The Devil's Book of Procurement Outsourcing

Earlier this week, an old FreeMarkets friend and colleague who now runs a significant piece of a solutions provider in the sector was in our humble office and began a rant against this article in Supply Chain Digest. After looking at it, I could not agree more with my friend's sentiments. The above-linked article is a downright embarrassment to the credibility of Supply Chain Digest. To reprint information that is so far off the mark is dangerous to readers. The authors of Black Book on Procurement Outsourcing clearly do not have a clue what procurement outsourcing is, as you'll see if you look at their list of top vendors, many of whom are not even in the outsourcing business.

Let's examine their "top twenty" list of procurement outsourcing providers to shed some light on how far off the mark they are. Their top ranked vendor is Genpact, an offshore-based BPO provider who certainly deserves a mention at the top of any procurement outsourcing list. But then things start crumble. ICG Commerce is ranked second, which is a complete shocker to me given their overall revenue being smaller than some individual procurement outsourcing deals. But it gets worse. Also on the list are vendors such as ePlus, Ketera, Global eProcure, PurchasingNet, and Procuri, who have no business being on a top list related to how any reasonably educated observer of the market would define procurement outsourcing.

But what's most noteworthy is who is missing on their top twenty list of providers. Indeed, there are many names not on the list who would have made the cut had the authors known anything about their subject matter. From an India/Offshoring approach to procurement outsourcing, Wipro, Tata and Infosys are all notably absent (hmmm ... one wonders why their collective deal value in the space in the past few years dwarfs that of most of the other names which were included on a combined basis). Or what about Provade, a provider who is gaining modest traction in the services procurement outsourcing arena? There are also a number of notably absent GPO providers who would clearly fit their definition of an outsourced provider based on who else is included in the list.

It's clear to me from looking at this list alone that Scott Wilson and Doug Brown, the authors of the Black Book, are a danger to themselves and the overall sector. Seriously, guys, bone up on what's really going on out there, lest you continue to do a disservice to all of us in the field who are serious about analyzing and looking at the growth of the procurement outsourcing market. I would also urge Supply Chain Digest, a site that I usually respect, to talk to other analysts and observers of the sector, such as Everest and TPI, who are much closer to what's really going on in the procurement outsourcing world from a deal flow and customer satisfaction perspective.

Jason Busch

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