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Procurement as a service encompasses outsourcing procurement functions to third-party service providers, enabling companies to reduce costs and enhance efficiency. Services offered under procurement as a service include sourcing, supplier management, contract management, spend analysis, and procurement advisory. It helps companies focus on core business areas while service providers leverage their expertise and economies of scale to handle procurement activities. The global procurement as a service market is driven by benefits such as streamlined workflows, improved compliance, access to specialized skills and technologies, and lowered total cost of ownership for procurement processes.
The Global Procurement as a Service Market is estimated to be valued at US$ 15.12 Billion in 2024 and is expected to exhibit a CAGR of 11% over the forecast period 2024 to 2031. Key Takeaways
Key players operating in the procurement as a service are Accenture plc, Aegis One Consults Ltd, CA Technologies, Capgemini, Corbus India LLP, F-code, GEP, Genpact, HCL Technologies Limited, IBM Corporation, Infosys Limited, Proxima Group, Simfoni Limited, Tata Consultancy Services (TCS), Wipro. Rising demand from industries such as manufacturing, retail, transportation, energy & utilities is fueling market growth as they adopt procurement as a service solutions to reduce costs and increase efficiency. Additionally, expansion of service providers into emerging markets of Asia Pacific, Latin America, and Middle East & Africa through partnerships and acquisitions is further propelling the procurement as a service market.
Market Key Trends
One of the key trends gaining traction in the procurement as a service market is the increased adoption of artificial intelligence and machine learning powered solutions for strategic sourcing. AI-enabled solutions help identify optimized suppliers, analyze past spending patterns, predict future costs, and develop smarter procurement strategies. This is allowing organizations to enhance savings, streamline negotiations, and gain real-time visibility into supplier performance. For instance, Genpact’s procurement solutions leverage AI to eliminate non-value added activities, enable self-service optimization, and automate tactical sourcing decisions.
Porter’s Analysis
Threat of new entrants: New firms can enter the procurement as a service market relatively easily as the investment required is relatively low. However, established players have built strong relationships with clients and have procurement expertise that may deter new entrants.
Bargaining power of buyers: Buyers have significant bargaining power in the procurement as a service market due to the presence of many service providers. Buyers can negotiate on price and switch between vendors.
Bargaining power of suppliers: A few large providers account for the majority of the market. This gives them significant influence over prices and terms of transactions.
Threat of new substitutes: Cloud-based solutions provide an alternative to traditional on-premise procurement software. However, these still require specialized procurement expertise that service providers offer.
Competitive rivalry: The market is highly fragmented with the top players accounting for less than 25% share. Players compete based on capabilities, experience, technology offerings and pricing.
Geographical Regions
North America accounts for the largest share of the procurement as a service market currently due to early adoption. The region is expected to continue its dominance over the forecast period due to digital transformation initiatives among enterprises.
The Asia Pacific region is expected to grow at the fastest pace due to increasing spends on procurement digitalization and growing adoption of cloud technologies among businesses in countries like China, India and Japan. Rapid economic growth and rising spends on technology in key Asia Pacific markets are driving the growth of procurement as a service.
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About Author:
Ravina Pandya, 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, chemical and materials, etc. (https://www.linkedin.com/in/ravina-pandya-1a3984191)
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