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Next Generation Sourcing & Procurement

Market Analysis

by Janet Irwin

published on Jul 11, 2018

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Report Overview:

NelsonHall's market analysis of Sourcing & Procurement BPO consists of 65 pages.

Who is this Report for:

NelsonHall’s “Next Generation Sourcing & Procurement BPO” report is a comprehensive market assessment report designed for:

  • Sourcing managers investigating sourcing developments within the outsourced sourcing & procurement services
  • Operations executives exploring the “art-of-the-possible” in sourcing & procurement BPO
  • Vendor marketing, sales and business managers developing strategies to target sourcing & procurement BPO
  • Financial analysts and investors specializing in the IT services and BPO sector

Scope of this Report:

The report analyzes the global market for sourcing & procurement BPO and addresses the following questions:

  • What is the market size and projected growth for the global sourcing & procurement BPO market overall, by geography, and by industry sector?
  • What are the principal drivers for adoption of sourcing & procurement BPO?
  • What are the typical benefits achieved from adoption of sourcing & procurement BPO?
  • Who are the leading vendors sourcing & procurement BPO?
  • How is business process transformation taking place in sourcing & procurement BPO?
  • How are vendor offerings in sourcing & procurement BPO developing and what types of capability are emerging?
  • How are sourcing & procurement BPO services delivered?
  • What are the challenges and success factors within sourcing & procurement BPO?

Key Findings & Highlights:

The sourcing & procurement BPO market is undergoing a significant transition from procurement transaction services & project based sourcing support services, evolving to next generation sourcing & procurement services with new business models incorporating self-serve, automation, autobots, AI, cognitive, machine learning & proactive analytics emerging end-to-end across strategic sourcing & category management, sourcing support services, and procurement transaction services.

Table of contents:

Table of contents:

  • 1. Introduction
  • Definition: Sourcing & Procurement BPO
  • Sourcing & Procurement BPO:
  • Next Generation S&P BPO:
  • Next generation S&P services are part of the evolution of the traditional workplace to a ‘millenialized’ digital workplace
  • This project is focused on S&P services, with a particular emphasis on next generation sourcing strategies and ‘millenializing’ end-user tools. It covers:
  • 2. Changing Shape of Next Generation S&P BPO
  • The current S&P market is still driven by the need to achieve cost savings and drive compliance….
  • Current S&P BPO market:
  • …with the future S&P market demanding a more ‘millenialized’ end-user experience and integrated market intelligence
  • Future S&P BPO market:
  • 3. Customer Requirements
  • Organizations are looking to outsource S&P services to achieve cost savings, drive compliance and reduce risk…..
  • Achieve cost savings:
  • Drive compliance:
  • Reduce risk:
  • ….while at the same time enabling partnerships with stakeholders, increasing productivity and improving the end-user experience
  • Enabling partnerships with stakeholder
  • Improve productivity:
  • Improved end-user experience:
  • Common issues with internal S&P functions are data & tools, processes and staff
  • Data & tools
  • Processes:
  • Staff:
  • Organizations are also seeking advisory and consulting skills for transition to next generation S&P services, access to ’millenialized’ tools, and innovation
  • Advisory and consulting capabilities:
  • Ability to provide requisite ’millenialized’ tools:
  • Innovation:
  • Support for future operating model design is a key client requirement alongside spend cost reduction
  • Clients working with vendors to adopt next generation S&P are realizing strategic sourcing & operational efficiency cost savings, increased compliance and greater spend visibility
  • 4C Associates reduced costs for a Dutch retailer through procurement functional diagnostic, design and benchmarking
  • Objectives
  • Results
  • Accenture enhanced the sourcing capabilities and improved the profitability of a leading apparel solutions provider
  • Objectives
  • Results
  • Capgemini reduced costs for a Canadian distribution utility by taking over 530 roles including elements of procurement
  • Objectives
  • Results
  • Capita worked with the world's leading specialist insurance market services company to create a centralized procurement service
  • Objectives
  • Results
  • DXC Technology Capita drove eSourcing adoption for a global manufacturer, delivering 12% cost savings in year 1
  • Objectives
  • Results
  • Genpact brought in indirect category expertise for a U.S. based services company achieving ~$140m in savings
  • Objectives
  • Results
  • GEP worked with a global biopharma company to develop category plans and spot buying programs achieving cost savings of ~10%
  • Objectives
  • Results
  • HCL supported the procurement function of a U.S. based fire & security products company in achieving cost savings of 29%
  • Objectives
  • Results
  • Infosys assisted the procurement function of a global hospitality and hotel group in achieving ~$5m annualized cost savings
  • Objectives
  • Results
  • IBM increased e-invoicing to 75% for a global consumer goods company
  • Objectives
  • Results
  • Proactis assisted a large multinational restaurant chain in increasing the number of sourcing projects and achieving ~$0m in savings
  • Objectives
  • Results
  • Proxima Group embedded a procurement team within a greenfield site for a financial services company
  • Objectives
  • Results
  • TCS implemented a customized S2P platform for a Japanese multinational electronics corporation moving 60% of spend to catalogs
  • Objectives
  • Results
  • Wipro assisted North America based relocation services company in developing new procurement processes achieving 25% productivity improvement
  • Objectives
  • Results
  • WNS-Denali supported a specialty material manufacturer in establishing procurement & sourcing service centers achieving cost savings of $200m over 2 years
  • Objectives
  • Results
  • 4. Market Size and Forecast
  • Global S&P BPO market will approach $3.6bn by 2022, with a CAGR of 7.1%
  • S&P BPO will continue to be broadly based across advisory & managed services, sourcing support, & procurement transactions
  • Growth in S&P BPO services is being driven by a few factors
  • Service areas:
  • North America and EMEA currently account for 85% of the S&P BPO market but with market growth across all regions
  • Financial services and life sciences & healthcare will see the highest growth in S&P BPO services, through to 2022
  • 5. Vendor Market Shares
  • The global S&P BPO services market is led by Accenture, IBM and GEP, followed by Genpact, Infosys, TCS, Proxima and Wipro….
  • ….challenged by Capita, Aquanima, Corbus, Cognizant, HCL, 4C, WNS-Denali and Capgemini
  • The U.S. S&P BPO market is led by Accenture and IBM followed by GEP, Genpact, TCS, Wipro, Infosys and Corbus….
  • ….followed by Proxima, Cognizant, HCL, WNS-Denali and Aquanima
  • The EMEA market is led by Accenture, challenged by IBM and GEP, then Proxima, Genpact, Capita, 4C and Wipro….
  • ….followed by Infosys, Aquanima, TCS, Cognizant, Capgemini and Corbus
  • The APAC market is dominated by Accenture, IBM and Infosys
  • S&P BPO activity in LATAM is currently small scale, led by GEP, Aquanima and TCS
  • 6. Vendor Offerings
  • Next generation S&P contract pricing models are typically based on five models
  • …..through sourcing support services including category, contract,
  • Sourcing support function includes these processes:
  • …..to procurement transaction processing services ranging from PR processing to supplier master data management
  • Procurement transaction processing function includes these processes:
  • 7. Delivery in Next Generation S&P
  • 79% of S&P BPO delivery personnel are based offshore, predominantly in India ….
  • ….though a few vendors with a lower transactional emphasis retain delivery largely onshore….
  • …. with category management & strategic sourcing services largely delivered from onshore
  • S&P vendors’ global delivery locations are very heavily concentrated in India…..
  • …..with N.Y. tri-state and Chicago as primary U.S. locations
  • Vendors operate a tool box of proprietary and external tools and frameworks to deliver S&P services
  • Vendors have well established proprietary tools for a range of S&P services
  • The use of RPA, AI and cognitive learning is being used today by some vendors to automate S&P services
  • RPA & Auto-bots are being used to:
  • AI is being used for:
  • Cognitive learning is being applied to:
  • 8. Challenges and Success Factors
  • Key vendor selection criteria are the ability to transform S&P, deliver cost savings, optimize processes, and ‘millenialize’ the end-user experience…
  • Ability to deliver procurement transformation and sourcing consulting projects:
  • Ability to implement cost savings programs:
  • Ability to provide S&P process optimization:
  • Ability to achieve customer experience optimization:
  • …while the biggest challenges for S&P services vendors are the lack of executive buy-in for transformational projects, and maintaining clean, up-to-date spend data to support analytics
  • Challenges:
  • The main success factors for S&P service vendors are the capability to deliver cost savings while enhancing the customer experience
  • Appendix I
  • Vendors researched for analysis

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