Introduction

2010 was the best year ever for PO in terms of new contract signings and contracts extensions. The market continued to witness an increase in the sourcing-focused contracts driven by the increasing need to generate quick savings. However, Everest expects that these contracts will expand into transactional services to ensure compliance and sustainability of savings. Everest predicts that 2011 will be strong year compared to 2010 and expects the PO market to grow at 15-20% YoY to reach ~US$1.5 billion in ACV.

In this research study, we analyze the global multi process PO market in 2010. We focus on:

• Market size and buyer adoption trends
• PO value proposition
• Contract characteristics across process scope, technology, global sourcing, and pricing structures
• Service provider evaluation and relative position on the Everest PEAK Matrix
• 2010 PO Market Star Performers based on performance and capability building in 2010

Scope of analysis

• Third-party PO deals; it does not include shared services or captives
• 250+ multi-process PO deals signed as of 2010 with a minimum of three procurement processes, over US$1 million in Annualized Contract Value (ACV), and a minimum contract term of three years
• Coverage across 15+ PO service providers with multi-process capability including Accenture, buyingTeam, Capgemini, Corbus, DSSI, Genpact, Global eProcure, HCL, HCMWorks, HP, IBM, ICG Commerce, Infosys BPO, TCS, Wipro, and Xchanging

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 2011. 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 size in terms of active ACV reached US$1.3 billion in 2010, managing over $160 billion of procurement spend for buyers
• 2010 continued to witness an increase in the sourcing-focused contracts driven by the increasing need to generate quick savings
• Technology plays an invasive role in PO with 60% of the buyers using technology augmentation and/or platform-play approach. This trend is more amplified in the Source-to-Contract (S2C) process than in the Procure-to-Pay (P2P) process
• The number of platform-based PO contracts increased in 2010
• The adoption of hybrid pricing structures, i.e., a combination of managed service fee with either FTE-based or gain sharing, increased in 2010
• Everest updated its classification of 15+ PO service providers on the Everest Performance| Experience| Ability| Knowledge (PEAK) Matrix for PO into Leaders, Major Contenders, and Emerging Players
• Market leaders (Accenture, IBM, and ICG Commerce) further strengthened their leadership positions in 2010 – accounted for nearly 75% of the overall market by ACV and ~50% of the new contract signings in 2010
• Everest identified five service providers as the “2010 PO Market Star Performers” based on their relative movement on PEAK – Accenture, Genpact, IBM, ICG Commerce, and Infosys