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Procurement outsourcing spikes in recession
3 September 2009:
As companies of all shapes and sizes look to reduce costs in the current recession, business process outsourcing has been getting a closer look, no matter what public opinion of the "O" word is. And procurement outsourcing is one of the fastest-growing areas of outsourcing.
It's no secret that outsourcing has a stigma attached to it. According to a recent survey from Capgemini, the overwhelming majority of senior executives polled (79%) agree that outsourcing jobs has a poor public opinion. Despite that acknowledgement, 72% of survey respondents said public opinion does have an impact on their decisions concerning outsourcing of business processes including procurement. And 65% of those polled said they wouldn't change their outsourcing strategy if public opinion of outsourcing improved.
Why do executives have such strong commitment to outsourcing? Because nearly three out of four executives polled feel outsourcing can help a company survive. And procurement outsourcing is key to some companies' survival strategies.
According to the recent Black Book of Outsourcing, a report complied by Brown-Wilson Group, a Datamonitor company, procurement outsourcing is the fastest growing back-office area of business process outsourcing. The outsourced procurement solutions market is forecast to expand dramatically this year from $700 million in 2008 to an estimated $1.1 billion market this year. And it's expected to pass the $3.5 billion mark in 2012, representing a 41% compound annual growth rate.
In addition to the obvious desire to reduce overall costs, the Black Book research shows the growth in procurement outsourcing is due in large part to the fast return on outsourcing investment. In short, it's not just how much you save but how quickly you can save it in this economy.
The survey shows 92% of executives polled cited fast ROI in their decision to outsource some procurement function. And procurement outsourcing, in particular, "is catapulting ahead in BPO growth based largely on a fast ROI and highly satisfied clients."
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Source: Purchasing.com
