Ever wondered which providers are driving the world of procurement outsourcing? Well, the wait is finally over, with the first ever Blueprint in this space… and a big congrats to Accenture, IBM, Procurian, Infosys and GEP for making the Winners Circle:
So we asked HfS analyst and report author, Brian Dubiel, who lives and breathes procurement outsourcing, to give us the skinny on this market:
Brian – what’s hot about procurement BPO right now – why are firms suddenly jumping into the space?
The Procurement Outsourcing (PO) market has quickly become one of the fastest growing BPO segments in the market, growing at an annual rate of 12% over the next 5 years, and expected to reach $3.4 Billion in expenditure this year. Our research has shown this is the result of procurement deals piggybacking on a maturing and established Finance and Accounting BPO market, with the close linkages between F&A and procure-to-pay. While many CFOs have become more accustomed to the BPO model, they are increasingly confident in taking advantage of provider skill-sets in procurement where category expertise, spend management and technology provide the core value, as opposed to merely lower cost labor.
So what processes are people looking at? Is it still mainly P2P, or are there higher value processes being evaluated?
As growth continues, the scope of PO services has grown from the more transactional P2P elements of the value chain, to one where more strategic processes are being outsourced, such as strategic sourcing, vendor governance and spend analytics, which is redefining the market differentiators among providers. Vertical expertise as well as geographic market sourcing presence have also aided the leading procurement market providers to offer distinguishable characteristics compared to the more “generalist” BPO body shops.
What differentiated the Winners Circle providers from the others?
Accenture, IBM, Procurian, GEP and Infosys have been selected this year as part of HfS’ “Winner’s Circle” for their ability to provide a strong encompassing Procurement value chain offering, both for the transactional and strategic processes. These providers offer strategic support communities for procurement professionals and can align to many vertical industries requiring unique sourcing expertise, such for Retail and CPG, or cater to niche category sourcing such as marketing, consulting, and other professional services. These providers have also gone above and beyond others with the incorporation of consultative procurement capabilities, such as helping enterprises discover value through redefining and transforming their procurement organizations, and incorporating global compliance standardization. In short, they are servicing customers more as strategic partners than mere outsourcing providers.
And, for all you HfS subscribers, you can download your copy of the…
Unlike other quadrants and matrices, the HfS Blueprint identifies the relevant differentials between service provider performance and capability across a number of facets actually meaningful to the delivery of services: how all the providers are genuinely innovating and how effectively they are executing. Moreover, HfS Blueprint Report criteria are dependent on a broad range of stakeholders with specific weightings, based on 1,355 crowd-sourced responses from our 2013 State of Outsourcing study, conducted with the support of KPMG. You can download a detailed methodology of the Blueprint concept and process here.
(Cross-posted @ Horses for Sources)