Procurement outsourcing involves contracting external procurement specialists to handle an organization's procurement activities and responsibilities. It allows companies to focus on their core competencies while leveraging procurement experts to negotiate better terms, reduce costs, drive efficiencies, and manage suppliers. Procurement outsourcing ensures access to specialized skills, advanced technologies, and greater buying power. Areas such as material management, purchase-to-pay processes, supply chain management and strategic sourcing are increasingly being outsourced.
The global Procurement Outsourcing Market is estimated to be valued at US$ 5.94 billion in 2024 and is expected to exhibit a CAGR of 6.5% over the forecast period 2024 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market key trends:
One of the key trends in the procurement outsourcing market is the increased adoption of cloud-based procurement solutions. Cloud deployment allows procurement functions to be managed remotely and facilitates collaboration between organizations and outsourcing partners. It provides scalability, flexibility and optimizes costs for procurement departments. Procurement service providers are investing in cloud-based platforms to manage direct and indirect category sourcing, eProcurement, spend analysis, contract management and supplier information. The transition to cloud is expected to accelerate due to benefits like pay-as-you-go pricing and no upfront infrastructure costs. This growing shift towards cloud-based procurement solutions will support the market growth over the forecast period.
Porter's Analysis
Threat of new entrants: The procurement outsourcing market requires substantial investment in resources, technology and employee training which poses a moderate threat of new entrants.
Bargaining power of buyers: Large enterprises have high bargaining power as buyers due to their ability to choose from a wide range of vendors providing procurement outsourcing services.
Bargaining power of suppliers: The presence of numerous procurement outsourcing service providers limits the bargaining power of individual suppliers in this market.
Threat of new substitutes: Currently there are limited substitute options for procurement outsourcing services. However, in-house procurement teams continue to remain a competitive alternative.
Competitive rivalry: The global procurement outsourcing market comprises large and small players competing on the basis of service offerings, innovation and pricing. This results in high competitive rivalry.
Key Takeaways
The Global Procurement Outsourcing Market Demand is expected to witness high growth over the forecast period supported by the numerous benefits of outsourcing such as reduced procurement costs and focus on core competencies.
Regional analysis: North America dominated the global procurement outsourcing market in 2020 accounting for the largest market share. This can be attributed to growing healthcare spending and presence of major market players in the region. Asia Pacific is expected to witness the fastest growth during the forecast period supported by rising medical tourism industry in countries such as India, China and Singapore.
Key players: Key players operating in the procurement outsourcing market include 3M, Cardinal Health, Smith+Nephew, Genadyne, DeRoyal Industries, Inc., Medela AG. These companies are focusing on new product launches and partnerships to strengthen their market position. For instance, in 2021, Cardinal Health collaborated with Novant Health to improve the organization's procurement processes through outsourcing strategies.
For more details on the report, Read- https://www.rapidwebwire.com/procurement-outsourcing-market-trends-size-and-share-analysis/
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