Double-digit procurement outsourcing growth is expected, as CPOs leverage service provider innovation to tackle complexity of next-gen demands.
The roles and responsibilities of the chief procurement officer (CPO) are changing—from back-office operations leader responsible for minimizing procurement expenses to a digitally-enabled C-suite member improving business outcomes and customer experience, according to new research from Everest Group.
Procurement has become deeply complex. Whereas the traditional focus areas of CPOs have been cost reduction, risk mitigation and supplier performance evaluation, the next-generation focus areas of CPOs are business partnering to enhance outcomes, digital enablement to improve the interface between procurement teams and other stakeholders, and maximizing value through supplier innovation.
“CPOs are being asked to move beyond cost containment to become contributors to corporate growth,” said Shirley Hung, vice president at Everest Group. “To respond to this mandate, CPOs must lead their teams and tap the expertise of third-party service providers to revamp processes, implement digital solutions, evolve recruiting strategies, and redefine what it means to be a successful procurement organization. As a result, we expect procurement outsourcing to sustain double-digit growth for the next two years.”
According to Everest Group, the “next generation CPO” must focus on four imperatives to stay relevant:
- Process transformation: Redesign current processes and streamline them as per the evolving digital landscape.
- Digital interventions: Implement digital levers such as Robotic Process Automation (RPA), analytics, and AI to drive efficiencies, cost savings, and enhance customer experience.
- Talent Management: Realign hiring and training strategies to keep the talent pool updated.
- Change in Metrics to Measure Success: Revise key metrics used for measuring success—key performance indicators (KPIs) and service level agreements (SLAs)—to focus more on outcome-based business metrics.
These insights and recommendations are detailed in a recently published Everest Group report: “Procurement Outsourcing (PO) Annual Report 2019: Evolving Imperatives for Procurement and What a Chief Procurement Officer (CPO) Should do to Remain Relevant.”
The report also provides comprehensive coverage of the global PO market including detailed analysis of market size and growth, buyer adoption trends, key emerging themes, and service provider landscape.
Other key findings:
- The global multi-process Procurement Outsourcing (PO) market is expected to witness a growth of 11-12 percent in the next three years to reach US $3.6 billion in size by 2020.
- Global growth dynamics vary significantly, with North America continuing to lead the market and emerging geographies such as Asia Pacific, Latin America, and Middle East and Africa witnessing the highest year-on-year growth in 2018.
- The market is dominated by a limited set of players. Accenture, IBM and GEP continue to command more than 50% share of the market.
- Each geography and vertical has a different set of leading service providers in terms of market share. Accenture is the only service provider to appear in the top five service providers across all regions and industries.
About Everest Group
Everest Group is a consulting and research firm focused on strategic IT, business services, engineering services, and sourcing. We are trusted advisors to senior executives of leading enterprises, providers, and investors. Our firm helps clients improve operational and financial performance through a hands-on process that supports them in making well-informed decisions that deliver high-impact results and achieve sustained value. Our insight and guidance empowers clients to improve organizational efficiency, effectiveness, agility and responsiveness. What sets Everest Group apart is the integration of deep sourcing knowledge, problem-solving skills and original research. Details and in-depth content are available at https://www.everestgrp.com.