Procurement service outsourcing market hot

A hot and emerging market within the business process outsourcing (BPO), which will be of interest to Indian ITES/BPO companies, is the procurement service outsourcing (PSO) market, says a study by the National Association of Software and Services Companies (Nasscom).

Increasingly, more and more companies across the world are opting to outsource non-core purchasing function to enhance productivity.

While more companies are still outsourcing the non-core component of their procurement and non-strategic processes, some are evolving the system and outsourcing their key processes based on enhanced comfort levels with the service provider, the study pointed out.

While this is still a sunrise segment for India, there are a significant number of players in the country that have built capabilities in areas such as supply chain management, built industrial-strength technology infrastructure, expanded their global presence and committed themselves to achieving operational and service excellence.

Quoting the Accenture report on procurement services providers (PSPs), Nasscom said the key trends which drive companies to use PSPs was the need to focus on strategic procurement of the spending categories that had not been outsourced.

Cost cutting was also a key motivator for PSP as were issues such as acquiring category expertise, volume aggregation and faster delivery of improved procurement performance on the categories of processes outsourced.

The Nasscom study, quoting a report by another company Aberdeen Group, said that through PSO enterprises across the globe have attained a lot of benefits including reduced prices paid for goods and services by 18%; improved contract compliance by 60%; cut sourcing and procurement cycles by half and reduced procurement administration and procurement automation costs by more than 25%.