The Indirect Procurement Outsourcing Market size was valued at USD 6.5 Billion in 2022 and is projected to reach USD 12.5 Billion by 2030, growing at a CAGR of 8.5% from 2024 to 2030.
The Indirect Procurement Outsourcing Market is a growing segment of the global supply chain industry, where businesses outsource the management and procurement of non-core goods and services. These indirect goods and services are typically not part of the end product but are essential for the operations and daily functioning of an organization. Indirect procurement outsourcing allows businesses to reduce costs, improve efficiency, and focus on core competencies. This market has expanded across several industries, with different sectors utilizing these services based on their needs. The major sectors include Consumer Packaged Goods (CPG) & Retail, BFSI (Banking, Financial Services, and Insurance), Manufacturing, Energy & Utilities, Hi-Tech & Telecom, Healthcare & Pharma, and Others.
The Consumer Packaged Goods (CPG) and Retail sector is one of the largest users of indirect procurement outsourcing services. CPG companies often face challenges with fluctuating demand, diverse product portfolios, and complex supply chains. By outsourcing indirect procurement functions such as logistics, packaging, marketing services, IT services, and office supplies, these companies can focus more on innovation, customer engagement, and brand development. Retailers also benefit from outsourcing tasks such as procurement of non-product materials, fleet management, and inventory management. This sector's dynamic nature requires agile procurement strategies, which outsourcing partners can deliver through advanced technology, expertise, and economies of scale. By partnering with external providers, companies in this sector can also gain insights into emerging trends and market dynamics, optimizing their overall procurement strategies.
The Banking, Financial Services, and Insurance (BFSI) sector relies heavily on efficient indirect procurement strategies to streamline operations and reduce costs. Indirect procurement activities in this sector include outsourcing services like technology support, administrative functions, and facilities management. Financial institutions also outsource procurement of marketing materials, training services, and legal support, which enables them to focus on their core financial operations. With growing regulatory pressures, the BFSI sector increasingly seeks the expertise of outsourcing firms to ensure compliance and manage risk effectively. Outsourcing allows these institutions to scale their operations and access the latest technology and systems without the capital investment. It also ensures operational efficiency, cost savings, and better alignment with evolving market demands.
The manufacturing sector involves complex supply chains and the management of both direct and indirect procurement needs. Indirect procurement outsourcing is becoming a common strategy for manufacturers to manage non-core operational requirements such as IT services, MRO (maintenance, repair, and operations) supplies, energy procurement, logistics, and HR services. By outsourcing these activities, manufacturers can focus on their production processes, improve their overall productivity, and reduce overhead costs. Additionally, manufacturers can benefit from the scalability and expertise of third-party providers in managing specialized tasks. Outsourcing in this sector enables companies to improve supply chain resilience, reduce risks, and achieve a more agile response to market changes, especially in times of economic uncertainty.
The Energy & Utilities sector is particularly suited for indirect procurement outsourcing due to the industry’s reliance on specialized equipment, services, and infrastructure. Outsourcing indirect procurement activities such as facilities management, IT services, safety and compliance services, and non-technical supply chain needs enables energy companies to streamline operations. By working with specialized outsourcing providers, these companies can gain access to advanced technologies, reduce operational costs, and improve service delivery. In the context of energy transition and sustainability goals, outsourcing can also help energy companies manage complex supply chains more effectively, ensuring that they can keep up with environmental regulations and demands for greater transparency. Moreover, outsourcing non-core tasks ensures that companies focus their attention on energy production, distribution, and regulatory compliance.
The Hi-Tech & Telecom industry has witnessed rapid advancements, requiring companies to manage increasingly complex procurement needs. Indirect procurement in this sector often involves outsourcing services related to IT, network management, software development, maintenance, and marketing services. Companies in this sector also outsource procurement of materials for hardware components, along with office supplies and facilities management. By outsourcing these activities, firms can focus on innovation, product development, and delivering cutting-edge technology solutions to the market. This also enables them to reduce costs, manage supply chain disruptions more effectively, and improve overall agility. Additionally, with technology and telecom companies constantly facing the need to update their infrastructure, outsourcing allows these firms to access expertise in managing and sourcing technological assets without significant internal investments.
The Healthcare and Pharmaceutical industries face unique procurement challenges due to regulatory compliance, supply chain complexities, and the constant need for innovation. Indirect procurement outsourcing in this sector includes services related to IT, facilities management, procurement of medical supplies, HR services, and legal support. Healthcare organizations and pharmaceutical companies leverage outsourcing to manage the procurement of non-core products and services, enabling them to focus on delivering healthcare services and advancing pharmaceutical research. By outsourcing, these organizations can gain access to specialized expertise, streamline procurement processes, and reduce costs. Additionally, outsourcing helps mitigate risks associated with regulatory compliance, supply chain disruptions, and the management of large, diverse inventories that are crucial to the functioning of healthcare facilities and pharmaceutical production plants.
The "Others" category in the indirect procurement outsourcing market encompasses various industries that do not fall under the main sectors mentioned above but still rely on outsourcing for non-core procurement activities. This category includes sectors such as education, transportation, government services, and more. In these sectors, outsourcing is used for functions such as administrative services, technology support, logistics, and procurement of general office supplies. By outsourcing indirect procurement functions, organizations can focus on their primary objectives while benefiting from cost savings, improved efficiency, and access to specialized expertise. The outsourcing market for these sectors is growing as organizations realize the value of external partnerships to drive business efficiency and manage procurement processes more effectively.
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By combining cutting-edge technology with conventional knowledge, the Indirect Procurement Outsourcing market is well known for its creative approach. Major participants prioritize high production standards, frequently highlighting energy efficiency and sustainability. Through innovative research, strategic alliances, and ongoing product development, these businesses control both domestic and foreign markets. Prominent manufacturers ensure regulatory compliance while giving priority to changing trends and customer requests. Their competitive advantage is frequently preserved by significant R&D expenditures and a strong emphasis on selling high-end goods worldwide.
IBM
Accenture
GEP
Infosys
Capgemini
Genpact
TCS
Xchanging
WNS
North America (United States, Canada, and Mexico, etc.)
Asia-Pacific (China, India, Japan, South Korea, and Australia, etc.)
Europe (Germany, United Kingdom, France, Italy, and Spain, etc.)
Latin America (Brazil, Argentina, and Colombia, etc.)
Middle East & Africa (Saudi Arabia, UAE, South Africa, and Egypt, etc.)
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Key trends in the indirect procurement outsourcing market include the growing adoption of digital technologies such as artificial intelligence (AI), automation, and cloud-based platforms. These technologies allow companies to streamline procurement processes, improve accuracy, and enhance decision-making. Additionally, the increasing demand for sustainability in procurement practices is driving companies to choose outsourcing partners that align with their environmental and social responsibility goals. Another notable trend is the shift toward integrated service models, where outsourcing providers offer a broader range of services to address multiple procurement needs within a single contract. The use of data analytics to optimize procurement strategies is also gaining traction, helping companies make more informed decisions based on real-time data. Lastly, the need for flexibility and scalability in procurement operations is encouraging companies to outsource more activities to stay competitive and responsive to market changes.
The indirect procurement outsourcing market presents several opportunities for growth, driven by companies' increasing focus on cost reduction and efficiency. As organizations continue to face pressure to manage their supply chains more effectively, the demand for outsourcing services that improve procurement processes will rise. Moreover, the growing adoption of advanced technologies like AI and blockchain in procurement activities offers new opportunities for innovation and service delivery improvements. Companies that provide specialized expertise, such as regulatory compliance or sustainability in procurement, can capitalize on the increasing demand for these services. Additionally, emerging markets in Asia-Pacific and Latin America offer untapped growth opportunities as organizations in these regions look to optimize their procurement processes. Companies can also explore opportunities to offer more flexible, customized outsourcing solutions that cater to the specific needs of different industries and sectors.
1. What is indirect procurement outsourcing?
Indirect procurement outsourcing refers to the outsourcing of non-core procurement activities like logistics, IT, facilities management, and office supplies to external providers.
2. Why do companies outsource indirect procurement functions?
Companies outsource indirect procurement to reduce costs, improve efficiency, and focus on their core business operations.
3. How does outsourcing improve procurement efficiency?
Outsourcing allows businesses to access specialized expertise and technologies, which helps optimize procurement processes and reduce operational complexity.
4. What are the benefits of indirect procurement outsourcing?
Benefits include cost savings, increased operational efficiency, access to specialized expertise, and the ability to focus on core competencies.
5. How does outsourcing impact supply chain management?
Outsourcing allows businesses to streamline their supply chain operations, improve flexibility, and reduce risks related to supply chain disruptions.
6. What industries benefit the most from indirect procurement outsourcing?
Industries such as CPG & Retail, BFSI, Manufacturing, Energy & Utilities, Hi-Tech & Telecom, and Healthcare & Pharma benefit significantly from indirect procurement outsourcing.
7. How does technology play a role in indirect procurement outsourcing?
Technologies like AI, automation, and cloud-based platforms help optimize procurement processes, improve decision-making, and enhance service delivery in outsourcing arrangements.
8. What are the key challenges faced in indirect procurement outsourcing?
Challenges include ensuring supplier reliability, managing quality control, maintaining communication, and handling regulatory compliance.
9. Can outsourcing reduce operational costs?
Yes, outsourcing can reduce operational costs by providing access to economies of scale, specialized expertise, and more efficient procurement processes.
10. How do companies select an indirect procurement outsourcing provider?
Companies typically select providers based on factors such as cost, expertise, technology capabilities, service offerings, and industry experience.
11. What is the role of data analytics in procurement outsourcing?
Data analytics helps organizations make informed decisions by analyzing procurement trends, improving forecasting, and optimizing purchasing strategies.
12. How does outsourcing affect procurement risk management?
Outsourcing helps manage procurement risks by ensuring that the latest technologies, compliance standards, and supplier networks are used to mitigate potential disruptions.
13. Is indirect procurement outsourcing limited to large companies?
No, companies of all sizes, including small and medium enterprises, can benefit from outsourcing indirect procurement activities.
14. How can outsourcing help companies meet sustainability goals?
Outsourcing providers with expertise in sustainable procurement practices can help companies source responsibly and reduce their environmental impact.
15. What is the impact of outsourcing on procurement transparency?
Outsourcing can improve transparency by providing real-time data and insights into procurement processes and supplier performance.
16. How is outsourcing linked to supply chain resilience?
Outsourcing helps improve supply chain resilience by allowing companies to leverage external expertise, ensuring faster responses to disruptions.
17. What types of services are commonly outsourced in procurement?
Commonly outsourced services include IT support, logistics, office supplies procurement, marketing services, and facilities management.
18. What role do global outsourcing providers play in indirect procurement?
Global providers offer a wide range of services across various industries, helping businesses access international expertise, optimize global procurement strategies, and reduce costs.
19. How do outsourcing contracts work?
Outsourcing contracts define the scope of services, terms of engagement, performance metrics, pricing structures, and other key agreements between businesses and their outsourcing partners.
20. How does outsourcing impact a company's core business activities?
Outsourcing allows companies to focus more on their core activities by delegating non-essential tasks, resulting in improved performance and competitive advantage.