Direct procurement spend is considered a source of competitive advantage and is typically managed in-house. Consequently, most procurement outsourcing engagements tend to focus on indirect spend which is typically under-invested from a people, process, and technology standpoint. However, with increasing maturity of PO solutions, outsourcing of direct spend is witnessing an increase in adoption.
In this study, we analyze the role of PO in managing direct spend categories. We focus on:
Key differences between direct and indirect spend
Market size, adoption trends, and service provider investments related to direct spend outsourcing
Models for leveraging PO to optimize direct spend
Drivers, challenges, and best practices
SCOPE OF ANALYSIS
Analysis of 330+ multi-process PO contracts signed as of 2011 by 15+ service providers including Accenture, Capgemini, Corbus, DSSI, Genpact, GEP, HCMWorks, HCL, HP, IBM, Infosys, Procurian, Proxima, TCS, Wipro, and Xchanging
Vertical Industry Strategies in Shared Services & Outsourcing (VISSSO) survey conducted in Q1 2012 with over 85 enterprise responses for sourcing and procurement
CONTENT
Some of the findings in this report, among others, are:
Over 85% of the spend managed by third-party PO service providers is indirect in nature
Direct spend category has shown significant increase in inclusion in 2010-2011
U.S.-based companies in goods-producing industries lead PO adoption with direct spending in scope
PO service providers are making significant investments in building direct spend procurement capabilities
Note: this report is from 2012. See our most recent R2R research report.
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