The Hindu Business Line : Procurement services’ demand rising: Logica

Hyderabad, March 18 Technology services provider Logica is upbeat on procurement outsourcing business and the company believes that more companies across verticals are opting for third party expertise.

The company already has built a clientele of over 80 customers in the financial services and telecom and expects to repeat similar success with procurement services.

The Global Head, Finance and Procurement Services, Mr Anil Kumar Daniel, said procurement outsourcing takes care of the entire gamut of supply chain rather than just the back office work under procurement. Traditionally, none of the procurement processes is viewed for outsourcing. But this is changing.

Speaking to Business Line, Mr Daniel said as per analyst reports including that by the IDC, procurement outsourcing is growing faster than the IT services, finance and accounting and HR outsourcing. While about 90 per cent of procurement work is done onsite, going forward, this will shrink to about 70 per cent and about 30 per cent offshored.

Growth drivers

Explaining the drivers for growth of procurement outsourcing, Mr Daniel said some of the basic processes such as quote requests, order processing, goods receipt and log, reporting, which are repetitive and time-consuming can be outsourced. This allows the company the flexibility to concentrate on other core business areas.

Procurement outsourcing can help in centralising the processes that cover requests to completion of the entire process. This involves supplier management, forecasting and reducing time. Apart from the main business, a lot of business intelligence is built into the system that ensures that companies save on costs.

With most organisations adopting enterprise resource planning (ERP) systems, IT-enabled procurement has become a significant part of the entire supply chain. Besides immediate cost benefits, it also helps in productivity enhancements and faster decision making, he said.

Traditionally, procurement was a key function for manufacturing companies. But even they are looking at outsourcing. So is the case with technology firms and companies in other sectors. Anything other than their core business that requires purchase could be handled by third party, he said.

“Having built presence in the country, we are actively looking at the domestic market for procurement services,” he said.

Centre in Chennai

LogicaCMG employs about 3,000 people in its Indian operations, which is its largest offshore centre. The company has over 80 customers and is responsible for implementation of one of the most strategic IT projects—Real Time Gross Settlement System (RTGS) for the Reserve Bank of India.

Logica announced on Tuesday the signing for a site in Chennai and the strengthening of its Indian management team with two senior appointments. The new site, based at DLF IT Park, Chennai, will cover over120,000 sq. ft. and make room for an additional 1,500 people. The office is due to be open in July.

Mr Abhay Gupte has joined as Chief Executive of Logica’s operations in India, previously Managing Director of EDS’ India Business. Logica recently announced the creation of its Outsourcing Services division. Mr Rahul Patwardhan, current CEO India, has recently moved to Europe. Logica also announced that Mr G.B.S. Bindra has been promoted to serve as Global Innovation Director.

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