Your Business Guide to Outsourced Procurement
Implement a strategic advantage.
Introduction
Everyone outsources.
Outsourcing is something we all do in our daily lives, often without even realizing it. From hiring a plumber to fix a leaky faucet to ordering takeout instead of cooking dinner, people commonly outsource tasks to save time, reduce stress, or simply because it’s convenient.
Yes, outsourcing can cost money, but sometimes it can also save money.
For example, you may aspire to fix your broken-down car, but by the time you’ve bought the tools, parts, and maybe even invested in a training course, you’ve spent a lot more than you would if you simply took it to the mechanic.
In this guide to outsourced procurement, we explore why businesses outsource, shed light on some fascinating statistics, delve into the main functions that are commonly outsourced, and provide practical tips for successful outsourcing.
We’ll also reveal the benefits of outsourcing procurement to a group purchasing organization (GPO).
Why Organizations Outsource
From tiny start-ups to the biggest organizations, there are plenty of reasons why companies engage in BPO (Business Process Outsourcing):
Save Serious Cash
Cost reduction remains the primary driver for outsourcing decisions. By handing off non-core tasks, companies can dodge the expenses of hiring and training a full in-house team, as well as investing in expensive equipment and technology. The savings often extend beyond direct costs to include reduced overhead, benefits, and infrastructure investments.
Tap Into Super Skills
Outsourcing lets businesses tap into a worldwide talent pool and get access to specialized skills that might not be found in-house. This means they can benefit from the expertise of external pros while focusing on what they do best. For procurement specifically, this might mean accessing category experts, market intelligence specialists, or negotiation professionals.
Get Things Done Faster
Outsourcing helps businesses streamline their operations and use their resources more efficiently. By bringing in experts for certain tasks, companies can crank up their productivity and get things done more quickly, leading to better overall performance.
Scale and Flex
Outsourcing gives businesses the flexibility to scale up or down quickly. This is particularly valuable in procurement, where workloads can fluctuate based on market conditions, seasonal demands, or organizational growth. Being able to adapt quickly keeps businesses agile and ready for whatever the market demands.
Focus on Core Competencies
By outsourcing non-core functions, organizations can redirect their internal resources toward activities that directly impact their competitive advantage and strategic objectives. For procurement teams, this might mean focusing on supplier relationship management while outsourcing tactical purchasing activities.
The Outsourcing Landscape
Let’s take a closer look at some eye-opening statistics about outsourcing:
Market Growth: The global outsourcing market continues its robust expansion, reaching $303 billion in 2024 with projections to grow to $525 billion by 2030. The procurement outsourcing segment is also experiencing particularly strong growth as organizations seek to optimize their supply chain operations and reduce costs.
Small Business Adoption: Recent studies show that small businesses are increasingly embracing outsourcing, with nearly 40% now outsourcing at least one business process in order to help increase operational efficiency, tap into specialized expertise, reduce costs, and more.
The most commonly outsourced functions include:
- Accounting (42%)
- IT services (40%)
- Digital marketing (38%)
- Customer support (35%)
- Procurement and sourcing (28%)
Strategic Impact: Outsourcing enables companies to invest in innovation and R&D by an average of 12%, as it frees up internal resources for strategic initiatives.
Size Matters: Larger organizations (50+ employees) are significantly more likely to outsource (68%) compared to smaller businesses (31%), but this gap is narrowing as smaller companies recognize the strategic value of outsourcing.
Geographic Considerations: Outsourcing isn't limited by geography. Businesses can choose to outsource to domestic partners, work with neighboring countries, or offshore to distant companies for further cost advantages. Popular outsourcing destinations like India, the Philippines, Poland, and Mexico have built strong reputations due to their large talent pools, competitive costs, English proficiency, and established business infrastructure.
Commonly Outsourced Functions
Here are some of the main functions that businesses frequently outsource:
Outsourcing IT functions such as software development, infrastructure management, cybersecurity, and network management allows businesses to leverage specialized expertise and access the latest technologies without heavy capital investment.
Outsourcing customer support services, including phone and email support, live chat, and social media management, enables businesses to enhance customer satisfaction, reduce response times, and provide 24/7 support.
Outsourcing HR functions like payroll processing, recruitment, and employee benefits administration can help businesses streamline HR operations, comply with regulations, and focus on strategic HR initiatives.
Outsourcing finance and accounting tasks such as bookkeeping, tax preparation, and financial reporting allows businesses to access professional expertise, ensure compliance, and reduce overhead costs.
Outsourcing digital marketing activities like social media management, content creation, and search engine optimization (SEO) can help businesses build a strong online presence, reach a wider audience, and drive growth.
Increasingly, organizations are outsourcing various aspects of their procurement function, from strategic sourcing and supplier management to tactical purchasing and spend analysis, recognizing the specialized expertise required for effective procurement management.
Tips for Successful Outsourcing
Consider these practical tips to make the most of outsourcing:
Know Your Processes
Understand the process you want to outsource before handing it over. Document current workflows, identify pain points, and establish baseline metrics.
Failing to do so will make it extremely difficult to gauge your service provider's performance and ensure successful knowledge transfer.
Choose the Right Partner
Take time to research and select a reliable outsourcing provider that demonstrates:
- Proven track record in your industry or function
- Relevant experience and expertise
- Cultural alignment with your organization
- Strong references from similar clients
- Appropriate certifications and compliance standards
As procurement professionals, you already excel at vendor evaluation – apply those same rigorous standards to outsourcing partners.
Clearly Define Your Objectives
Communicate your goals, expectations, and success metrics clearly to your outsourcing partner. Establish:
- Specific deliverables and timelines
- Quality standards and performance metrics
- Escalation procedures
- Regular review schedules
This ensures both parties are aligned and working toward the same objectives.
Protect Intellectual Property
Ensure appropriate confidentiality and non-disclosure agreements are in place to protect your company's intellectual property, sensitive information, and competitive advantages. This is particularly important when outsourcing strategic functions like procurement.
Prioritize Cybersecurity
Verify that your outsourcing partner has robust cybersecurity measures to minimize supply chain risks:
- Industry-standard security protocols
- Regular security audits and updates
- Data encryption and secure transmission methods
- Incident response and recovery procedures
- Compliance with relevant data protection regulations
Monitor Performance & Provide Feedback
Regularly evaluate your outsourcing partner's performance against established metrics and provide constructive feedback. This enables continuous improvement and helps maintain a strong, productive working relationship.
Plan for Change Management
Prepare your internal team for the transition by:
- Communicating the rationale for outsourcing
- Redefining roles and responsibilities
- Providing training on new processes
- Addressing concerns and resistance proactively
Outsourcing Misconceptions
Outsourcing doesn’t have to be an all-or-nothing deal, despite what some folks might think. This misconception stems from the idea that outsourcing means giving up complete control and ditching all responsibilities; but that’s not the case at all.
Let's address some common myths about outsourcing that may be holding your organization back:
Myth 1: Outsourcing is All-or-Nothing
Reality: Outsourcing doesn't have to be an all-or-nothing proposition. Many successful organizations adopt a hybrid approach, selectively outsourcing specific tasks or functions while maintaining control over strategic activities. You have the flexibility to choose which aspects of your operations to outsource based on your unique needs, capabilities, and strategic priorities.
Myth 2: Outsourcing Means Losing Control
Reality: Effective outsourcing partnerships actually provide greater visibility and control through structured reporting, performance metrics, and regular communication. The key is establishing clear expectations, governance structures, and oversight mechanisms from the beginning.
Myth 3: Outsourcing is Only for Large Companies
Reality: Small and medium-sized enterprises can derive significant benefits from outsourcing, often more so than larger organizations. SMEs can access specialized expertise they couldn't afford to hire full-time, level the playing field with larger competitors, and scale their operations more efficiently.
Myth 4: Outsourcing Always Leads to Job Losses
Reality: While outsourcing may change job roles, it often allows internal teams to focus on higher-value, more strategic activities. Many organizations find that outsourcing creates opportunities for career advancement and skill development as employees take on more complex responsibilities.
Myth 5: Quality Always Suffers with Outsourcing
Reality: When done correctly with the right partner, outsourcing can actually improve quality by providing access to specialized expertise, best practices, and dedicated resources that may not be available internally.
Outsourced Procurement: The Strategic Advantage
Why do forward-thinking organizations choose to outsource some or all of their procurement functions? The answer lies in the strategic advantages that outsourcing provides in today's competitive business environment.
Cost Optimization Beyond Savings
Outsourcing procurement can deliver substantial cost reductions – typically 15- 25% in operating costs – but the benefits extend far beyond simple savings. Organizations gain access to:
- Process efficiencies developed through specialization and scale
- Technology investments they couldn't justify internally
- Best practices refined across multiple client engagements
- Market intelligence gathered from broader industry exposure
Access to Specialized Expertise
Procurement outsourcing providers, including GPOs like Una, employ category experts with deep sourcing experience across multiple industries and spend categories. This specialized knowledge often exceeds what individual organizations can develop internally, particularly in:
- Complex category management
- Market analysis and supplier intelligence
- Contract negotiation strategies
- Risk assessment and mitigation
- Regulatory compliance across jurisdictions
Strategic Resource Reallocation
When third parties handle tactical procurement activities, your internal team can
refocus on:
- Strategic sourcing initiatives that drive competitive advantage
- Supplier relationship management that builds long-term partnerships
- Innovation programs that identify new value creation opportunities
- Risk management that protects organizational interests
- Cross-functional collaboration that aligns procurement with business objectives
Scalability and Flexibility
Outsourcing provides the flexibility to:
- Scale procurement resources up or down based on business needs
- Access specialized skills for specific projects without permanent hiring
- Adapt to market changes and new business requirements quickly
- Test new approaches without significant internal investment
Enhanced Speed-to-Value
Outsourcing can dramatically accelerate your procurement initiatives. Providers
bring:
- Established supplier relationships that eliminate lengthy selection processes
- Pre-negotiated contracts that provide immediate access to competitive pricing
- Proven methodologies that reduce implementation timeframes
- Dedicated resources that can scale quickly to meet project demands
When to Consider Outsourcing Procurement
Before diving into outsourcing, assess your current situation to determine if and when outsourcing makes sense for your organization:
Current State Assessment
Evaluate your procurement function's current performance:
- Spending analysis: Understand your spending patterns by category, supplier, and business unit
- Process efficiency: Identify bottlenecks, redundancies, and time-consuming activities
- Resource allocation: Assess if your team is focused on strategic vs. tactical activities
- Cost structure: Calculate the total cost of your internal procurement operations
- Performance gaps: Identify areas where you lack expertise or resources
Market Readiness Indicators
Consider outsourcing when you observe:
- Increasing complexity in your supply base or sourcing requirements
- Resource constraints that limit your ability to pursue strategic initiatives
- Market changes that require new expertise or capabilities
- Cost pressures that demand more aggressive savings targets
- Growth opportunities that exceed your current procurement capacity
Organizational Readiness
Ensure your organization is prepared for outsourcing:
- Leadership support for the outsourcing initiative
- Change management capabilities to handle the transition
- Clear governance structures to oversee outsourced activities
- Performance measurement systems to track results
- Cultural alignment between your organization and potential partners
Approaches to Outsourcing Procurement
There's no one-size-fits-all approach to procurement outsourcing. Organizations can choose from several models based on their specific needs and circumstances:
Outsourcing by Task
Strategic Tasks
- Market analysis and intelligence: Deep-dive research into market trends, supplier landscapes, and competitive positioning
- Category strategy development: Creating comprehensive sourcing strategies for specific spend categories
- Supplier evaluation and selection: Conducting thorough assessments of potential suppliers
- Contract negotiation: Leveraging specialized negotiation expertise and market knowledge
Tactical Tasks
- RFP/RFQ management: Creating, distributing, and managing competitive bidding processes
- Purchase order processing: Handling routine transactional activities Supplier onboarding: Managing the administrative aspects of bringing new
suppliers online - Invoice processing and reconciliation: Streamlining accounts payable processes
Analytical Tasks
- Spend analysis: Identifying patterns, opportunities, and risks in spending data
- Supplier performance monitoring: Tracking and reporting on supplier performance metrics
- Compliance monitoring: Ensuring adherence to policies, contracts, and regulations
- Risk assessment: Evaluating and monitoring supply chain risks
Outsourcing by Category
Indirect Procurement Categories
- Office supplies and equipment
- IT hardware and software
- Marketing and advertising services
- Facilities management and maintenance
- Travel and entertainment
- Professional services
Direct Procurement Categories
- Raw materials and components (industry-specific)
- Packaging and labeling materials
- Production equipment and machinery
Specialized Categories
- Energy and utilities management
- Fleet management and logistics
- Telecommunications services
- Insurance and risk management products
Outsourcing by Project
Transformation Projects
- Digital procurement implementation: Rolling out new procurement technologies and systems
- Sustainability initiatives: Implementing environmental and social responsibility programs
- Supplier consolidation: Reducing supplier base complexity while maintaining quality and competition
- Process standardization: Harmonizing procurement processes across business units or geographies
Improvement Projects
- Speed-to-savings acceleration: Implementing agile procurement methodologies to reduce cycle times
- Maverick spend reduction: Bringing non-compliant spending under management
- Supplier diversity programs: Increasing participation of diverse suppliers
- Cost reduction initiatives: Targeting specific savings goals across categories
Outsourcing to a Group Purchasing Organization
Group Purchasing Organizations (GPOs) represent a unique and highly effective approach to procurement outsourcing.
Unlike traditional BPO providers, GPOs offer a collaborative model that leverages collective buying power to deliver immediate value.
The GPO Advantage
Immediate Access to Pre-Negotiated Contracts
When you join a group purchasing organization like Una, you bypass the lengthy supplier selection and negotiation process. Our portfolio of pre-negotiated contracts provides immediate access to competitive pricing and favorable terms across multiple categories.
Collective Buying Power
GPOs aggregate demand across member organizations, creating purchasing volumes that individual companies couldn't achieve alone. This collective
approach unlocks:
- Volume discounts typically reserved for large enterprises
- Enhanced terms and conditions negotiated from a position of strength
- Priority service levels from preferred suppliers
- Access to innovation and new product offerings
Zero-Cost Value Creation
Unlike traditional outsourcing arrangements that require significant upfront investment, GPO membership typically comes at no direct cost to members. Una's business model is supported by administrative fees paid by suppliers, meaning members receive value without fees, contracts, or hidden costs.
Una’s Comprehensive Outsourcing Services
Beyond core group purchasing benefits, Una provides additional outsourcing services that address common procurement challenges:
Supply Chain and Contract Management
- Standardized processes that streamline purchasing across your organization
- Contract lifecycle management support to ensure compliance and optimize terms
- Supplier relationship management to maintain productive partnerships
Data Analytics and Spend Intelligence
- Cost comparison analyses across your direct and indirect spend categories
- Spend visibility improvements that identify saving opportunities
- Benchmark reporting to measure your performance against industry standards
- Market intelligence to inform strategic sourcing decisions
Category Management Excellence
- Dedicated category experts with deep knowledge across multiple spend areas
- Best practice implementation based on experience across diverse industries
- Sourcing strategy development tailored to your specific requirements
- Performance monitoring and continuous improvement support
Strategic Consulting Services
- Spend analysis and assessment to identify blind spots and opportunities
- Procurement maturity evaluation to benchmark your capabilities
- Transformation roadmap development to guide strategic improvements
- Change management support to ensure successful implementation
When GPO Outsourcing Makes Sense
Tail spend management is one of the most common reasons organizations engage with GPOs. Characteristics that make tail spend challenging include high transaction volume with low individual values, fragmented supplier base that's difficult to manage, limited internal resources to dedicate to these categories, and compliance challenges due to decentralized purchasing.
GPOs excel at tail spend management by consolidating that fragmented spend through preferred supplier networks and providing standardized catalogs and ordering processes. GPOs can help Implement compliance controls and approval workflows, and deliver immediate savings without significant internal investment.
Organizations of all sizes can benefit from enhanced buying power through GPO participation.
Horizontal GPOs like Una serve organizations across multiple industries, focusing on common spend categories like office supplies and equipment, IT products and services, facilities and maintenance supplies, food service and catering, shipping and logistics, and professional services.
Vertical GPOs serve specific industries or sectors, offering specialized contracts for things like healthcare and medical equipment, educational institutions, and government entities.
Solo procurement professionals face unique challenges in covering all aspects of the procurement lifecycle. GPO partnerships provide immediate access to category expertise across multiple areas and time savings through pre-negotiated contracts and streamlined processes. You can also take advantage of professional development opportunities through GPO resources and networking, and strategic focus capability by outsourcing tactical activities.
When hiring additional team members isn't feasible, GPOs offer a cost-effective alternative. There is no additional headcount required to expand procurement capabilities and GPOs provide a fixed cost structure that's predictable and manageable. Group purchasing organizations also offer scalable services that grow with your organization's needs and immediate ROI through cost savings and efficiency gains.
One concern about procurement outsourcing is the potential impact on existing supplier relationships. GPOs address this by working with your preferred suppliers where possible to extend existing relationships and maintaining transparency in supplier selection and management processes. GPOs provide supplier diversity options that align with your corporate values and offer flexibility to exclude certain categories or suppliers from GPO programs.
Cost Considerations of GPO Outsourcing
Total Cost of Ownership Analysis
When evaluating GPO partnership, consider the comprehensive cost picture.
- Personnel costs: Salaries, benefits, training, and overhead for procurement staff
- Technology investments: Procurement software, analytics tools, and system maintenance
- Process costs: Time spent on sourcing activities, contract management, and supplier relations
- Opportunity costs: Strategic initiatives delayed due to resource constraints
GPO Investment:
- Membership fees: Una membership is completely free with no hidden costs
- Implementation costs: Minimal, primarily involving process integration and staff training
- Ongoing management: Limited internal resources required for GPO relationship management
Value Delivered:
- Hard savings: Direct cost reductions averaging 15-25% across categories
- Soft savings: Process efficiencies, time savings, and risk reduction
- Avoided costs: Investments in technology, expertise, and infrastructure
- Strategic value: Enhanced capabilities and competitive positioning
Return on Investment
Most organizations see positive ROI from GPO partnerships within the first few months, with benefits including:
- Immediate savings from pre-negotiated contracts
- Quick wins in previously unmanaged categories
- Scalable benefits that grow with spending volume
- Long-term value through ongoing relationship and capability development
Measured Success in Outsourced Procurement
Establishing clear metrics and governance structures is essential for outsourcing success:
Key Performance Indicators
Financial Metrics
- Cost savings achieved vs. targets and baselines
- Cost avoidance through better contract terms and risk management
- Total cost of ownership improvements across categories
- Return on investment from outsourcing partnership
- Budget variance and forecasting accuracy
Operational Metrics
- Cycle time reduction for key procurement processes
- Supplier performance improvements (quality, delivery, service)
- Contract compliance rates and adherence to terms
- Process efficiency gains and automation levels
- Risk mitigation effectiveness and incident reduction
Strategic Metrics
- Stakeholder satisfaction with procurement services and outcomes
- Innovation adoption and value creation from supplier partnerships
- Sustainability progress toward environmental and social goals
- Supplier diversity improvements and compliance
- Market intelligence quality and strategic insight generation
Governance and Oversight
Steering Committee
Establish a cross-functional steering committee to oversee the outsourcing relationship:
- Executive sponsorship to ensure strategic alignment and resource commitment
- Procurement leadership to manage day-to-day partnership activities
- Finance representation to validate savings and manage costs
- Business unit involvement to ensure user needs are met
- Legal and compliance oversight to manage risks and contractual obligations
Regular Reviews
Implement structured review processes:
- Weekly operational reviews to address immediate issues and opportunities
- Monthly performance reviews to assess KPI performance and trends
- Quarterly business reviews to evaluate strategic progress and plan improvements
- Annual strategic reviews to assess partnership value and future direction
Continuous Improvement
Foster a culture of continuous improvement:
- Best practice sharing between internal teams and outsourcing partners
- Process optimization initiatives based on performance data and user feedback
- Technology enhancement opportunities to improve efficiency and effectiveness
- Relationship strengthening activities to build trust and collaboration
Making the Decision to Outsource: A Framework
Use this comprehensive framework to evaluate whether procurement outsourcing is right for your organization:
Step 1: Strategic Assessment
Business Alignment
- Does outsourcing align with your overall business strategy and objectives?
- Will outsourcing help you achieve competitive advantages or operational efficiencies?
- How does outsourcing fit with your organizational culture and values?
Resource Evaluation
- Do you have sufficient internal resources to handle current and future procurement needs?
- Are your current procurement capabilities meeting stakeholder expectations?
- Would internal resources be better allocated to other strategic priorities?
Step 2: Financial Analysis
Cost-Benefit Analysis
- What are your current procurement costs (direct and indirect)?
- What savings and efficiencies could outsourcing deliver?
- What investments would be required for the transition and ongoing management?
- What is the expected timeline for return on investment?
Risk Assessment
- What risks does outsourcing introduce (operational, financial, strategic)?
- How do these risks compare to the risks of maintaining status quo?
- What mitigation strategies could address identified risks?
Step 3: Market Research
Provider Evaluation
- What outsourcing options are available for your specific needs?
- How do different providers compare on capabilities, costs, and cultural fit?
- What references and case studies demonstrate success in similar situations?
Due Diligence
- What certifications, compliance standards, and quality measures do providers maintain?
- How financially stable and strategically committed are potential partners?
- What contractual terms and service level agreements are standard in the market?
Step 4: Readiness Assessment
Change Management Capacity
- Does your organization have the capability to manage a significant transition?
- How will you address employee concerns and resistance to change?
- What training and development will be needed for affected staff?
Governance Capability
- Can you establish effective oversight and management of the outsourcing relationship?
- Do you have the skills and resources to monitor performance and drive improvements?
- How will you maintain strategic control while leveraging external expertise?
Step 5: Decision Criteria
Must-Have Requirements
- Cost reduction and efficiency improvements
- Maintained or improved service quality
- Risk mitigation and compliance assurance
- Strategic flexibility and scalability
Nice-to-Have Benefits
- Access to innovation and best practices
- Enhanced supplier relationships
- Improved analytics and reporting
- Professional development opportunities for internal staff
Step 6: Implementation Planning
Transition Strategy
- How will you manage the transition from current state to outsourced model?
- What phases or pilot programs will reduce implementation risks?
- How will you ensure business continuity during the transition?
Success Factors
- What governance structures and processes will ensure ongoing success?
- How will you measure and communicate value creation?
- What mechanisms will drive continuous improvement and relationship development?
Conclusion
The procurement landscape is evolving rapidly, with increasing complexity, cost pressures, and strategic expectations. In this environment, smart procurement leaders are looking for ways to "do more with less" – continuing to add value to their businesses without incurring additional expenses or sacrificing quality.
Outsourcing represents a proven strategy for organizations seeking to optimize their procurement function while focusing internal resources on strategic priorities.
Whether you invest millions with a nationally recognized consulting firm to transform your sourcing strategy or partner with a GPO like Una at no cost, you're positioned to reap significant benefits from procurement outsourcing:
- Immediate cost savings through improved processes and supplier relationships
- Access to specialized expertise that would be costly to develop internally
- Enhanced operational efficiency through proven methodologies and best practices
- Strategic resource reallocation to focus on high-value activities
- Scalable capabilities that grow with your business needs
- Risk mitigation through professional management and oversight
The Una Advantage
Una membership offers a unique value proposition in the procurement outsourcing market:
- Zero cost membership with no fees, contracts, or hidden surprises
- Immediate access to pre-negotiated contracts and competitive pricing
- Comprehensive services beyond traditional group purchasing
- Proven track record of delivering measurable results for members
- Collaborative approach that preserves your strategic control and supplier relationships
Taking the Next Step
If you're looking for a cost-effective way to outsource procurement tasks while achieving meaningful savings, efficiency improvements, and strategic capability enhancement, Una provides an ideal starting point.
Ready to explore how outsourced procurement can transform your organization's performance?
Contact our team to schedule a discovery call and learn how Una can help you achieve your procurement objectives without any financial investment or long-term commitments.
The future of procurement is collaborative, efficient, and strategically focused. Make sure your organization is positioned to thrive in this evolving landscape by leveraging the power of outsourced procurement through Una's proven group
purchasing platform.
This guide represents Una's commitment to empowering procurement professionals with the knowledge, tools, and resources needed to drive exceptional value for their organizations. For additional resources, case studies, and insights, visit our comprehensive resource center at una.com/resources.