Procurement Outsourcing Market is Anticipated to Witness High Growth Owing to Cost Savings

Procurement Outsourcing Market is Anticipated to Witness High Growth Owing to Cost Savings

This involves conducting market analysis, supplier selection, negotiations, purchase order management, accounts payable, procurement analytics, spend analysis, and contract management for indirect goods and services. Procurement outsourcing helps companies focus on their core competencies while reducing procurement costs and improving efficiency. The procurement outsourcing market involves demand forecasting, supplier performance reporting, inventory management, and outsourced warehouse management as some of the key services provided. Companies utilize procurement outsourcing to leverage the cost advantages and expertise offered by specialized third-party providers.

The Global Procurement Outsourcing Market is estimated to be valued at US$ 25.15 Bn in 2024 and is expected to exhibit a CAGR of 8.9% over the forecast period 2024 To 2031.

Key Takeaways

Key players operating in the procurement outsourcing are 3M, Cardinal Health, Smith+Nephew, Genadyne, DeRoyal Industries, Inc., Medela AG, Convatec Inc., Mölnlycke Health Care AB, PAUL HARTMANN AG, ATMOS MedizinTechnik GmbH & Co. KG, Talley Group Ltd, Cork Medical, LLC, and Devon Medical Products. These players are focusing on strategic collaborations and new product launches to expand their market share. For instance, in 2020, Genadyne partnered with Source-One to offer an integrated package of procurement and sourcing solutions for the healthcare sector.

The Procurement Outsourcing Market Size  provides significant opportunities for cost savings, process optimization, and spending visibility. By outsourcing non-core procurement activities, companies can reduce procurement costs by 15-35% depending on the processes outsourced. Outsourcing also allows businesses to focus resources on strategic sourcing and supply chain initiatives leading to improved efficiencies.

The market is also witnessing growing global expansion with the increasing international presence of third-party procurement outsourcing companies. Key players are strengthening their global delivery centers and onshore/nearshore capabilities to capture more overseas clients. Emerging countries in Asia and Latin America present major opportunities for procurement outsourcing providers due to growing need for cost optimization.

Market Drivers

One of the key drivers for the procurement outsourcing market is cost savings. By outsourcing procurement activities, companies are able to reduce procurement expenses significantly through leveraging economies of scale offered by specialized third-party providers. Outsourcing providers consolidate spending across clients to negotiate better rates with suppliers on behalf of customers. This allows companies to lower sourcing and procurement costs substantially.

Market Restrains

One of the key restraints for the procurement outsourcing market is loss of control. When companies outsource their procurement functions, they lose direct control over processes and may have limited visibility. Outsourcing involves assigning responsibilities to third parties which increases reliance on external vendors. Companies run the risk of loss of control and strategic flexibility as outsourcing providers may not always prioritize tasks exactly as the client would like. Addressing such control and flexibility challenges is a key barrier that needs to be overcome for increased adoption of procurement outsourcing solutions.

Segment Analysis
The procurement outsourcing market is dominated by the manufacturing sub-segment, as manufacturing companies are increasingly outsourcing their procurement processes to third-party vendors. This is helping manufacturing companies focus more on their core business operations while leveraging the expertise of specialized procurement outsourcing vendors. The healthcare sub-segment is also growing rapidly due to increasing demand for procurement outsourcing from hospitals and healthcare providers to reduce costs and streamline procurement processes.

Global Analysis
North America is expected to continue dominating the procurement outsourcing market during the forecast period owing to early adoption of procurement outsourcing by companies across industries in the region. The presence of leading procurement outsourcing vendors is also driving market growth in North America. Asia Pacific is projected to witness the fastest growth during 2024-2031 due to a surge in adoption of procurement outsourcing by companies in China, India, and other developing countries of the region as they focus on streamlining procurement processes. Rapid industrialization and growth of the manufacturing sector are fueling the demand for procurement outsourcing in Asia Pacific.

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