by Procurement outsourcing refers to the process of obtaining goods and services required by an organization from external suppliers and vendors, in a structured and streamlined manner. It helps businesses free up capital, reduce costs and complexity, while focusing internal resources on core competencies. The procurement outsourcing market comprises services such as supply chain management, category management, procurement application management, transaction management, and supplier management. Procurement outsourcing helps organizations achieve operational excellence and cost optimization. With blockchain technology integration, procurement data and transactions can be tracked and validated in a decentralized digital ledger, enabling transparency, security and efficiency gains.
The Global Procurement Outsourcing Market is estimated to be valued at US$ 25.15 Bn in 2024 and is expected to exhibit a CAGR of 8.9% over the forecast period 2024 To 2031.
Key Takeaways
Key players operating in the Procurement Outsourcing are 3M, Cardinal Health, Smith+Nephew, Genadyne, DeRoyal Industries, Inc., Medela AG, Convatec Inc., Mölnlycke Health Care AB, PAUL HARTMANN AG, ATMOS MedizinTechnik GmbH & Co. KG, Talley Group Ltd, Cork Medical, LLC, and Devon Medical Products. These players are focusing on enhancing their procurement capabilities and service offerings with new technologies.
The growing need for cost optimization and increasing focus on core business processes present huge opportunities for players in the procurement outsourcing market. Outsourcing non-core procurement activities helps businesses improve efficiency.
Blockchain implementation in Procurement Outsourcing Market Size enables transparency in transactions, data validation, tracking provenance, and reduces compliance costs. It is emerging as a core transformational technology in this market.
Market Drivers
The main driver for the procurement outsourcing market is the growing need among organizations to optimize costs and streamline procurement processes. By outsourcing non-core procurement activities to specialized third-party providers, businesses are able to achieve significant cost savings while focusing on their core operations. Streamlined procurement also improves efficiency, compliance and supplier relationships. These factors are expected to significantly drive the demand for procurement outsourcing over the forecast period.
Current Challenges in Procurement Outsourcing Market
The procurement outsourcing market is facing many challenges such as data security concerns, control loss over core business processes, and issues in change management. As companies are sharing sensitive supply chain and operations data with third-party service providers, there are risks of data breaches and leakage. Ensuring security of mission critical data is a major issue for enterprises. Outsourcing key procurement activities also means loss of control over certain processes. Managing change during transition and contract periods is another challenge. Suppliers need to carefully address these concerns through strong contractual agreements, seamless integration, and robust security policies.
SWOT Analysis
Strength: Cost optimization and economies of scale achievable through outsourcing. Experienced third-party vendors can leverage expertise and technologies.
Weakness: Overdependence on vendors and loss of in-house capabilities. Transition and change management issues during outsourcing.
Opportunity: Scope for innovative digital solutions in procurement. Outsourcing helps focus on core business areas.
Threats: Economic and political uncertainties impact outsourcing markets. Security and compliance risks related to data sharing.
Geographical Regions
North America accounts for the largest share in the procurement outsourcing market currently due to high outsourcing rates. The region contributes over 35% to the global market value. Asia Pacific region is expected to witness the fastest growth during the forecast period. Availability of low-cost skilled resources and growing digital transformation are driving outsourcing in countries like India and China.
The Asia Pacific region is emerging as the fastest growing geographical segment in the procurement outsourcing market. China, India, Japan, and Singapore are major markets owing to rapid economic growth, outsourcing friendly policies, and expanding healthcare infrastructure. Cost advantages and skilled workforce availability are promoting third party procurement services in Asia Pacific.
*Note:
1.Source: Coherent Market Insights, Public sources, Desk research
2.We have leveraged AI tools to mine information and compile it
About Author - Ravina Pandya
Ravina Pandya,a content writer, has a strong foothold in the market research industry. She specializes in writing well-researched articles from different industries, including food and beverages, information and technology, healthcare, chemicals and materials, etc. With an MBA in E-commerce, she has expertise in SEO-optimized content that resonates with industry professionals. LinkedIn Profile
