Procurement outsourcing services in the UK had recorded a slow rate of growth in recent years. The procurement industry is expected to make a comeback in 2013. The growth had slowed down for five years until 2012-13. An anticipated recovery in the outsourcing business will fuel the growth of revenue in this sector.
By outsourcing procurement services, departments can focus more on strategic spending and manage suppliers leveraging non-strategic spending. This enables upgrading service levels as well as improving the links between procurement and business operations. The tools and processes that go into non-central functions are outsourced, which help in keeping the focus on essential functions. In addition, it relieves companies from the liability of maintaining support staff. Procurement outsourcing companies typically make use of their internal infrastructure to provide services in this area.
The procurement outsourcing sector faced several challenges under the shadow of a shrinking economy for the past five years until 2012-13. The revenue gained from the industry is calculated to decrease at an annual rate of 1.1% reaching £2.53bn. The market dropped with the fall in the number of businesses in the UK. This put the rest of the businesses on guard, which resulted in fewer numbers of investments in the procurement outsourcing sector. This led to a reduced demand for these services. The trend is expected to reverse, and growth in this industry is expected to take off in the year 2013.
Procurement Outsourcing Revenue set to record higher growth
Businesses have been inclined to outsource procurement functions in the face of stiff competition and for achieving greater efficiencies. The higher rate of adoption of telecommunications and IT into business operations has also led to effortless methods for procurement outsourcing functions.
The growth in revenue for the industry is expected at a rate of 3.2% in 2012-2013. The widespread practice of outsourcing followed by businesses, in order to achieve higher efficiency will boost the industry’s growth in revenue. The demand for procurement outsourcing services in the UK will also be backed by an anticipated expansion with regard to capital expenditure in the private sector, in the year 2013.
Healthier growth is expected for the procurement outsourcing industry in the following five years, 2017-2018. It is predicted that business confidence will improve over this period. This in turn will have a positive impact on procurement operations, and a majority of the processes will be outsourced to the industry. Higher demands and expertise will raise profits, ultimately boosting the prospects of this service sector.