Procurement As A Service Market Size, Share & Trends Analysis Report By Component (Strategic Sourcing, Category Management), By Organization, By Vertical, By Region, And Segment Forecasts, 2021 - 2028

Report Overview

The global procurement as a service market size was valued at USD 5.78 billion in 2020 and is expected to expand at a compound annual growth rate (CAGR) of 8.2% from 2021 to 2028. As businesses worldwide grapple with the impact of the COVID-19 pandemic, the demand for services to mitigate supply risks, optimizing working capital and cash flow while maintaining profitability will gain prominence. These uncertain times will probably favor the market growth over the forecast period. Although the pandemic impacted demand in the second quarter of 2020, with businesses shutting down manufacturing activities amid lockdown restrictions and enterprises cutting down costs, they recovered marginally in 2021. The market will reach pre-COVID levels by the end of 2022, with the resumption of business activities near normal.

An outsource procurement model with expertise to handle organizations' procurement activities using technology is procurement as a service. Today, several organizations rely heavily on digital technology to undertake sourcing and procurement functions while tracking payments and purchases. The application of digital technologies to automate processes is gaining traction, and the trend will favor the market growth over the forecast period. The integration of technology that enables strategic sourcing and supplier management to become predictive and proactive will play a key role in reducing operating costs. As a service provider, the job of procurement is to ensure utilizing the latest technology to help enterprises predict better in terms of sourcing and procurement will upkeep the demand over the forecast period.

The need to improve procurement function with the aid of new technologies on the block will play a pivotal role in boosting demand over the next few years. As supply chains globally focus on modernizing processes to ensure productivity and improve business operations, the demand for procurement as a service will grow. The scale of the current pandemic is a wake-up call for service providers as the traditional procurement models are no longer feasible. This is because the crisis in the past was mainly limited to a specific region/country. However, the recent pandemic has paralyzed businesses worldwide, impacting both B2B and B2C enterprises. In light of this situation, the priority of global procurement service providers has shifted from running negotiation contracts or sourcing processes to partnering with businesses to ensure the short and long-term business continuity of their clients.

Similarly, on the demand end, the awareness regarding procurement processes and services among enterprises has increased manifold over the last couple of years. Custom services offerings have become a unique selling point for service providers, favoring procurement as a service market growth. For instance, vendors like Tradeshift and SAP aim to build an individual supplier network, e-procurement, and procure-to-pay solutions for their customers. Therefore, growing customer awareness towards advances in procurement functions will bode well for future growth.

Component Insights

Category management, strategic sourcing, contract management, spend management, transaction management, and process management are critical components of the procurement as a service model. Strategic sourcing captured a sizeable market share in 2020, followed by transaction management.

Strategic sourcing helps organizations ineffective execution of their sourcing strategies and save money. In the procurement world, challenges such as the COVID-19 pandemic, international political unrest, or natural disasters can bore a long-lasting impact on businesses. Therefore, sourcing strategy forms a critical component for all businesses alike. With deep-level analysis of internal processes, supplier performance, and supply markets, strategic sourcing helps businesses meet efficiency and performance goals. The segment is anticipated to register a CAGR exceeding 5% over the forecast period.

Transaction management is anticipated to surpass USD 2 billion by 2028. Sourcing transaction management helps end-users increase business profitability while engaging suppliers in ethical and long-term business relationships. Transaction management includes price & terms, purchase order, delivery, invoicing, etc. In recent times, automation has also made in-roads to transactional management, creating growth opportunities. Market vendors help enterprises understand the complex dynamics of a commercial transaction environment and tailers offerings to suit specific needs. These options providing customization will also help upkeep market demand over the future.

Organization Insights

The demand for procurement as a service among large enterprises accounted for over 70% of the revenue share in 2020. However, the demand from SMEs is gaining traction, with the segment registering over 9% CAGR from 2021 to 2028. Awareness and the need to manage supply risks is urging small businesses to adopt these services, a trend expected to continue over the next seven years

Large enterprises with a plan to manage complex procurement contracts and bag deals will continue to invest in these services, subsequently capturing a high portion of the overall revenue share. Minimizing operational costs while eliminating business complexities makes these services a popular choice among large enterprises. The segment is estimated to register a CAGR exceeding 5% from 2021 to 2028. However, in large enterprises, integration issues due to legacy systems will pose a challenge.

Vertical Insights

Procurement as a service finds applications in the BFSI, retail, IT and telecom, manufacturing, and the healthcare sector, among others. The demand in the manufacturing sector was highest, with the segment capturing over 20% of the overall revenue share in 2020. Managing supply chains with shorter lead times will contribute largely to the segment growth. Manufacturing will continue to be to the highest demand driver for the market till 2028. The services in the manufacturing sector will focus on improving supply chain dynamics in relation to direct inputs and raw materials.

The retail sector accounted for a decent share in 2020, with a market size exceeding USD 800 million in the same year. The retail sector is customer-oriented, characterized by dynamic industry trends stemming from evolving customer requirements and spending patterns. In the retail environment, these services help align several operations while maximizing returns on investment. Further, with the integration of newer technologies such as Artificial Intelligence (AI) and Machine Learning (ML), the procurement service offerings will provide many additional service features, including analytics to the end-user, subsequently creating avenues for future growth. In addition to new technologies, unprecedented growth in the e-commerce sector in light of the pandemic will also favor market growth in the long run.

Regional Insights

Europe led the global market for procurement as a service capturing over 40% of the overall revenue share in 2020; however, North America will overtake the EU by 2028 in terms of revenue, registering a CAGR exceeding 8% from 2021 to 2028. Rapid technology uptake will be responsible for a positive future outlook for North America. Europe has reached maturity with expected modest growth over the forecast period. An early focus on streamlining supply chain processes while being a hub for manufacturing will continue contributing to market dominance till 2023.

Latin America over the forecast tenure will register an estimated CAGR exceeding 9%. A surge in the number of organizations with new business ventures holding ground in emerging economies of the region will contribute considerably to the market growth over the forecast period. However, 2020 was a difficult year with countries like Brazil being the hardest hit amid the COVID-19 pandemic. Going forward as the situation improves, the demand for procurement as a service will recover, favoring growth.

Key Companies & Market Share Insights

Providing custom and industry-specific solutions will be a long-term strategy for most vendors in the procurement as a service industry. Mergers and acquisitions will continue to be a key growth strategy to capture regional expertise and know-how while gaining market share. M&A strategies are focused on strengthening the company’s competency in offering supply chain transformation to businesses. The companies also continue collaborating with suppliers, address cross-functional business decisions, to simplify compliance requirements. Some of the prominent players operating in the global procurement as a service market are:

• Accenture

• HCL Technologies Ltd

• Aegis

• GEP

• IBM

• Infosys

• Genpact

• Wipro

• WNS (Holdings) Ltd.

• Tata Consultancy Services Limited

Procurement As A Service Market 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 2016to 2028. For this study, Grand View Research has segmented the global procurement as a service market report based on component, organization, vertical, and region:

• Component Outlook (Revenue, USD Million, 2016 - 2028)

  • Strategic Sourcing

  • Spend Management

  • Process Management

  • Category Management

  • Contract Management

  • Transaction Management

• Organization Outlook (Revenue, USD Million, 2016 - 2028)

  • SMEs

  • Large Enterprises

• Vertical Outlook (Revenue, USD Million, 2016 - 2028)

  • BFSI

  • Manufacturing

  • Retail

  • IT & Telecom

  • Healthcare

  • Others

• Regional Outlook (Revenue, USD Million, 2016 - 2028)

  • North America

    • U.S.

    • Canada

  • Europe

    • U.K.

    • Germany

  • Asia Pacific

    • China

    • India

    • Japan

  • Latin America

    • Brazil

    • Mexico

  • Middle East & Africa