How Procurement Outsourcing Pushes Value: PSC LIVE Singapore
Jithesh begins by outlining the fundamental concept of procurement outsourcing - transferring specific procurement functions to third-party providers.
He highlights key benefits, including:
- Enhanced focus on core business: Companies can redirect internal resources to strategic initiatives while outsourcing routine procurement tasks.
- Cost efficiency: A structured outsourcing approach reduces operational costs while improving supplier negotiations and contract management.
- Competitive advantage: Businesses gain access to a broader network, advanced technology and global best practices from third-party providers.
- Process standardisation and compliance: Outsourcing helps enforce consistency, mitigate risks, and ensure regulatory adherence.
Jithesh emphasises that successful procurement outsourcing is about more than just cost-cutting - it’s a strategic move to improve operational agility and resilience.
Market insights and trends
Jithesh presents industry research forecasting significant growth in procurement outsourcing.
The global market is expected to expand from `US$4.78bn in 2024 to US$9.02bn by 2029, with a compound annual growth rate (CAGR) of 13.1%.
Key factors driving this growth include:
- A shift towards strategic sourcing, ensuring optimal pricing, quality and supplier reliability.
- Increased focus on automation and data analytics, allowing for more efficient procurement processes.
- Adoption of cloud-based procurement solutions, such as Workday and Oracle Cloud, which enable real-time access to procurement data.
- The growing importance of sustainability, with businesses prioritising ethical sourcing and environmentally responsible suppliers.
Jithesh also notes a trend in outsourcing destinations, with countries like India, the Philippines and Poland emerging as preferred locations for procurement services.
Selecting the right outsourcing partner
For businesses considering procurement outsourcing, Jithesh provides practical advice on choosing the right partner. He recommends:
- Assessing internal capabilities: Businesses must first determine which procurement functions to outsource based on their strengths and weaknesses.
- Aligning with strategic goals: Outsourcing should support broader business objectives, such as improving efficiency, reducing risks or enhancing supplier relationships.
- Ensuring compliance and data security: With regulations like GDPR in place, organisations must ensure their outsourcing partners meet strict data protection standards.
- Establishing clear communication and performance monitoring: Regular audits and key performance indicators (KPIs) should be in place to measure success and ensure continuous improvement.
Final thoughts
Jithesh concludes by addressing the outdated perception that outsourcing is solely a cost-saving measure.
Modern procurement service providers offer much more - enhanced governance, supplier relationship management and data-driven decision-making.
For companies looking to optimise procurement, outsourcing presents an opportunity to streamline operations, reduce costs and focus on strategic priorities.
As Jithesh put it: “I would always go for a personalised approach. First find out what are the things that you are lacking and what are the things you would like to have in place.”
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