Top 3 reasons to outsource indirect procurement

Paul Snell reveals, in his article “Maverick spends, not a major issue for buyers“, the top 3 reasons of 326 global companies surveyed  by the research firm NelsonHall ( a global US Business Process Outsourcing analyst firm) ,for outsourcing indirect procurement:

  • reducing process costs (84 per cent of companies),
  • accelerated sourcing times (79 per cent), 
  • improved ability to manage supplier performance (78 per cent),

Though the consensus is high on these priorities, very few of those global companies (23 per cent)  are reporting maverick spend as a priority as most efforts are done to better manage supplier performance.

Another interesting finding of the study is that 70 per cent of those companies are looking forward implementing a shared service center (centralising indirect procurement) before going outsourcing. Currently, only 30% of firms implemented a shared service center.

On the other hand, NelsonHall also reported in an earlier research that “Procurement BPO is the fastest growing back office area of BPO (which also includes Finance, accounting and HR). There was a lag in new contract signings in 2005 but there have been some interesting new awards in the first half of 2006 with more deals are in the pipeline. (…) NelsonHall research indicates that the ramp up will really accelerate in 2008. A very recent survey has reaffirmed NelsonHall’s predictions that growth over the next few years will continue to come from North America and Europe. “

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