CPO, Outsourcing, Procurement

Outsourcing procurement - CPO's learn to let go

After a cool start, the market for indirect procurement outsourcing is hotting up. All the major providers, from the IT services giants to the specialist procurement and business process outsourcing (BPO) players, report record levels of interest from prospective clients and promise a string of new contract wins during the remainder of this year. And whereas in the past companies were only willing to hand over either individual categories such as travel or temporary labor or some transaction processing work, the trend is increasingly moving towards deals that cover both the sourcing and management of multiple categories and the underlying purchase-to-pay system required to drive operational efficiency and contract compliance.

It’s not just mid-sized, relatively unknown companies with immature procurement functions that are taking the plunge either: in the past six months IBM, which has trumped its rivals in the publicity stakes of late, has announced deals with Unilever, Colgate-Palmolive and Solectron, a big electronics contract manufacturer. In May, Ariba said it had extended its relationship with flagship customer Lucent Technologies, which covers 14 indirect spend categories for its operational sites in North America and Europe. And as CPO Agenda went to press, Xchanging, a “pure play” BPO specialist, was preparing to reveal a new household-name client that will add about 50 per cent to the £500 million it currently transacts annually for BAE Systems, United Biscuits and Boots, the UK’s leading health and beauty retailer.

“We’ve seen a very substantial uptake in activity this year and I don’t see that going away. This is the beginning of a new wave,” says Hap Brakeley, global managing director of Accenture Procurement Solutions.

by Geraint John, Editor, CPO Agenda

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Learning to let go