Worldwide Procurement BPO Market Still in Its Infancy Despite Increasing Interest, IDC Says

FRAMINGHAM, MA – SEPTEMBER 23, 2002 – While interest is increasing in procurement business process outsourcing (BPO), the reality is that the market is still very small and in its infancy compared with other BPO segments, such as logistics or customer care, IDC reveals. IDC estimates that the worldwide procurement BPO market was $5.3 billion in 2001 and expects the market to increase at a five-year compound annual growth rate (CAGR) of 18.2% to $12.2 billion by 2006.

 

"Companies are beginning to explore the concept of outsourcing procurement functions more and more these days, but most of the deals continue to be small ones and focused on the indirect procurement segment," said Romala Ravi, program manager of IDC's Supply Chain and Logistics Management Services research. "Larger, more comprehensive procurement outsourcing contracts are likely to emerge in the later years of the forecast period."

IDC believes that major factors driving the demand for more holistic procurement BPO services include:

Organizations' relentless focus on cost reduction

Challenges faced with early eprocurement initiatives

Recognition of the pitfalls of a technology-only solution

IDC predicts that most of the procurement BPO offerings will continue to be in the indirect procurement area, and that the procurement BPO concept will expand to include former consulting-type activities, such as spending management and strategic sourcing services.

This bulletin, Worldwide Procurement Business Process Outsourcing (BPO) Forecast and Analysis, 2002-2006 (IDC #27819), presents a market forecast through 2006 and by major regions, including the Americas, EMEA, and Asia/Pacific. This document also analyzes trends, market drivers, and inhibitors and identifies market opportunities for service providers.

To purchase this document, call IDC's volume sales hotline at 508-988-7988 or email jnagle@idc.com.

For more information about IDC's Supply Chain and Logistics Management Services research, please contact Jill Toole at 508-988-6915 or by email at jtoole@idc.com.

About IDC

IDC is the foremost global market intelligence and advisory firm helping clients gain insight into technology and ebusiness trends to develop sound business strategies. Using a combination of rigorous primary research, in- depth analysis, and client interaction, IDC forecasts worldwide markets and trends to deliver dependable service and client advice. More than 700 analysts in 43 countries provide global research with local content. IDC's customers comprise the world's leading IT suppliers, IT organizations, ebusiness companies, and the financial community. Additional information can be found at www.idc.com.

IDC is a division of IDG, the world's leading IT media, research and exposition company.

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