A Quick Study of Procurement BPO

Global Services, a CMP publication, recently featured a good survey article on procurement BPO (or managed procurement services, as some call it). You can check it out by clicking here. One of the graphs in the piece shows that procurement BPO satisfaction lags other outsourcing areas, but I'd argue that the sample size is probably not large enough, given the limited number of signed deals to analyze in the market (the article pegs the total current market at only a hundred or so relationships). And certainly, it probably took a few years and billions in contracts for the IBMs and Accentures of the world to work out the kinks in their IT and finance outsourcing business models as well. Still, according to the article, "Experts say that while procurement is quite a bit more challenging than other forms of BPO, it's also optimized for a pilot test of one discrete category" such as travel or IT products rather than purchasing everything under the sun." As a result, this makes "Managed procurement is one of the least controversial forms of outsourcing." That's one way of looking at the market, but given procurement BPO's limited growth to date, I'm not sure if I agree with that last statement. But certainly procurement BPO -- especially on the indirect side -- presents a significant savings opportunity that the vast majority of companies are leaving on the table.

Jason Busch

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