The market size for procurement as a service was valued at USD 7,130.5 million in 2023, and it is anticipated to grow at 7.5% annually to reach USD 14,741.4 million by 2033.
Procurement as a Service refers to the outsourcing of procurement processes and activities to a third-party service provider. It allows organizations to streamline procurement operations, reduce costs, and improve efficiency.
PaaS providers offer various services, including strategic sourcing, supplier management, contract management, purchase order processing, and invoice management. These services are delivered through cloud-based platforms, enabling organizations to access procurement functionalities remotely and in real time.
The growing adoption of PaaS can be attributed to several factors. Firstly, organizations are increasingly focusing on cost optimization and operational efficiency, and outsourcing procurement functions can help achieve these goals. PaaS providers have the expertise and resources to effectively manage procurement processes, leading to improved productivity and cost savings.
Additionally, the complex and dynamic nature of the global supply chain has made it challenging for organizations to manage procurement in-house. Outsourcing procurement to specialized service providers allows companies to leverage their expertise and industry knowledge, ensuring better supplier relationships, risk mitigation, and compliance with regulations.
Furthermore, advancements in technology, such as artificial intelligence, machine learning, and robotic process automation, are enhancing the capabilities of PaaS solutions. These technologies enable the automation of repetitive tasks, data analysis for better decision-making, and improved transparency in procurement processes.
The demand for efficient procurement solutions is increasing across various industries, including manufacturing, healthcare, retail, and IT. Additionally, the shift towards digital transformation and the adoption of cloud-based solutions are further driving market growth.
| Attribute | Details |
|---|---|
| Procurement as a Service Market Size (2023) | USD 7,130.5 million |
| Procurement as a Service Market Projected Size (2033) | USD 14,741.4 million |
| Value CAGR (2023 to 2033) | 7.5% |
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The lack of awareness about procurement software and limited technical expertise are restraining the growth of the market. Furthermore, increasing data security and privacy issues within the existing system may restrain market growth. The need for better infrastructure in less developed regions and their dependence on third-party providers is also expected to restrain the growth of the market.
The global procurement as a service market expanded at a CAGR of 5.4% from 2018 to 2022. In 2018, the global market size of procurement as a service was valued at USD 5.4 billion and was estimated to reach a valuation of USD 6.7 billion in 2022. Procurement as a service is an outsourced procurement approach that combines technology, workforce, and expertise to manage a portion or the entire procurement function of a firm.
The increasing digitalization in the business process of procurement and sourcing is expected to boost market growth. Furthermore, strategic sourcing and supply management has become efficient due to the introduction of technologies which is helping firms to reduce their cost and improve their profitability from the business. The rising need to advance procurement functions within organizations with the help of technologies may drive the market in the coming years.
The global market is predicted to surge ahead at a CAGR of 7.5% from 2023 to 2033 to reach a market worth USD 14,741 million by the end of 2033. The United States may continue to be the leading user of procurement as a service throughout the analysis period accounting for over USD 2.3 billion absolute dollar opportunity in the coming 10-year epoch.
The procurement as a service market in the United States was valued at around USD 2.2 billion in 2021 and is estimated to reach a valuation of USD 2.4 billion in 2022. According to a research report published by ISG Provider Lens, the covid-19 pandemic has accelerated the adoption of procurement as a service among the public sectors in the United States.
The pandemic has shown the drawbacks of the traditional procurement process, which paced the demand for the digital transformation of the procurement process in the public sector. Many public sector organizations are using procurement as a service to increase the efficiency and predictability of expenses of their procurement process which is expected to drive the market. The procurement as a service market in the United States has projected to reach a valuation of USD 4.7 billion by 2032.
With its strong economy, technological advancements, and high level of adoption of digital solutions, Europe has emerged as a prominent region for PaaS implementation. Furthermore, Europe has a robust regulatory environment and compliance requirements, especially in sectors such as healthcare, finance, and public procurement.
PaaS providers in Europe offer solutions tailored to meet these specific regulatory needs, ensuring that organizations remain compliant while managing their procurement operations effectively. Additionally, Europe has a mature and well-established cloud infrastructure, enabling seamless adoption of cloud-based PaaS solutions. The region's strong IT infrastructure, data privacy regulations (such as the General Data Protection Regulation or GDPR), and emphasis on data security contribute to the growing adoption of PaaS among European businesses.
As one of the speedily growing economies in the world, India has been actively adopting digital technologies to drive efficiency and improve business processes across various industries, including procurement. Additionally, the increasing globalization and integration of Indian businesses into the global supply chain have led to a growing need for efficient procurement practices.
PaaS providers in India offer services that cater to the specific requirements of global sourcing, supply chain management, and supplier collaboration, enabling Indian businesses to compete effectively in the international market.
Cost optimization is a key driver for the adoption of PaaS in India. By outsourcing procurement activities to specialized service providers, Indian businesses can reduce operational costs, eliminate the need for extensive in-house procurement teams, and focus on their core competencies.
Strategic sourcing is a method to supply chain management that formulates the way information is acquired and used so that an organization can use its purchasing power to find the better possible values in the market and plan its purchasing strategy to attain business goals. The strategic sourcing segment registered a CAGR of 7.4% from 2018 to 2022. The digital transformation in procurement services is driving the demand for strategic sourcing.
Manufacturing companies must provide a quality product at optimum prices, maintain less production time, maintain their market presence, and need to manage their expense. To maximize their profit, manufacturing companies are using procurement services. The manufacturing vertical marked a CAGR of 7.3% from 2018 to 2022.
These organizations, characterized by their extensive operations and complex procurement requirements, are increasingly turning to PaaS solutions to optimize their procurement processes.
Large enterprises often have complex supply chains with numerous suppliers and vendors. PaaS solutions offer advanced supplier management features, such as supplier performance tracking, supplier collaboration portals, and vendor risk assessment tools. These capabilities help large enterprises strengthen supplier relationships, mitigate risks, and optimize procurement decisions.
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Procurement as a service provider performs merger and acquisition strategies to gain expertise and market share. The key companies operating in the procurement as a service market include Accenture, Infosys, GEP, Genpact, Proxima, WNS Denali, Capgemini, IBM, Wipro, HCL Technologies, Tata Consultancy Services(TCS), Xchanging, Aegis Components Inc., Corbus LLC, Bain & Company, CA Technologies, Hewlett Packard Enterprise Development LP, Skybox Security Inc, Palo Alto Networks, Inc and Cisco Systems, Inc.
The market expanded at a CAGR of 5.4% from 2018 to 2022.
Lack of awareness about procurement software restrains the market growth.
The increasing digitalization in the business process of procurement and sourcing boosts market growth.
The United States dominates the industry with its lucrative opportunities.
The market is likely to surpass USD 14,714.4 million by 2033.
| Market Size (2023) | USD 1,856.5 million |
|---|---|
| Market Projected Size (2033) | USD 3,561.9 million |
| Value CAGR (2023 to 2033) | 6.7% |
| Market Value (2023) | USD 25.7 Billion |
|---|---|
| Market Forecast Value (2033) | USD 78.5 Billion |
| Market CAGR (2023 to 2033) | 11.8% |
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