Procurement Outsourcing: Not Quite Ready for Prime BPO Time

If procurement BPO were a sitcom, it would have been cancelled after a few pilot shows long ago. But fortunately it's not, and companies are finally getting around to seeing the type of savings that it can generate. As further evidence of Procurement BPO's emergence, check out IDC's findings and forecasts on the subject. According to their research, IDC estimates that the "worldwide procurement BPO market reached $627 million in 2005, and will expand at a five year compound annual growth rate (CAGR) of 22.3 percent to reach $1.7 billion by 2010. The study reveals that growth in customer spending is accompanied by a more crowded and diverse competitive landscape, with more aggressive activity coming from newer entrants such as services procurement BPO providers and Indian offshore BPO providers."

A 22.3 CAGR is impressive, but a $1.7 billion market size by 2010 represents but a pimple on the face of the overall BPO market (which Gartner estimates will exceed $170 billion by 2007 alone). Indeed, this is a market still in its adolescence -- in more ways than one. But some regional markets and industries are more developed than others. In their research, IDC notes that the Americas -- North America specifically -- has the largest global marketshare of BPO deals. IDC also forecasts that the manufacturing, financial services, retail, and utilities industry will drive the majority of BPO growth going forward.

Jason Busch

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