An End-to-End Migration — Procurement Outsourcing Extends Its Reach

Among the procurement outsourcing research houses, I believe that the Everest Research Institute is probably producing the best research in the sector at the moment. A recent analysis they conducted continues to prove out why. In it, they argue that procurement outsourcing is migrating toward end-to-end offerings. Specifically, what's most insightful in this analysis is the finding that "procurement and finance processes [are together] delivering new efficiencies and offering increased savings opportunities." What are some of the other highlights of the report? Consider that "nearly 45 percent of PO contracts signed by end-to-end suppliers are greater than US$50 million in total contract value as compared to 16 percent for sourcing-focused and 25 percent for P2P-focused suppliers, respectively" and that "less than 30 percent of assessed suppliers have developed a significant scale of operations and overall procurement expertise is rare."

Conversations I've had with some Indian outsourcing providers confirm that many are migrating to a broader end-to-end model. But in my view, many lack the sales and marketing capability to convince Western organizations to lift-and-shift their operations like an IBM or Accenture (two of the largest providers referenced in the study). This is especially true when it comes to convincing procurement and finance to outsource more than one area (e.g., A/P and eProcurement/transactional buying). Still, the Indian providers are developing the requisite skill and talent base to contend in the global market. And this is good news for companies that are increasingly realizing they have numerous end-to-end procurement outsourcing options from which to choose.

- Jason Busch

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