Keywords: BPO, outsourcing, business process outsourcing, procurement, eprocurement, purchase to pay, procure to pay

Business process outsourcing shows strength in volatile market

Susie West | News | 25 May 2012

• Print
•        

The multi-process business procurement outsourcing market has been given a vote of confidence after a new study predicts growth of around 15% in 2012.

Research by global consulting and research firm Everest expects the market to reach $1.8bn in annual contract value by the end of the year, following on from a positive 2011 where the market saw a second consecutive record year for new contracts, growing 14% over the year to reach $1.6bn.

It found that over the past 12 months it has been mid-market businesses with revenues of between $1bn-5bn as the predominant adopters of procurement outsourcing such as purchase-to-pay processes.

The primary drivers for these businesses transitioning to shared services is to cut costs, optimise processes and improve compliance, explained Saurabh Gupta, Vice-President of Everest Group.

He added: "The business case is attractive as it can address a cost base representing 5-15% of the company revenue."

This, he said, "represents a significant return on investment".

Analysing the market in 2011, the Everest report found that almost 80% of contracts signed were by companies in the manufacturing, retail and financial services industries.

It also showed that more than half of new contracts had an 'end-to-end scope' across the source-to-pay process.

In addition, there is a growing trend in finance and accounting contracts with accounts payable that includes elements of the upstream procure-to-pay process.

Predicting trends for next year, Mr Gupta said: "We expect to see acquisitions and partnerships between procure-to-pay and source-to-pay providers as well as a continued expansion of the service provider landscape … competition will intensify as the major contenders invest in capabilities and experience rapid year-over-year growth."

Other market projections include a noticeable upturn in demand from the Asia-Pacific and South America regions, as well as more public sector organisations adopting these systems.