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.
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