Report: Supply Chain Management BPO Growing at 25 Percent

Back-office service in supply chain management (SCM) grew at a compound annual growth rate (CAGR) of 25% between 2010 and 2014, to reach US$1.2 billion, according to a …

Back-office service in supply chain management (SCM) grew at a compound annual growth rate (CAGR) of 25% between 2010 and 2014, to reach US$1.2 billion, according to a study from Everest Group.

The sector is, however, undergoing some fundamental changes, with BPO providers wondering how they can make use of Big Data analytics to sign up more buyers.

Compared to other back-office services such as F&A outsourcing, analysts say, supply chain management is still in its infancy.

With demand growing by the day, service providers are trying to hammer out more comprehensive offerings, bundling it with reporting/compliance capabilities and data analytics in addition to a few computing solutions.

“In the past, organizations tended to compartmentalize procurement, logistics and inventory management, but now companies are seeking third-party providers who offer comprehensive SCM BPO offerings,” said Swapnil Bhatnagar, Everest Group practice director.

Around 160 SCM deals were signed as of 2013, with North America remaining the biggest market for service buyers.

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North American organizations make up about 65% of SCM BPO buyers, but Asia Pacific has also experienced a huge demand for the service recently. Organizations with revenue exceeding $5 billion represent 69% of buyers.

“In the future, control tower based solutions are likely to continue to gain traction. Also, as supply chain analytics become more complex, big data analytics is likely to impact the market significantly,” stated the analyst firm.

According to the report, Accenture and Indian outsourcing firms such as TCS and Genpact lead the market with a combined market share of 40%.

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