Customer spike: Procurement outsourcer sees 50-percent spend increase since start of economic crisis
By Manufacturing Business Technology Staff -- Manufacturing Business Technology, 3/25/2009 1:59:00 PM
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Procurement outsourcing specialist ICG Commerce says the amount of spend the organization manages for leading companies spiked to $10.2 billion—a 50-percent increase since Sept 30, 2008.
Driving this increase are new or expanded contracts with industry titans including Whirlpool, Teva Pharmaceuticals, Goodyear, Cameron International, as well as a leading software provider.
"As current economic conditions force companies to seek additional ways to cut costs, results-oriented leaders are turning to procurement outsourcing," says Carl Guarino, CEO, ICG Commerce. "Our recently accelerated customer activity is a testament to our proven ability to deliver hundreds of millions of dollars in savings that drop straight to the bottom line."
According to research and advisory firm The Everest Group, procurement outsourcing delivers five times more savings than other endeavors such as IT or HR outsourcing. Unlike these other outsourcing solutions—which focus on headcount reductions through technology and labor arbitrage—procurement outsourcing focuses on driving down the costs of purchased goods and services. For many companies these purchases—which fall into categories, like logistics, marketing services, IT/telecom, packaging and travel—represent more than $1 billion of expenditures.
"Globalization and outsourcing are megatrends that are accelerating dramatically in today's economic climate," says Pierre Mitchell, procurement research director for The Hackett Group. "Our recent 2009Procurement Key Issues study indicates 50 percent of procurement organizations plan to use BPO [business process outsourcing] as part of their globalization efforts."
ICG Commerce says it delivers savings by infusing sourcing specialists who bring deep category expertise and access to intelligence data that compounds as they work across numerous Fortune 1000 companies.
