Procurement outsourcing refers to the practice of outsourcing the procurement function to a third-party service provider. Procurement outsourcing enables organizations to leverage the expertise, resources, and technology of specialized providers to procure various indirect materials, components, and services. The growing adoption of cloud-based solutions and analytics is enabling procurement outsourcing companies to offer enhanced strategic services. Major companies are increasingly focusing on core business areas and outsourcing non-core operations such as procurement to specialized third-party providers.

The global Procurement Outsourcing Market is estimated to be valued at US$ 5 Billion in 2023 and is expected to exhibit a CAGR Of 6.5% over the forecast period 2023 To 2030, as highlighted in a new report published by Coherent Market Insights.

Market Dynamics:

Increased focus on core business functions is expected to drive growth of the procurement outsourcing market over the forecast period. Organizations are increasingly outsourcing procurement activities to specialized third-party providers to focus internal resources on core growth areas. This enables companies to leverage procurement expertise, advanced analytics, category management, and technology solutions offered by outsourcing companies. Growing adoption of cloud-based platforms is also providing enhanced strategic services to clients. Outsourcing procurement enables cost savings through economies of scale and reduced overhead. Additionally, access to global sourcing networks allows procurement outsourcing providers to procure materials at competitive rates, thus offering cost benefits to client organizations. This is further expected to boost adoption of procurement outsourcing over the forecast period.

Segment Analysis

The procurement outsourcing market is dominated by the services sub segment. Procurement outsourcing services include supply management, process optimization, strategic sourcing, transaction management and category management. They help companies focus on their core competencies while leveraging the expertise of outsourcing partners to achieve greater operational efficiencies in their indirect procurement processes. This has driven greater adoption of procurement outsourcing services over other sub segments in the market.

PEST Analysis

Political: Changes in trade policies and regional trade agreements impact businesses’ procurement networks. Outsourcing helps insulate organizations from such external political risks.

Economic: Outsourcing procurement activities helps reduce operating costs for businesses. It allows optimal utilization of resources and lowers expenses through economies of scale benefits.

Social: Focus on environmental and social sustainability is increasing. Outsourcing partners provide expertise to monitor supply chains for ESG compliance and manage responsible sourcing programs.

Technological: Digital technologies like AI, analytics and cloud are being deployed to transform procurement. Outsourcing leverages such technologies for benefits like demand forecasting, spend analysis and contract management.

Key Takeaways

The Global Procurement Outsourcing Market Demand is expected to witness high growth over the forecast period. The global procurement outsourcing market is estimated to be valued at US$ 5 billion in 2023 and is expected to exhibit a CAGR of 6.5% over the forecast period 2023 to 2030.

Regional analysis:

North America accounts for the largest share currently due to advanced adoption of procurement outsourcing practices across major industries in the region. Asia Pacific is anticipated to register the fastest growth supported by growing operations of multinational companies and their focus on procurement optimization in emerging countries of the region.

Key players:

Key players operating in the procurement outsourcing market include Accenture, Capgemini, Genpact, GEP, HCL Technologies, IBM, Infosys, Wipro. Procurement outsourcing contracts with these leading providers help companies streamline indirect spend, adhere to compliance and focus on their core functions.

Note:
1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it