Procurement BPO Deal Analysis Reveals Vibrant Market Activity, IDC Finds
FRAMINGHAM, Mass.–(BUSINESS WIRE)–Sept. 26, 2005–A newly released IDC study of worldwide procurement business process outsourcing (BPO) contracts signed by U.S. providers reveals that the procurement BPO market is much larger than public deal announcements alone indicate. While only 50 procurement BPO deals have been publicly disclosed by U.S.-based providers over time, IDC’s exploration of the market has uncovered a much larger body of contracts that is well over twice the size of the announced contract pool.
“The procurement BPO market has steadily expanded over the years, experiencing growth well above that indicated by publicly-known contracts alone,” said Shruti Yadav, research analyst for IDC’s global BPO Services program. “In this study, IDC has dissected deal activity and uncovered trends around the kinds of organizations, vendors, and market dynamics that have contributed to growth over the years.”
The report traces the evolution of the increasingly-vibrant procurement BPO market since its beginnings in the late 1990s, and examines the impact of various vendors, industries, and customers on the scope and nature of procurement outsourcing activity today. The analysis focuses on deals signed by U.S.-based providers with client organizations both in the U.S. and abroad. Highlights from IDC’s study include the following:
– Large organizations with more than 1000 employees have accounted for a resounding majority of total contracts announced.
– The manufacturing industry dominates much of the known procurement BPO deal activity of U.S. vendors. Financial services, retail, and wholesale companies rank next in terms of their contributions to procurement BPO contracts.
– The most common business drivers fueling procurement outsourcing are the need to redirect focus on core competencies, reduce costs, standardize processes and technology, and grapple with rapid growth.
“The robust year-over-year increase in the number of discrete procurement BPO contracts being signed by key vendors is a leading indicator of market advancement and in itself warrants an analysis of the evolving nature of this space,” Yadav adds. “The scope of procurement outsourcing arrangements is expanding as well — as reflected in the volumes of spend managed, the longevity of the engagements, the breadth and diversity of categories under management, and the tighter links between the outsourcing move and overarching corporate strategy.”
The IDC study, Procurement BPO Contracts Analysis: A Study of Evolving Deal Activity (IDC #33832), analyzes the major procurement BPO contracts signed by U.S. providers since 1997 - the year in which the first such contracts were announced. IDC views the following aspects of procurement BPO engagements: contract distribution by company size, category of vendor, vertical industry, scope of engagement, and additional key factors. This study also investigates key adoption trends and drivers, the top categories of industries and organizations at the forefront of adoption, and the evolving composition and characteristics of procurement BPO engagements themselves. Future outlooks of the evolving market and essential guidance for vendors are also provided.
To purchase this document, call IDC’s Sales hotline at 508-988-7988 or email sales@idc.com.
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