Financial Services has been at the forefront of outsourcing and offshoring but Procurement Outsourcing (PO) adoption is relatively low. Historically procurement did not attract enough attention among financial services buyers. As a result, procurement is generally understaffed and underinvested.
This started to change in mid-2000s as a few pioneering financial services institutions started to outsource non-core procurement spend. The business case was attractive and outsourcing procurement helped them rapidly achieve maturity of the function. Everest analysis indicates PO can impact a cost base representing 5-10% of revenues of a financial services organization, thus generating annual savings of US$50-100 million for a US$10 billion organization.
This generated interest in the market and financial services started to adopt PO aggressively but new contract signings dropped in 2008. The current economic challenges and the recent spate of acquisitions changed the financial services landscape. Today, the fight for sustenance takes precedence – consequently outsourcing-related decision making is slow. There is heightened sensitivity around offshoring as well.
This research takes a look at the impact of the current financial turmoil on adoption of PO services by financial services and provides Everest’s outlook for the market.
The scope of analysis includes
This report summarizes key PO market trends in financial services industry and facilitates PO stakeholders in taking informed business decisions. Key Insights are divided into two categories:
Each category contains key trends, which are discussed in detail (and illustrated with supporting data and analysis) to provide the reader information in easy-to-apply, bite-size pieces. For example, Adoption trends and supplier landscape section contains the following insights: