LONDON--(BUSINESS WIRE)--Technavio analysts forecast the global procure-to-pay (P2P) outsourcing market to grow at a CAGR of 15.77% during the forecast period, according to their latest report.
The research study covers the present scenario and growth prospects of the global procure-to-pay outsourcing market for 2016-2020. To calculate the market size, the report considers revenue generated from P2P outsourcing vendors in the market and total contract value (TCV) of P2P outsourcing deals.
Technavio ICT analysts highlight the following four factors that are contributing to the growth of the global procure-to-pay outsourcing market:
- Cut costs in procurement process
- Modernization of indirect procurement process
- Risk management practices for P2P outsourcing contracts
- Need to automate end-to-end P2P process
Cut costs in procurement process
Technavio believes cost reduction is a vital factor to the adoption of P2P outsourcing solutions among organizations. Procurement managers face challenges in the effective management of P2P processes due to increased complexities and manual errors in the supply chain systems. IT and BPO outsourcing decisions are strategic in organizations, which consider many factors such as regulatory and compliance standards and quality improvement in the end-to-end procurement process. These factors are crucial to organizations to get high returns on investment (ROI) from investment outsourcing services. Companies incorporating the strategy to outsource business processes do not require capital investment in infrastructure.
According to Amit Sharma, a lead analyst at Technavio for research on ITO and BPO sector, “The outsourcing of business processes helps firms to gain access to local talent, advanced technologies, and skilled workforces. Also, client firms can improve their economical cost structure as they do not have to pay for extra office space, equipment, or specialist employees. They also do not need to invest in in-house staff training.”
Modernization of indirect procurement process
Organizations are modernizing their indirect procurement processes to achieve cost reduction and add value to the bottom line. Indirect procurement costs account for 35%-55% of the total spend of organizations in their business life cycle. Outsourcing of indirect procurement functions can save significant amounts of money as well as increase the bottom line. Every dollar that is unnecessarily wasted on indirect procurement can be saved for organizations to improve profitability.
Firms invest in procurement outsourcing solutions that can help them increase visibility in the procurement process, improve customer service, and allow seamless integration with the existing enterprise systems. Leading vendors in the market such as Infosys help clients in the utilities sector to reduce their indirect procurement cost by 4%-14%. Similarly, other vendors also offer IT outsourcing solutions that can help organizations reduce costs of indirect spend by modernizing their indirect procurement process.
Risk management practices for P2P outsourcing contracts
Outsourcing contracts help organizations to establish a transparent work structure and long-term relationships. In contract services, service providers are compelled to reduce the risks involved in quality measure and analysis of the spending pattern. They need to adhere to compliance capabilities in the areas of market research, risk measurement, and analytics. These compelling factors have forced services providers to take corrective steps as per requirements. Moreover, this enables outsourcing vendors to deliver more value-added services at the same price.
“As procurement is one of the most important sections of the finance department, it faces significant pressure to add more features at the same cost. Service providers can leverage the benefits of their resources to create efficient staffing for business processes for multiple clients,” says Amit.
Need to automate end-to-end P2P process
P2P outsourcing solutions help organizations to automate procurement activities such as invoice management systems, electronic requisitioning process, order management process, and other procurement-related activities. In the past, organizations managed procurement processes through manual systems. Organizations that have used manual systems to manage procurement activities faced difficulties and incurred loss at various stages of the procurement process.
Manual systems in the procurement process do not have the required capabilities to match correct invoices that are generated for billing purpose. The increased number of manual errors in the supply chain systems has compelled organizations to use automated systems for invoice processing and e-procurement services. Automated IT systems implemented in the P2P process enable organizations to control the entire procurement activity through a centralized system. The demand for automation has increased in a bid to control the end-to-end SCM systems.
Browse Related Reports:
- Global S2P Outsourcing Market 2015-2019
- Global General and Administrative Outsourcing Market 2016-2020
- Global Healthcare Business Process Outsourcing Market 2016-2020
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