INTRODUCTION

The PO market witnessed strong growth in 2011. Annual spending on PO grew by 14%. Service providers are managing more than US$190 billion of procurement spend on behalf of their clients. PO adoption is no more restricted to the large market. The mid-market now has a deal volume comparable to the large market. The PO solutions are expanding in terms of process, category and functional scope. The rapidly growing PO market attracted new entrants. The M&A activity increased with service providers focusing on capability building. In 2012, Everest Group expects the PO market to continue strong activity, resulting in a YoY growth of 15% in terms of ACV.

In this research study, we review the global multi-process PO market in 2011 and provide guidance on the market’s direction in 2012. We focus on:

• Market size and buyer adoption trends
• PO value proposition
• Contract characteristics across process scope, technology, global sourcing, and pricing structures
• PO service provider landscape covering service provider’s market shares and areas of investments

SCOPE OF ANALYSIS

• Third-party PO deals; it does not include shared services or captives
• 320+ multi-process PO deals signed as of 2011 with a minimum of three procurement processes, over US$1 million in ACV, and a minimum contract term of three years. Typically, managed spend is greater than US$50 million
• Coverage across 15+ PO service providers with multi-process capability including Accenture, Capgemini, Corbus, DSSI, Genpact, GEP, HCMWorks, HCL, HP, IBM, Infosys, Optimum Procurement, Procurian, Proxima, TCS, Wipro, WNS, Xchanging, and Xerox
• Ongoing buyer surveys and interactions such as Vertical Industry Strategies in Shared Services & Outsourcing (VISSSO), Best-in-class BPO buyer survey, Executive-level buyer interviews

CONTENT

This report will assist key stakeholders (buyers, service providers, technology providers) understand the changing dynamics of the PO market and help them identify the trends and outlook for 2012. In this backdrop, this report provides comprehensive coverage of the global PO market including detailed analysis on market size and growth, buyer adoption trends, PO value proposition, contract characteristics, and service provider landscape. Some of the findings in this report, among others, are:

• The PO market witnessed a strong 2011 with annual growth of 14% (by ACV). The global multi-process PO market crossed US$1.6 billion in ACV
• In 2011, 60 new multi-process PO contracts and 53 renewals/extensions were signed – the highest ever
• The market is shifting from classifying spend as direct versus indirect to core versus non-core. Inclusion of direct spend increased in 2010-2011
• Functional scope of PO contracts is starting to expand into adjacent supply chain processes
• Augmentation is becoming the new norm (especially for S2C technology) and platform-based PO is increasing. However, most enterprises continue to be undecided on adoption of SaaS/BPaaS-based solutions
• IBM, Accenture, and Procurian are the top three players in the PO market with nearly 70% market share (by ACV)
• The rapidly growing PO market attracted new entrants. M&A activity also increased. Service provider investments in 2011 focused on capability building – both scope of services and technology