
• Wipro
• Genpact
• Tata Consultancy Services
• Infosys
• Capgemini
• DXC Technology Company
Procurement Outsourcing by Segment
The study includes a forecast for the global procurement outsourcing market by services, component, application, end use, and region.
Procurement Outsourcing Market by Services [Analysis by Value from 2018 to 2030]:
• Business Process Outsourcing Services
• Consulting Services
Procurement Outsourcing Market by Component [Analysis by Value from 2018 to 2030]:
• Solution
• Services
Procurement Outsourcing Market by Application [Analysis by Value from 2018 to 2030]:
• Marketing Related Services
• IT Related Services
• HR Related Services
• Facilities Management & Office Services
• Others
Procurement Outsourcing Market by End Use [Analysis by Value from 2018 to 2030]:
• BFSI
• Energy & Utilities
• Healthcare
• IT & Telecom
• Professional Services
• Manufacturing
• Retail
• Logistics
• Others
Procurement Outsourcing Market by Region [Analysis by Value from 2018 to 2030]:
• North America
• Europe
• Asia Pacific
• The Rest of the World
Country Wise Outlook for the Procurement Outsourcing Market
The trends transform the procurement outsourcing market as companies optimize processes, cut costs, and focus on strategies. Technological change, new trade patterns, and heightened concern for efficiency all drive changes in major markets. Here is a glance at the latest changes happening in some target countries:
• United States: In the US, procurement outsourcing is fueled by cultural transformation and the use of data analytics. Businesses utilize artificial intelligence (AI) and machine learning to manage their supply chains and decision-making processes. The emphasis is on improving strategically targeted purchasing and using these resources to foster fruitful, low-cost supplier partnerships, which increases operational effectiveness.
• China: China is experiencing significant growth in the procurement outsourcing sector, attributing this expansion to increasing manufacturing capacity and external trade. More firms are resorting to procurement outsourcing to respond to complex supply chains and the challenges posed by cross-border operations. The focus is on using advanced systems and tools for procurement-related activities within organizations.
• Germany: Similar to several other mature markets for procurement outsourcing, the emphasis in Germany is on compliance and risk management. In the face of strict compliance requirements and the necessity for optimizing supply chains, German firms are turning to outsourcing opportunities in procurement to operate more efficiently. The use of digital tools and platforms for better accountability and cost containment is another major trend.
• India: In India, procurement outsourcing is on the rise due to the realization of cost benefits. This often requires superior procurement skills and technology to provide adequate solutions for complex supply chains. Companies are sourcing outsourcing providers for assistance in strategic sourcing, supplier management, and procurement processes.
• Japan: Innovation-driven efficiency is the trend in Japan’s procurement outsourcing market. More Japanese firms are implementing digital procurement and automation technology to optimize their processes and cut costs. Additionally, there is a rising trend of strategic integration and partnerships to strengthen procurement processes and manage international supply chains.
Features of the Global Procurement Outsourcing Market
Market Size Estimates: Procurement outsourcing market size estimation in terms of value ($B).
Trend and Forecast Analysis: Market trends (2018 to 2023) and forecast (2024 to 2030) by various segments and regions.
Segmentation Analysis: Procurement outsourcing market size by various segments, such as by services, component, application, end use, and region in terms of value ($B).
Regional Analysis: Procurement outsourcing market breakdown by North America, Europe, Asia Pacific, and Rest of the World.
Growth Opportunities: Analysis of growth opportunities in different services, component, application, end use, and regions for the procurement outsourcing market.
Strategic Analysis: This includes M&A, new product development, and competitive landscape of the procurement outsourcing market.
Analysis of competitive intensity of the industry based on Porter’s Five Forces model.
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FAQ
Q1. What is the procurement outsourcing market size?
Answer: The global procurement outsourcing market is expected to reach an estimated $6.8 billion by 2030.
Q2. What is the growth forecast for procurement outsourcing market?
Answer: The global procurement outsourcing market is expected to grow with a CAGR of 10.4% from 2024 to 2030.
Q3. What are the major drivers influencing the growth of the procurement outsourcing market?
Answer: The major drivers for this market are growing requirement for new IT solutions in line with current consumer trends and increased requirement to handle compliance laws and agreements and increased demand from businesses to streamline the procurement process .
Q4. What are the major segments for procurement outsourcing market?
Answer: The future of the procurement outsourcing market looks promising with opportunities in the marketing related services, IT related services, HR related services, and facilities management & office services markets.
Q5. Who are the key procurement outsourcing market companies?
Answer: Some of the key procurement outsourcing companies are as follows:
• International Business Machines
• Accenture
• GEP
• WNS
• Wipro
• Genpact
• Tata Consultancy Services
• Infosys
• Capgemini
• DXC Technology Company
Q6. Which procurement outsourcing market segment will be the largest in future?
Answer: Lucintel forecasts that business process outsourcing services will remain the larger segment over the forecast period due to efficiency improving and reduce costs.
Q7. In procurement outsourcing market, which region is expected to be the largest in next 5 years?
Answer: North America will remain the largest region over the forecast period due to high adoption of advanced technology.
Q.8 Do we receive customization in this report?
Answer: Yes, Lucintel provides 10% customization without any additional cost.
This report answers following 11 key questions:
Q.1. What are some of the most promising, high-growth opportunities for the procurement outsourcing market by services (business process outsourcing services and consulting services), component (solution and services), application (marketing related services, IT related services, HR related services, facilities management & office services, and others), end use (BFSI, energy & utilities, healthcare, IT & telecom, professional services, manufacturing, retail, logistics, and others), and region (North America, Europe, Asia Pacific, and the Rest of the World)?
Q.2. Which segments will grow at a faster pace and why?
Q.3. Which region will grow at a faster pace and why?
Q.4. What are the key factors affecting market dynamics? What are the key challenges and business risks in this market?
Q.5. What are the business risks and competitive threats in this market?
Q.6. What are the emerging trends in this market and the reasons behind them?
Q.7. What are some of the changing demands of customers in the market?
Q.8. What are the new developments in the market? Which companies are leading these developments?
Q.9. Who are the major players in this market? What strategic initiatives are key players pursuing for business growth?
Q.10. What are some of the competing products in this market and how big of a threat do they pose for loss of market share by material or product substitution?
Q.11. What M&A activity has occurred in the last 5 years and what has its impact been on the industry?