The economic downturn will fuel a growth in procurement outsourcing (PO) during 2009 and beyond, according to studies.
A recent report by the Everest Research Institute, part of the consultancy Everest Group, found the PO market will reach the $1 billion mark in contract value this year. The research firm said growing cost pressures will drive a 30 per cent year-on-year growth in the field as businesses adopt a "phased approach" to outsourcing.
According to a separate review by NelsonHall last month the size of the market for all aspects of outsourced purchasing is expected to increase from $710 million in 2008 to just under $1.7 billion by 2012. It said companies¡¯ PO projects would be ¡°spurred by the global economic downturn¡± as they attempt to cut costs.
In addition, delegates at a PO roundtable in London last year agreed the financial crisis could boost outsourced purchasing.
Buyers including David Natoff, head of global supplier sourcing, finance operations at Google and Simon Lee-Smith, group supply director at telecommunications firm O2, said increased demand on their teams' resources and additional savings pressures meant outsourcing elements of purchasing operations provided clear benefits. Firms such as O2, financial services giant Prudential, mining firm Rio Tinto and food producer Birds Eye, signed major PO deals last year for categories including utilities, IT and HR.
PO companies are also set to attract some of the best procurement talent, according to Everest Group. The firm said a combination of better pay and higher profile positions will enable them to employ the best and most experienced buyers.
