Report: procurement outsourcing trends show change in 2008
Survey finds non-core procurement spend being outsourced on the rise
By David Hannon -- Purchasing, 4/30/2009 2:00:00 AM EDT
A new report from Everest Research Institute shows that the approach companies are taking to procurement outsourcing is changing. In 2008, there were fewer new procurement outsourcing contracts signed than the year before and the amount of large-scale outsourcing decline, but the amount of non-core procurement spend that was outsourced increased by $16 billion.
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Companies scaled back on multi-process procurement outsourcing deals but ramped up the single-process procurement outsourcing activity. "Last year's drop in new contract spending is the result of a changing buyer approach, not a lack of interest in PO," said Katrina Menzigian, vice president of the Everest Research Institute. "The average size of multi-process contracts nearly halved last year as buyers began adopting a cautious, phased approach, but expansion of existing contracts and increased signings of single-process contracts were significant drivers of market growth."
Other highlights of the Everest report include:
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Offshore adoption has increased significantly across procure-to-pay (P2P) as well as sourcing-focused contracts.
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Nearly half of all outsourcers leveraged supplier-owned IT systems; a third also leveraged supplier-provided tools.
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End-to-end PO suppliers Accenture, IBM, and ICG Commerce hold nearly 80% of market share. IBM accounted for 70% of new TCV signed last year.
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Top P2P-focused performers in 2008 were Wipro, Infosys BPO, and EDS-HP.
In a previous report, Everest Research said procurement systems are included in the scope of 70% of procurement outsourcing contracts. "Procurement outsourcing suppliers are meeting this demand by making strong investments to enhance and further build out the technology component of their procurement outsourcing offerings through internal development, partnerships and acquisitions."
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