Procurement as a Service Market Size, Share & Industry Analysis, By Component (Process Management, Spend Management, Category Management, Contract Management, Strategic Management, and Transactions Management), By Enterprise Type (Small and Medium Enterprises (SMEs) and Large Enterprises), By Industry (BFSI, IT & Telecom, Manufacturing, Healthcare, Retail & E-commerce, Energy & Utility, Oil & Gas, Travel & Hospitality, and Others), and Regional Forecast, 2024 – 2032

The global procurement as a service market size was valued at USD 6.40 billion in 2023. The market is projected to grow from USD 6.91 billion in 2024 to USD 14.52 billion by 2032, exhibiting a CAGR of 9.9% during the forecast period.

Procurement as a Service (PaaS) is a cloud-based approach that involves outsourcing strategic aspects of the purchasing process to a company, offering immediate access to procurement services and software. Procurement as a service is a business strategy for companies where an external provider handles some or all of their procurement tasks. This approach merges elements of Business Process Outsourcing (BPO) with cloud technology to provide a comprehensive range of procurement services. Key companies such as GEP, Infosys Limited, Dragon Sourcing, SAP SE, Genpact, and Kissflow Inc., which deliver procurement-as-a-service solutions, aim to enhance the market's growth by forming partnerships and acquiring start-up companies present in different countries worldwide.

The growing demand for automated procurement processes and management solutions is anticipated to drive market growth over the forecast period. Additionally, the cost-cutting pressures and demand for adopting a spend optimization process also propel market growth.

The COVID-19 pandemic has had a significant impact on the procurement as a service market by reshaping spending strategies, supply chain processes, and business priorities. During the pandemic, the demand for cloud-based PaaS had grown tremendously due to the growing adoption of remote work culture and automation across different industry verticals. The PaaS solutions offer real-time risk monitoring data insights to ensure business continuity.

IMPACT OF GENERATIVE AI

Gen AI Integrated PaaS Solutions Boost Efficiency of Supply Chain Management Process and Helps to Make Data-Driven Decisions

Integrated generative AI has a prominent impact on the procurement process by automating various aspects of procurement processes, which significantly improves efficiency and enhances the decision-making process. Gen AI-based PaaS solutions help bring digital transformation within traditional procurement processes and help to improve the performance of the supply chain optimization process, reduce costs, and boost the performance of supplier risk management with better customer experience.

• According to a researcher survey, in 2023, 96% of organizations currently use AI in performing procurement tasks, which significantly helps to mitigate potential risks and improve supplier interactions, thereby optimizing the process.

Key Impacts of Generative AI on PaaS are as follows:

• Automating Routine Procurement Tasks:

• Generative AI can automate the creation of standard procurement contracts by pulling relevant clauses and legal terms, reducing time spent on manual drafting.


• It also helps to analyze vendor performance data to generate recommendations for optimal vendor selection, contract renewals, and replacements.




• Enhancing Sourcing Strategies:




• Integrated Gen AI can predict procurement needs based on historical data, market trends, and real-time analytics, enabling proactive sourcing strategies.


• It analyzes deep data insights from large datasets of different procurement tools, helping companies achieve better deals and make better sourcing decisions using various spending strategies.

These Gen AI-driven innovations in the PaaS market help procurement professionals to focus on strategic initiatives, optimizing sustainability and navigating complex supply chain landscapes.

PROCUREMENT AS A SERVICE MARKET TRENDS

Growing Emergence of Cognitive Technologies in Procurement to Drive the Growth of the Market

Integration of cognitive technologies such as AI and Machine Learning (ML) can significantly enhance procurement functions by automating processes, analyzing vast amounts of data, and providing intelligent decision-making support. AI, natural language processing, and ML-integrated cognitive computing systems analyze structured and unstructured procurement data, which significantly helps predict supplier risks, optimize sourcing decisions, and benchmark supplier performance.

These technologies also enhance relationships with suppliers by automating communication workflows. They also help monitor suppliers’ performance in real-time to resolve major and complex supply chain issues.

• According to research analysts, by 2024, 50% of companies will support suppliers in using artificial intelligence AI-enabled contract risk analysis tools and software, improving the performance of procurement systems and decision-making.

Thus, businesses are experiencing a transformation in procurement processes by integrating artificial intelligence and Machine Learning (ML) technologies. Considering these factors, the integration of AI and ML cognitive technologies with PaaS solutions will boost market growth during the forecast period.

MARKET DYNAMICS

Market Driver

Emergence of Digital Technological Advancements is Fueling Market Growth 

The adoption of advanced technologies is enhancing corporate operations, with businesses keen to implement these technologies to improve scalability, flexibility, and cost efficiency. Software as a Service (SaaS) is enabling companies to outsource their business processes to third parties, allowing them to focus on their core competencies. Furthermore, the automation of commercial activities through artificial intelligence and machine learning is accelerating market growth.

The expansion of the procurement outsourcing market is fueled by various factors, including the necessity to adopt new IT solutions that align with consumer trends. Additionally, businesses' demand for simplified procurement processes and the management of compliance policies and agreements contribute to this growth.

However, outsourcing risks and challenges in managing these agreements present barriers to market expansion. On the other hand, technological advancements, increased demand from the manufacturing sector, and the adoption of AI and big data technologies are expected to support market growth. This, in turn, is expected to drive the revenue of the procurement as a service market over the forecast period.

Market Challenge

Increasing Data Breach and Security Issues May Hamper Market Growth

The high risks associated with outsourcing, coupled with the complex nature of category management and its related systems may limit the industry's global expansion. Moreover, the need for awareness of these technologies among different sectors, integration issues with existing systems, rising concerns over data security and privacy, and the temporary disruptions caused by the coronavirus pandemic present additional hurdles to market expansion.

Market Opportunity

Increasing Requests for Procurement and Demand Management Services by Corporate end-users to drive Market Growth

The Procurement as a Service (PaaS) sector is experiencing significant growth, due to the growing need for effective demand and supply management solutions. The concept of "demand management" involves a company's internal strategy to balance supply and demand through strategic marketing and purchasing. For instance,

• In August 2023, OMNIA Partners developed OMNIA Partners OPUS, a next-generation procurement platform designed to deliver a seamless, comprehensive research experience for procurement specialists, aiming to manage multiple cooperative contracts. The company also focuses on simplifying traditional procurement processes to meet user needs.

By utilizing data, recent events, and other factors, procurement management solutions can create forecasts based on statistical analysis for various businesses. These solutions help assess supply limitations, financial projections, customer commitments, inventory levels, and the management of demand and costs. This, in turn, opens up new opportunities for market expansion.

SEGMENTATION

By Component Analysis

Transaction Management Segment to Lead owing to Growing Number of Transactions

By component, the market is divided into process management, spend management, category management, contract management, strategic management, and transactions management.

The transaction management segment is projected to grow with the highest CAGR over the forecast period. This is due to the increasing number of transactions among end-users, which enhances profitability and business efficiency.

• For instance, in August 2024, Opus 2 developed Opus 2 transaction management platform for corporate lawyers in order to manage and collaborate on Mergers and Acquisition (M&A) transactions. It also helps corporate legal departments reduce time, minimize risks, and enhance the efficiency of law firms.

Growing focus on company sales orders, invoices, delivery, and terms, and insurance which includes the overall transactions process, increases the demand for procurement solutions. These factors boost the procurement as a service market growth over the forecast period.

The strategic management segment holds the largest market share in 2023 and is estimated to grow with a remarkable CAGR over the forecast period. Increasing need for PaaS across various enterprises of different industry verticals increases the usage of supply chain management and sourcing solutions to reduce cost and profitability, further driving market expansion over the forecast period.

By Enterprise Type Analysis

SMEs Segment to Showcase Highest CAGR to Boost Performance of Efficient Procurement Processes

By enterprise type, the market is divided into Small and medium Enterprises (SMEs) and large enterprises.

The Small and Medium enterprises (SMEs) segment is projected to grow with the highest CAGR over the forecast period. Many smaller businesses lack the resources to build in-house procurement teams tailored to specific customer needs, leading SMEs to adopt affordable, subscription-based PaaS solutions to save time and money. It also helps to boost the profitability and scalability of the organization and streamline the procurement workflow operations by reducing paperwork. These factors led to increased adoption of PaaS solutions among SMEs to boost the performance of efficient procurement processes.

Large enterprises dominated the procurement as a service market share in 2023. Various large-sized companies are adopting Procurement as a Service (PaaS) solutions in order to reduce the maintenance and handling costs of the organizations. Furthermore, the rising need for managing and monitoring the compliance policies and availability of raw materials to lower total operational expenses boosts the adoption of procurement-as-a-service solutions among large companies.

By Industry Analysis

Manufacturing Segment Dominated due Rising Demand for Paper-Based Procurement Documentation Process

As per industry, the market is divided by industry into BFSI, IT & telecom, manufacturing, healthcare, retail & e-commerce, energy & utility, oil & gas, travel & hospitality, and others.

The manufacturing sector held the maximum market share in 2023 due to growing supply chain management operations and increasing demand for standardizing and streamlining an organization's internal procurement process. Integrating digital technologies with traditional procurement processes has reduced paper-based documentation and streamlined document exchange in workflow operations. The rise in the need to improve supply chain visibility and the desire for better transparency of orders and shipment information further increase market growth.

According to research, 60% to 70% of costs incurred by manufacturing companies are spent on the procurement process. This has reduced the capital expenditure and aims to fulfill specific needs of the customers along with improved business efficiency. Thus, the adoption of PaaS software across the manufacturing sector drives the growth of the market.

The retail sector is expected to depict the highest growth rate over the forecast period. As retail businesses are customer-centric and influenced by dynamic market trends mainly driven by changing consumer needs and buying behaviors. These services help in aligning various retail activities to optimize returns on investment. Additionally, growing emergence of new cognitive technologies and the significant increase in the e-commerce industry, especially during the pandemic are key factors propelling the growth of the Procurement as a Service (PaaS) market during the forecast period.

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PROCUREMENT AS A SERVICE MARKET REGIONAL OUTLOOK

Geographically, the market is studied across North America, Europe, Asia Pacific, the Middle East & Africa, and South America.

North America

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North America held the largest market share in 2023 and is anticipated to experience significant growth over the coming years due to growing technological advancements across companies in multiple industries. The shift toward procurement as a service by government bodies, which enhances cost visibility and management, is a major driver in the U.S.

• According to the MHI Annual Industry Report 2023, 74% of supply chain leaders increased their investments in supply chain management processes to enhance resiliency, transparency, and sustainability and reduce employee workloads.

Additionally, the increase in the number of large companies offering procurement services is also playing a role in the market's expansion. However, the presence of a large number of procurements as a service provider in the U.S., Canada, and Mexico boosts the growth of the market over the forecast period.

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Increasing digital transformation and increasing demand for procurement services to deliver better customer experience are boosting the growth of the market.

The U.S. holds the maximum share among countries present across the North American procurement as a service market. It is due to the growing integration of advanced technologies such as AI, ML, blockchain, and others with external expertise and manufacturing companies present across the U.S. that fuel the demand for the adoption of procurement as a service (PaaS) solutions. This integration aims to maintain cost-effective sourcing strategies, contributing to the growth of the market across the U.S. over the forecast period.

South America

South America is in a development phase due to the growing demand for procurement solutions that monitor raw materials and inventory for manufacturing companies present across the globe. This trend is expected to drive the growth of the market across the region over the forecast period.

Europe

Europe is projected to grow at a moderate rate over the forecast period. The region observes growing investments by manufacturing companies in various European countries such as Germany, France, the U.K., and Italy to enhance their procurement processes. Additionally, procurement service providers focused on tailoring service plans for their clients, which drives the growth of the market during the forecast period. Additionally, there is a rising interest in innovative solutions that can help businesses streamline their procurement operations using data. As a result of digital transformation, procurement service providers are modernizing their offerings to include web-based applications.

Middle East & Africa

The Middle East & Africa is projected to grow with the second-highest growth rate due to the rising penetration of cutting-edge technologies and digital transformation efforts that promote transparency and collaboration across procurement sourcing processes. This will drive product demand in the market over the forecast period.

• For instance, in October 2022, GEP, a global procurement and supply chain provider, expanded its presence in Abu Dhabi, Middle East to meet the growing demand for procurement services and solutions across the region.

Asia Pacific

Asia Pacific is also poised for growth during the forecast period. The adoption of procurement as a service is on the rise, driven by the increasing use of the internet for both direct and indirect procurement. China and India, where supply markets are strict, there is a quick demand for alternative supply sources. The procurement as a service sector is expected to witness substantial growth over the forecast period as organizations look for more efficient ways to handle their growing number of new supply sources. The expansion of the market is also supported by the growing number of small and medium enterprises (SMEs) in developing nations such as China and India, aided by government initiatives such as Make in India and Self-Reliance.

KEY INDUSTRY PLAYERS

Technological Developments by Leading Companies to Aid Market Proliferation

Companies operating in the market mainly include GEP, Infosys Limited, Dragon Sourcing, SAP SE, Genpact, Kissflow Inc., and Accenture plc. These firms are focusing on bringing innovations in Procurement as a service (PaaS). To enhance their operations throughout the world, the market players are using various strategic methods, such as partnerships, product launches, investments, acquisitions, and mergers.

List of Key Procurement as a Service Market Players Profiled: 

• GEP (U.S)


• Infosys Limited (India)


• Dragon Sourcing (U.K.)


• SAP SE (Germany)


• Genpact (U.S.)


• Kissflow Inc. (India)


• Accenture plc. (Ireland)


• HCL Technologies Ltd. (India)


• WNS (Holdings) Ltd (U.K.)


• Tata Consultancy Services Limited (India)


• Total IT Global. (U.K.)


• Allegis Global Solutions (U.S.)


• Wipro, Inc. (India)


• IBM Corporation (U.S.)


• CA Technologies (U.S.)


• Aegis Components Inc. (U.S.)


• Corbus LLC (U.S.)


• Bain & Company (U.S.)


• Hewlett Packard Enterprise Development LP (U.S.)


• Synise Technologies Ltd. (India)


• Capgemini SE (France)

KEY INDUSTRY DEVELOPMENTS:

• May 2024: CIC, a data consultancy service provider, partnered with BCC Group, a Europe-based software development company and launched ONE platform-as-a-service solution. This solution aims to deliver real-time support and monitoring services along with market data distribution capabilities. This solution is available for both cloud and on-premise platforms to deliver a better customer experience for users present across the globe.


• February 2024: Accenture completed the acquisition of Insight Sourcing, a procurement service provider, to expand its sourcing and procurement services portfolio. This acquisition allows the company to deliver advanced services to the retail, consumer goods, industrial, and technological industries, while also strengthening its procurement capabilities for private equity clients.


• June 2023: ProcureAbility, a prominent procurement service provider, entered into a partnership with dSilo, a deep learning AI company, to enhance the performance of procurement platform providers by leveraging AI-enabled capabilities. ProcureAbility integrated dSilo’s ProcureGPT platform to empower procurement professionals and aims to address contract management, spend leakage, and other missed opportunities to improve business efficiency.


• September 2023: RightsSpend, an online data-driven procurement platform, partnered with ISBA to deliver deep data research insights and various networking opportunities. This partnership aims to reduce the complexity of the marketing challenges faced by clients.


• June 2023: Comviva, a data monetization solution provider, entered into a partnership with e& enterprise to deliver advanced omnichannel CPaaS solutions. These solutions integrate all communication channels to deliver a better customer experience.

REPORT COVERAGE

The report provides a detailed analysis of the market and focuses on key aspects such as leading companies, service types, and leading applications of the service. Besides, the report offers insights into the market trends and highlights key industry developments. In addition to the factors above, the report encompasses several factors that contributed to the growth of the market in recent years.

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