The global procurement outsourcing (PO) market grew apace in 2009 with new contract signings and extensions increasing 30 and 90 percent respectively, according to a new report from Everest.

Everest projects the PO market will grow in excess of 20 per cent this year and reach nearly US$1.3 billion in annual contract value (ACV).

While overall PO market activity increased last year average contract values fell. Everest says this is due to ‘conservative buyers signing smaller contracts because of the prevailing uncertain economic conditions’. In the longer-term the consultancy expects these buyers to grow the scope of their PO engagements and in turn fuel future market growth.

Other predictions outlined in the report include: the SMB segment investing more in single-process PO contracts with suppliers offering new platform-based offerings such as SaaS and buyers beginning to favour transaction-focused contracts with an end vision of ‘source-to-pay’ (S2P).

“Buyers in last year’s down economy were averse to risk and thus inclined to start small and adopt sourcing-centric approaches to generate quick savings,” said Katrina Menzigian, VP, BPO Research.

“Buyers are now poised to expand sourcing-focused contracts into transactional services. Contracts that exploit the synergies between Finance and Accounting Outsourcing (FAO) and PO, especially in the procure-to-pay areas, will see increased market traction.”

Readers can click to view an extract of the Procurement Outsourcing Annual Report 2010.