The rise in the number of freelancers, effective expenditure management on contractual workers, and elevated emphasis on workforce analytics are boosting the service procurement market.
The global service procurement market is forecast to reach USD 1,494.9 Million by 2026, according to a new report by Reports and Data. Significant growth in the service procurement market is forecasted to be observed during the forecast period. The growth and expansion of the service procurement market is the result of the combination of several factors. Continuous emphasis on increasing productivity among end-user industries, increased demand for human resources, the rise in the number of freelancers, and elevated focus on workforce analytics are some of the factors contributing to the growth of the market.
There are various advantages associated with service procurement solutions that are increasing its acceptance and incorporation among end-user industries. Integration of service procurement solutions, provide the client-companies with comprehensive research on value and cost along with effective negotiation with independent contractors. Such in-depth analysis turns out to be beneficial for them in increasing their profitability and cost-savings. These benefits of service procurement solutions have increased its incorporation in the operation of end-user industries. Different initiatives taken by the industry players positively impact the market expansion. As an instance, in 2018, Coupa had launched Services Maestro and had acquired DCR Workforce, a key player of the market. Such initiatives by industry players result in the market presence of new players and subsequent expansion of the market.
The global information and communications technology (ICT) market registered steady revenue growth in 2020, and market size is expected to increase further over the forecast period. Factors contributing to the global ICT market revenue growth are growing penetration of smart mobile devices such as smartphones, tablets, and smart watches, rapid adoption of state-of-the-art technologies such as AI, machine learning, Internet of Things (IoT), big data analytics, and cloud computing, and rapid digitalization across numerous industries including the banking & finance, education, healthcare, automotive, oil & gas, agriculture, buildings & construction, and power & energy industries. Increasing accessibility of the Internet across the globe, emergence of the 5G technology, growing need for faster Internet services for rapid data transfer & processing, introduction of advanced Wi-Fi systems, and rising data security and user safety concerns among consumers are some of the other factors expected to drive the ICT market revenue growth.
Type Outlook (Revenue, USD Million; 2020-2026)
- Direct Procurement
- Indirect Procurement
Component Type Outlook (Revenue, USD Million; 2020-2026)
- Resource tracking and sourcing
- Freelancer management
- Contingent workforce management
- Service governance
- Reporting and analytics
- Maintenance and Support
- Integration and Deployment
Organization size Type Outlook (Revenue, USD Million; 2020-2026)
- Large Enterprises
- Small and Medium-Sized Enterprises
Deployment Type Outlook (Revenue, USD Million; 2020-2026)
End-users Type Outlook (Revenue, USD Million; 2020-2026)
- Energy and Utilities
- Banking, Financial Services, and Insurance [BFSI]
- IT & Telecommunication
- Transportation and Logistics
- Retail and Consumer Goods
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- Complexity in the Services Selection Process: Service procurement involves the selection and hiring of external vendors or service providers. The process can be complex, especially when organizations need to evaluate multiple vendors, compare their offerings, negotiate contracts, and ensure compliance with regulatory requirements. The complexity of this process can be a challenge for organizations, particularly if they lack standardized procedures or efficient technology platforms to facilitate the selection and onboarding of vendors.
- Temporary Worker’s Access to Corporate Systems and Facilities: When organizations engage external workers or contractors, granting them access to corporate systems, facilities, and sensitive information becomes a concern. Ensuring appropriate security measures, data protection, and access controls can be challenging. Organizations need to implement robust security protocols to protect their data and intellectual property while providing temporary workers with the necessary access to perform their tasks effectively. Failure to address these security concerns can have adverse consequences, such as data breaches or unauthorized access.
- Compliance and Regulatory Requirements: Organizations must comply with various legal and regulatory requirements when engaging external workers. This includes adherence to labor laws, tax regulations, immigration policies, and other compliance obligations. Managing and ensuring compliance across a diverse and dynamic workforce can be complex, especially when engaging workers from different regions or countries. Non-compliance can lead to legal consequences, reputational damage, and financial penalties.
- Integration with Existing Systems: Integrating service procurement solutions with an organization’s existing systems and processes can be challenging. Compatibility issues, data synchronization, and seamless workflow integration need to be addressed to ensure smooth operations. Organizations may face difficulties in integrating their service procurement platforms with their enterprise resource planning (ERP), human resource management systems (HRMS), or other relevant software, leading to inefficiencies and reduced effectiveness.
- Change Management and User Adoption: Implementing service procurement solutions often requires significant changes in existing workflows and processes. Organizations need to train their employees on new systems, communicate the benefits of the solutions, and address any resistance to change. Poor user adoption can undermine the potential benefits of service procurement solutions, hampering productivity and hindering the achievement of desired outcomes.
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Further key findings from the report suggest
- Service procurement market held a market share of USD 673.8 Million in the year 2018, with a growth rate of 10.3% during the forecast period.
- In context to Type, it has been segmented into Direct Procurement and Indirect Procurement. The Direct Procurement segment generated a higher revenue of USD 437.9 Million in 2018 with a CAGR of 9.5% during the forecast period. The fact that Direct Procurement is highly necessary and applicable in the functioning of end-user industries as it helps in acquiring services and components that are directly associated with organization functioning, is contributing to its generated revenue.
- In regards to Component, it has been segmented into Services and Solutions. The Solutions segment yielded a higher revenue of USD 32.5 Million in 2018 with a CAGR of 6.9% during the forecast period. Expansion of various end-user industries and the associated increase in demand for service procurement solutions like Resource tracking and sourcing solutions for enhancing their human resources contribute to the generated revenue of this segment.
- In context to Organization size, it has been segmented into Large Enterprises and Small and Medium enterprises. The Large enterprises’ segment occupied a larger market share of 80.0% in 2018, with a growth rate of 9.5% during the forecast period. The segment is forecasted to maintain its market dominance during the forecast period. Factors like extensive workload, associated increased demand for human resources, high relevance of resource tracking and sourcing solutions results in extensive deployment of service procurement solutions in this size of organization, contributing to the segment’s market share.
- In regards to End-users, the Energy and Utilities segment occupied the largest market share of 20.0% in 2018, with the CAGR of 10.7% during the forecast period. Continuous expansion in Energy and utility industry, increase in the number of customers and the associated rise in workload makes service procurement solutions highly relevant for this segment, as it helps in the effective management of workload by assigning it to the third party. Thus high deployment rate of service procurement solutions in the functioning of this industry contributes to the segment’s market share.
- In regards to region, Asia Pacific is forecasted to witness the fastest growth rate of 11.7% during the forecast period. Factors like the adoption of emerging trends and elevated demand for cost-effective solutions contribute to the region’s growth rate.
Regional Markets Highlighted in the Global Service Procurement Market Report:
- North America
- Rest of Europe
- Asia Pacific
- South Korea
- Rest of Asia Pacific
- Latin America
- Rest of Latin America
- Middle East & Africa
- Saudi Arabia
- South Africa
- Rest of Middle East & Africa
Top Companies Profiled in the Report:
PRO Unlimited, Beeline, DCR Workforce, Upwork, Peoplefluent, Provade, Workmarket, Field Nation, Superior Group, and Pixid.
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