Procurement As A Service Market Size, Share & Trends Analysis Report By Component (Strategic Sourcing, Category Management, Contract Management), By Organization, By Vertical, By Region, And Segment Forecasts, 2019 - 2025

Industry Insights

The global procurement as a service market size was valued at USD 5.7 billion in 2018 and is anticipated to register a CAGR of 7.3% from 2019 to 2025. Procurement as a service is an outsourced procurement model that uses a combination of expertise to handle the procurement function of an organization along with technology. A large number of organizations rely on digital technology to carry out procurement and sourcing functions as well as track payments and purchases. Digital procurement is the application of disruptive technologies in order to enable automation of transactional procurement. It further helps processes like strategic sourcing to become predictive and supplier management to become proactive, thereby reducing operational costs. Majority of the procurement as a service providers are also offering reporting portal to their consumers to ensure transparency in the process.

A growing need for improving procurement function, coupled with increasing penetration of advanced technologies across different industry verticals, is expected to boost the market growth. In a highly competitive environment, supply chains around the world are modernizing processes to ensure productivity and enhance business operations. As the supply chain is a core component in the manufacturing sector, it is anticipated to drive high demand for procurement as a service function to maintain market competitiveness.

The awareness about the procurement process among organizations has increased over the past years. With the advent of customized offerings, service providers are making continuous efforts to shift their business offerings to the “as-a-service” model. As consumers become more aware of advanced procurement functions in their respective business, they are anticipated to look for providers that offer robust procurement service model. Procurement technology vendors such as Tradeshift and SAP are building individual suppliers network, procure-to-pay, and e-procurement solutions. Thus, consumers can swiftly deploy e-procurement solutions and gain benefits by reducing time to market the products.

Managing indirect spending is complex in nature and is labor intensive within the organizations. It includes the sourcing of complex goods and services such as professional services, IT services, facilities management, and marketing. Procurement as a service helps an organization in choosing such categories for sourcing and assigns them with experts to handle purchasing. As a result, enterprises can effectively manage business operation, track purchases, and payments. With procurement as a service delivery model, companies will have access to subject matter expertise and technology that will be delivered on-demand. Thus, enterprises only pay for services and technology, they use.

The use of intelligent automation happens to be one of the major advancements within the procurement transformation process. Intelligent automation coupled with procurement as a service would help in digitizing and reinventing processes to reach new levels. Thus, delivering improved efficiency and enhanced experience to a user. For instance, Accenture’s procurement as a service clients are benefitting from intelligent automation through its cloud-based Source-to-Pay platform, Radix, in which intelligent automation is embedded. Automation enabled analytics plays a crucial role in increasing the speed, effectiveness, and accuracy of the workflow in order to accelerate outcomes.

Component Insights

Based on component, the market is segmented into strategic sourcing, category management, spend management, contract management, process management, and transaction management. The strategic sourcing segment accounted for the largest market share in 2018 and is expected to dominate the market over the forecast period. The strategic sourcing involves the activities such as taking into account a company's external spend, using external spend information to formulate an overall strategy for the company's purchases. It also involves conducting the request for quotation or request for proposal process, negotiating prices with suppliers, and setting up contracts. Strategic sourcing helps organizations in effective execution of their sourcing strategies and save money.

Category management is anticipated to exhibit a healthy CAGR over the forecast period. It deals with direct supervision of each category of an organization’s spending. It involves managing contracts and governing procurement for each category, and ensuring compliance with these contracts. It also monitors supplier performance and helps in resolving any problems that arise with suppliers. Besides, it involves regular reporting of spend patterns within each category, which allows an organization to maintain the latest information on spending.

Organization Insights

Based on organization, the procurement as a service market is segmented into SMEs and large enterprises. The large enterprises segment accounted for largest share of the market in 2018. However, the SMEs segment is expected to gain momentum over the forecast period. The growing awareness regarding the use of procurement as a service to eliminate expenditures associated with technology deployment and staff contracting is increasing among SMEs.

The need to manage complex procurement contracts is strengthening the growth of procurement as a service within the large enterprises segment. The large enterprises are rapidly moving towards procurement as a service to minimize operational costs and eliminate their complexities. Moreover, organizations operating in several verticals are adopting procurement as a service model to increase their productivity and efficiency. However, integration issues with legacy systems is one major factor anticipated to hinder the market growth.

Vertical Insights

Based on the vertical, the market can be segmented into BFSI, manufacturing, retail, IT and telecom, healthcare, and others. The manufacturing segment accounted for the largest market share in 2018 and is expected to continue to dominate the market over the forecast period. Growing demand for cost effectiveness in supply chain and of the need for shorter production times are key factors driving the market growth. Manufacturing vertical has been an early adopter of procurement outsourcing across the non-core spend. The focus in manufacturing is typically on creating and investing in a supply chain organization targeting on direct inputs and raw materials. 

Retail business operates in a customer-oriented environment to offer products that cater to dynamic market landscape. Procurement in retail deals with the process of selecting vendors, negotiation of contracts, establishing payment terms, and actual purchasing of goods. Adoption of procurement process in retail environment helps in streamlining of processes along with maximizing the overall return on investment. Furthermore, the advent of machine learning and artificial intelligence in the procurement has created opportunities for an organization to reduce operational costs, maximize efficiency, and accelerate their productivity gains. Besides, higher adoption of analytics solutions is anticipated to improve the process of procurement, thereby driving the market growth.

Regional Insights

The North America region accounted for the largest market share of over 46.0% in 2018, and it is expected to continue to dominate over the forecast period. Businesses in the region happens to be an early adopter of advanced technologies along with being a major hub for technological advancements. The European region accounts for the second-largest share for the market. Increasing awareness regarding streamlining of supply chain processes is one major factor driving the market growth in the region. With this, the organizations can move their focus towards sustainability. However, third party dependence and outages are substantial factors responsible for restraining the market growth.

The Latin America region is expected to register a highest CAGR over the forecast period. An increasing number of enterprises in the Latin America region are adopting procurement as a service and are transforming their business. For instance, SAP Ariba, is one of the largest business to business networks across the globe. In Mexico, Grupo Lala, one of the largest dairy company in the country, is using the Ariba Network along with a range of cloud-based applications to automate the sourcing processes, negotiate optimal contracts, and gain clear visibility into spend, across all categories.

Procurement as a Service Market Share Insights

Prominent participants in the market include Accenture, Aegis, HCL Technologies Ltd., IBM, GEP, Genpact, Infosys, Wipro, WNS (Holdings) Ltd., and Tata Consultancy Services Limited. The market leaders are focusing on providing diverse and customized solutions that cater to the needs of every consumer to gain more significant market share. Accenture, GEP, Infosys, Genpact, and WNS (Holdings) Ltd., happen to be the leading players in the market. Mergers and acquisitions are regularly practiced in this industry to strengthen competencies, extend geographical reach, and gain market share.

For instance, in November 2018, Accenture completed the acquisition of Intrigo Systems, systems integrator and advisory services provider for SAP enterprise and cloud solutions in procurement, supply chain, and e-commerce. The acquisition strengthened the former company’s competencies in delivering enterprises with procurement and supply chain transformations. This further helped in addressing cross functional business decisions, collaborating with suppliers, and simplifying the compliance.

Report Scope

Segments Covered in the Report

This report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2015 to 2025. For the purpose of this study, Grand View Research has segmented the global procurement as a service market report on the basis of component, organization, vertical, and region:

• Component Outlook (Revenue, USD Million, 2015 - 2025)

  • Strategic Sourcing

  • Spend Management

  • Process Management

  • Category Management

  • Contract Management

  • Transaction Management

• Organization Outlook (Revenue, USD Million, 2015 - 2025)

  • SMEs

  • Large Enterprises

• Vertical Outlook (Revenue, USD Million, 2015 - 2025)

  • BFSI

  • Manufacturing

  • Retail

  • IT & Telecom

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2015 - 2025)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa