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Disruptions Force Enterprises to Rethink Procurement

Some firms seek rapid reinvention, while others implement BPO and plan for longer-term transformation, ISG Provider Lens™ report says

Enterprises worldwide are rethinking their approach to procurement as pandemic-related disruptions force them to consider immediate improvement measures, a new research report published today by Information Services Group (ISG) , a leading global technology research and advisory firm, finds.

The 2022 ISG Provider Lens™ Procurement BPO and Transformation Services global report finds the COVID-19 crisis has made the ability of suppliers to deliver goods and services unpredictable, intensified unauthorized spending and made tail-spend management more complex. Relocations during the pandemic have added to procurement woes.

As a result, more than half of large and midmarket enterprises around the world are considering either complete transformation or business process outsourcing (BPO) within the next 24 months, ISG says. While some want to reinvent their procurement and sourcing as soon as possible, more seem to be investing in immediate improvement through BPO followed by a long-term, sustainable improvement path.

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“For many large organizations, BPO potentially is the first major step toward procurement transformation”

“For many large organizations, BPO potentially is the first major step toward procurement transformation,” said Shahid Batty, director, Business Operations, at ISG. “Data we gathered from service providers suggest a ratio of 10:1 for BPO versus transformation engagements.”

However, in the midmarket, ISG research suggests at least half of all clients are more interested in making major changes now than in starting with BPO and achieving transformation over time. Many smaller firms, which have borne the brunt of supply chain disruptions, still lack any centralized controls or management for procurement.

“Most firms in this segment seek rapid reinvention and formalization of sourcing and procurement organizations and operations,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research.

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The report advises enterprises to look for at least four outcomes from a BPO engagement: higher efficiency, lower costs, identification and repair of current procurement problems, and prevention of future problems. Among its other insights, the report also identifies challenges faced by service providers that could end up affecting their clients.

The 2022 ISG Provider Lens™ Procurement BPO and Transformation Services global report evaluates the capabilities of 22 providers across four quadrants: BPO Services – Large Accounts, BPO Services – Midmarket, Digital Transformation Services – Large Accounts, and Digital Transformation Services – Midmarket.

The report names Accenture, Genpact, GEP, HCL and Infosys as Leaders in all four quadrants. It names Tech Mahindra as a Leader in three quadrants and Corbus, IBM, TCS and WNS Denali as Leaders in two quadrants each. Corcentric and Wipro are named as Leaders in one quadrant each.

In addition, Corbus and WNS Denali are named as Rising Stars – companies with a “promising portfolio” and “high future potential” by ISG’s definition – in two quadrants each. Corcentric is named as a Rising Star in one quadrant.

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