Spend on procurement outsourcing (PO) is expected to increase by 25 percent next year, the Everest Research Institute has found.

The organisation forecasts that uptake of PO will be led by the "mature" U.S. market, while European businesses will also continue to increase spend on outsourced purchasing.

Global market growth will be helped by an increase in the number of suppliers offering PO services. Renewing and extending the scope of existing contracts is also expected to "contribute significantly" to overall spend.

Everest couldn't say what the total value of the market would be but told SM it was comfortable with the calculation of the 25 percent rise. Cost-cutting, increasing operational efficiency and procurement compliance will be the primary drivers for organisations signing PO deals.

Earlier this year Katrina Menzigian, Vice President of Everest, told SM there would be a rise in PO in the financial services sector as companies restructured and emerged from the economic crisis. This is expected to form a part of the anticipated increase.

Everest also predicted an increase in offshoring next year, after growth fell flat in 2009. Although any rise is likely to be lower than historic levels, Everest said India and the Philippines would be popular low-cost locations.

By Allie Anderson

Source: Supply Management