Enterprises have scaled back investments in procurement BPO services since late 2022 but are still modernizing their procurement functions to better compete under still-challenging business conditions, according to a new research report published by Information Services Group (ISG) a leading global technology research and advisory firm.
Read More about AiThority Interview: AiThority Interview with Thomas Kriebernegg, Managing Director & Co-Founder at App Radar
“Procurement is a major focus area for ESG goals and regulations”
The 2023 ISG Provider Lens global Procurement BPO and Transformation Services report finds spending growth on procurement outsourcing has slowed from about 30 percent year-over-year in the immediate wake of COVID-19 lockdowns to about 15-20 percent today. While the dramatic supply-chain disruptions and price shocks of the pandemic have eased, companies are still facing global instability, economic uncertainty and the need to deeply transform procurement, ISG says.
“When the pandemic hit, companies suddenly saw the cracks in their procurement practices,” said Scott Furlong, partner and leader of ISG Global Business Operations. “Emergency measures helped, but now they are looking at structural changes that will help them adapt to future requirements, so we expect investment to accelerate again.”
BPO, especially procurement outsourcing, has become a widely accepted practice over the past few years, the report says. While most initial outsourcing projects have been aimed at cutting expenses in the short run and avoiding cost increases in the future, many enterprises are now working with digital transformation providers to create links and consistency across procurement, finance and supply-chain functions.
Manufacturing firms remain the most common users of procurement outsourcing, accounting for nearly 30 percent of procurement BPO and transformation engagements worldwide, followed by health care and pharmaceutical companies, ISG says.
Automation of procurement continues to grow, evolving beyond robotic process automation to more intelligent systems utilizing AI and machine learning, ISG says. A number of service providers assessed by ISG say they expect to automate a significant percentage of their clients’ procurement operations within three years. A related trend is the rising importance of master data management, as enterprises and providers recognize the importance of clean, uniform and easily available data for effective analytics to improve procurement processes.
AiThority Interview Insights: AiThority Interview with at Brian Sathianathan, Co-Founder and CTO at Iterate.ai
Many enterprises are also outsourcing processes for complying with environmental, social and governance (ESG) standards in procurement, the report says. All service providers offer ESG compliance management as a service, while some 80 percent of enterprises have at least a moderate commitment to sustainable procurement.
“Procurement is a major focus area for ESG goals and regulations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “By including ESG management in their standard portfolios, service providers make it easier for clients to enforce and streamline their own policies while meeting current and future regulations.”
The report also explores several other procurement outsourcing trends, including the continuing importance of procurement software platforms and the progression of procurement BPO engagements into transformations.
For more insights into the procurement challenges enterprises face, along with advice on how to overcome them amid ongoing business and economic changes, see the ISG Provider Lens Focal Points briefing here.
The 2023 ISG Provider Lens™ global Procurement BPO and Transformation Services report evaluates the capabilities of 25 providers across four quadrants: BPO Services — Large Accounts, BPO Services — Midmarket, Transformation Consulting Services — Large Accounts and Transformation Consulting Services — Midmarket.
The report names Accenture, Genpact, GEP, IBM and Infosys as Leaders in all four quadrants. It names HCLTech as a Leader in three quadrants. Capgemini, Corbus, Corcentric, Deloitte, TCS, Tech Mahindra, Wipro and WNS Denali are named as Leaders in two quadrants each.
In addition, Tech Mahindra is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in two quadrants. HCLTech and WNS Denali are named as Rising Stars in one quadrant each.
Customized versions of the report are available from Capgemini, Corcentric, GEP, Nexdigm and WNS Denali.
The 2023 ISG Provider Lens global Procurement BPO and Transformation Services report is available to subscribers or for one-time purchase on this webpage.
Latest AiThority Interview Insights : AiThority Interview with Joshua Wilson, Commercial Director, JAPAC at Crimtan
[To share your insights with us, please write to sghosh@martechseries.com]
Comments are closed.