“Global Procurement Outsourcing Market to reach a market value of 12.5 Billion by 2031 growing at a CAGR of 10.7%”
The Global Procurement Outsourcing Market size is expected to reach $12.5 billion by 2031, rising at a market growth of 10.7% CAGR during the forecast period.
The rising Banking, Financial Services, and Insurance (BFSI) sector in India significantly influences the growth of the procurement outsourcing Market. Over the past several years, the BFSI sector has shown remarkable stability and growth, underscored by an increase in bank account ownership from 53% to 78% between FY 16 and FY 21. This surge in financial inclusivity has led to a broader customer base, driving the demand for efficient procurement processes within financial institutions. Thus, the Asia Pacific region generated 26% revenue share in the market in 2023. Countries like China, India, and Japan are emerging as key players in procurement outsourcing, driven by their expanding manufacturing capabilities and growing service sectors. Many regional businesses outsource procurement to access specialized expertise, reduce operational costs, and focus on core competencies.
The major strategies followed by the market participants are Partnerships as the key developmental strategy to keep pace with the changing demands of end users. For instance, In November, 2023, Infosys Limited partnered with Proximus, a digital communications company. The partnership aimed to modernize and consolidate the IT stack of Proximus affiliates. Additionally, In July, 2024, Genpact partnered with Reworld, a waste management company. The partnership aimed to enhance sustainability and operational efficiency in finance, sourcing, and IT functions.
Based on the Analysis presented in the KBV Cardinal matrix; IBM Corporation and Accenture PLC are the forerunners in the Procurement Outsourcing Market. In May, 2024, IBM Corporation came into partnership with SAP SE, an American technology company, to enhance generative AI capabilities and industry-specific cloud solutions. Companies such as Infosys Limited, HCL Technologies Ltd., Capgemini SE are some of the key innovators in Procurement Outsourcing Market.
Core competencies refer to the unique strengths and capabilities that give a company its competitive advantage in the market. These could include specialized knowledge, innovative products, or exceptional customer service. Organizations can enhance their value proposition and improve overall performance by concentrating on what they do best. Outsourcing procurement allows companies to allocate their resources more effectively. By transferring procurement functions to specialized external providers, organizations can free up internal resources—such as time, personnel, and capital—to focus on their core activities. In conclusion, increasing focus on core competencies and cost efficiency driving outsourcing decisions drives the market's growth.
Strategic sourcing emphasizes the analysis of total cost of ownership (TCO) rather than just purchase price. This approach leads to long-term savings through better supplier negotiations and reduced operational costs. By consolidating purchases through strategic sourcing, companies can leverage their buying power to negotiate better terms, discounts, and favourable contract conditions with suppliers. Companies increasingly recognize that procurement should align with overall business strategy. SRM practices facilitate ongoing assessments of supplier performance and risk profiles, allowing organizations to anticipate and address potential issues before they escalate. Thus, rising demand for strategic sourcing and supplier relationship management is driving the growth of the market.
Procurement processes often involve handling sensitive information, including financial details, supplier contracts, pricing strategies, and proprietary data. When outsourcing these processes, organizations risk exposing this information to external parties, which may lead to unauthorized access and data breaches. Organizations may need to invest significantly in additional security measures, such as encryption, monitoring systems, and auditing processes, to mitigate data security risks associated with outsourcing. Thus, the concerns over data security and privacy breaches in outsourced procurement processes are impeding the market's growth.
The leading players in the market are competing with diverse innovative offerings to remain competitive in the market. The above illustration shows the percentage of revenue shared by some of the leading companies in the market. The leading players of the market are adopting various strategies in order to cater demand coming from the different industries. The key developmental strategies in the market are Partnerships, Collaborations & Agreements.
On the basis of organization size, the market is segmented into small and medium-sized enterprises (SMEs) and large enterprises. The large enterprises segment recorded 58% revenue share in the market in 2023. This segment includes multinational corporations and large-scale businesses with substantial procurement needs and complex supply chains. The prominence of large enterprises in the market can be attributed to several factors.
Based on deployment the market is bifurcated into cloud and on-premise. The cloud segment acquired 68% revenue share in the market. Cloud-based solutions are highly scalable, allowing organizations to easily adjust resources based on their needs. They often reduce upfront costs associated with hardware and maintenance, as expenses are typically spread out as subscription fees. Cloud solutions can be accessed from anywhere, offering flexibility and remote access which is crucial for global operations.
By industry vertical, the market is divided into BFSI, healthcare, and IT & telecommunication. The IT & telecommunication segment procured 31% revenue share in the market in 2023. This segment encompasses various organizations, including software companies, telecommunications providers, and IT service firms, all with unique procurement needs driven by rapid technological advancements and changing market dynamics. The growth of the IT & telecommunications sector is closely tied to the increasing demand for digital transformation and innovation.
Based on component, the market is divided into solutions and services. In 2023, the solutions segment garnered 46% revenue share in the market. This segment includes software and platforms designed to streamline and optimize procurement processes. Solutions often encompass a range of functionalities such as supplier management, spend analysis, e-sourcing, contract management, and procure-to-pay (P2P) automation. The prominence of the solution segment can be attributed to several factors.
Free Valuable Insights: Global Procurement Outsourcing Market size to reach USD 12.5 Billion by 2031
Region-wise, the market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The North America region witnessed 38% revenue share in the market in 2023. This dominance can be attributed to several key factors inherent to the region. North America, particularly the United States, is home to many multinational corporations with extensive and complex procurement needs. These organizations are increasingly recognizing the strategic advantages of outsourcing procurement functions to specialized providers, which has driven significant growth in the market.
The Procurement Outsourcing Market is highly competitive, driven by the need for cost reduction and operational efficiency. Key trends include the presence of diverse service providers, increasing integration of technologies like AI and data analytics, and a growing emphasis on sustainability in procurement processes. Globalization of supply chains adds complexity, requiring providers to navigate varied regulations. Additionally, customization and flexibility in service offerings are essential differentiators as organizations seek tailored solutions to meet their specific procurement needs.
| Report Attribute | Details |
|---|---|
| Market size value in 2023 | USD 5.7 Billion |
| Market size forecast in 2031 | USD 12.5 Billion |
| Base Year | 2023 |
| Historical Period | 2020 to 2022 |
| Forecast Period | 2024 to 2031 |
| Revenue Growth Rate | CAGR of 10.7% from 2024 to 2031 |
| Number of Pages | 260 |
| Tables | 413 |
| Report coverage | Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Competitive Landscape, Market Share Analysis, Porter’s 5 Forces Analysis, Company Profiling, Companies Strategic Developments, SWOT Analysis, Winning Imperatives |
| Segments covered | Component, Deployment, Industry Vertical, Organization Size, Region |
| Country scope |
|
| Companies Included | Infosys Limited, TATA Consultancy Services Ltd., HCL Technologies Ltd., WNS (Holdings) Ltd., NB Ventures, Inc. (Global eProcure), Wipro Limited, IBM Corporation, Accenture PLC, Genpact Limited, Capgemini SE |
By Component
By Deployment
By Industry Vertical
By Organization Size
By Geography
Our team of dedicated experts can provide you with attractive expansion opportunities for your business.
Unique Offerings 