Procurement outsourcing has garnered significant attention in the BPO sector. This is due to the fact that in comparison to the other fields, it has a greater degree of impact on an organization. This area of outsourcing has been least understood but there has been an increased awareness of the benefits this can bring to companies. Procurement outsourcing leads to effective business operations. However, enterprises face several constraints in this field. In the case of procurement outsourcing challenges, industry trends have been the main driver of growth.
Procurement is considered to be a vital business function. Organizations face several risks in this direction. The integrity of contracts may be compromised when procurement is outsourced. Vendor relationships may also be put at risk. This diminishes the role of procurement to a less strategic function within companies.
With respect to emerging trends in this scenario, these factors play a crucial role when planning strategies for procurement outsourcing. Due to procurement outsourcing challenges, industry leaders are often reluctant to make a full commitment to this business strategy.
Procurement outsourcing challenges: Industry hurdles and the future
Buyers focus on the application of technology rather than looking towards the BPO sector for offloading procurement tasks. In addition, in the event of procurement outsourcing challenges, industry trends dictate further strategies to be followed in this direction. Outdated skill sets and insufficient resources have been the major constraints faced by procurement organizations. Budget cuts force Chief Procurement Officers (CPOs) to prioritize efforts and make do with less.
Service providers in the BPO sector can find a way out of the situation by providing a faster path towards knowledge-driven operations, thereby leading to excellence in service delivery. A report prepared by Technavio, the leading advisory on technological prospects and market research, forecasts that the procurement outsourcing market is expected to register a CAGR of 23.14% for the period 2012–2016, at the global level. According to this report, a major factor that contributes to this rate of growth is the significant reduction in cost.
In the BPO sector, procurement is going through a phase of changing price models. The lack of understanding in this domain is one of the procurement outsourcing challenges; industry experts consider this as a hurdle in the way of successful business operations.
The BPO sector has to cross many bridges to deliver efficient procurement services. One of the main challenges is the mindset of companies that refuse to make a full commitment to this process. However, new trends in the industry have been a driving force of growth for this sector. The emerging prospects are expected to move procurement outsourcing towards a journey of progress and development.