By: Ateendra Dabas, Saurabh Gupta, Katrina Menzigian, Ankur Sahni

Everest Research Institute

Introduction

The Procurement Outsourcing (PO) market remains on a growth trajectory, and witnessed 30% YoY growth in 2008, primarily driven by organic growth and continued buyer interest. Everest analysis indicates that the increase in single-process contract signing activity in 2008, coupled with higher granularity in process and category scope in PO contracts represents a shift in buyer adoption pattern. Key highlights of 2008 include:

• Although the “new” spending in 2008 was significantly lower, the overall spending increased 30% due to strong growth in contract extensions
• PO contracts reflected a more granular process and category scope. An increasing number of contracts initially launch with a P2P focus but with a broader S2P vision
• While IBM was the leading PO supplier in 2008, P2P focused suppliers signed nearly 50% of all contracts during the year

This report examines the global 2008 PO market and provides insights, detailed analyses and implications for stakeholders into 2009 and beyond. Everest analyses spans multiple dimensions, including market size and buyer adoption, value proposition and contract characteristics, and supplier landscape. This report will assist both companies considering outsourcing procurement to a third-party and suppliers of PO services to understand in detail how the market dynamics and value proposition for PO are evolving.

Scope

• Third-party PO contracts and does not include shared services or captives
• Multi-process PO contracts that involves outsourcing of three or more activities from the Source-to-Pay (S2P) process, with at least US$1 million of Annual contract value, and has a contract length of at least three years
• All multi-process PO contracts across all industries and geographies signed as of 2008
• Suppliers with multi-process PO capability including Accenture, buyingTeam, Capgemini, Corbus, DSSI, EDS-HP, Genpact, Global eProcure, HCL, IBM , ICG Commerce, Infosys BPO, TCS, Vertex, Wipro, WNS, and Xchanging

Contents

This report summarizes key market trends and insights to assist management in making more informed business decisions. Key Insights are divided into four categories: Market size and buyer adoption, value proposition and contract characteristics, Supplier landscape, and key implications for PO buyers and suppliers. Each category contains 3-4 key trends, which are discussed in detail (and illustrated with supporting data and analysis) to provide the reader information in easy-to-apply, bite-size pieces. For example, Market size and buyer adoption is sub-divided into the following:

• Market size and growth: The multi-process PO market witnessed 30%YoY growth in 2008 driven by organic growth and continued buyer interest
• Buyer adoption trends:  Large manufacturing organizations based out of the USA dominated the PO market in 2008

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