PO in Financial Services: From Wall Street to Martin Place - Unlocking Value from the Savings Goldmine

1 Jul 2009



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.  PO Value Proposition


The scope of analysis includes

  • Third-party PO contracts and does not include shared services or captives
  • Multi-process PO contracts that involve outsourcing of three or more activities from the Source-to-Pay (S2P) process, with at least US$1 million in Annual Contract Value, and a contract length of at least three years
  • All multi-process PO contracts across all industries and geographies signed as of 2008


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:

  • Business case and market size of PO in financial services
  • Adoption trends and supplier landscape

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:

  • PO in financial services is an under-penetrated market. Financial services is a significant adopter of outsourcing and offshoring services, but PO continues to be an under-penetrated market. Financial services accounts for only 10% of the multi-process PO contracts
  • PO contracts in financial services are generally larger in size and scope with a higher degree of offshore and technology leverage than the overall market average. However, the current economic conditions are changing the deal shape
  • Given the relatively low levels of PO adoption in financial services, few suppliers have experience in providing PO services to financial services. Accenture is the clear and dominant leader with nearly 95% market share (by ACV)
  • While the current supplier landscape for PO in financial services is highly concentrated, we expect several new suppliers to enter the market

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