Where is Procurement Outsourcing Headed?

I recently had the chance to catch up with a few members of the Everest Research Institute's procurement outsourcing research team. While I plan to write about these findings in the coming weeks, in the meantime I thought it might be useful to highlight some of Everest's latest research suggestive of trends in the procurement outsourcing (PO) market. According to a recent Everest research summary, in 2007, the procurement outsourcing market "continued on a growth path toward wider market adoption. With the number of new contract signings in 2007 matching that of 2006, the PO market is moving closer to entering a 'rapid growth' phase as 2008 unfolds." Everest suggests that, among other trends, we'll see "Emerging buyer adoption trends around transactional PO, end-to-end processes, and 'phased' engagements" rather than simply category sourcing outsourcing programs.

I reckon that as part of these types of programs that we can also expect the A/P and procurement outsourcing link to get closer together in more sophisticated companies either considering a shared services off-shore environment or full-blown outsourcing options. Among other observations Everest makes in this research summary, they suggest that the overall market "had a relatively flat 2007 and PO followed suit" but that the "The PO market is witnessing broad-based adoption across geographies, industries, and buyer segments." Given this, will 2008 be a break-out year for procurement outsourcing? In my book, it's doubtful, but I do expect -- and I agree with Everest -- that we'll see a value proposition shift in many of the types of deals that ultimately come to fruition.

- Jason Busch

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