Procurement outsourcing: Why and when it makes sense

What to consider before handing over your procurement process

Streamlined procurement is a competitive advantage in 2025. As businesses balance goals like reducing costs, building partnerships, managing risks, and streamlining operations, adopting agile procurement models is essential for staying ahead.

However, this is a tall order, and depending on your organization’s priorities, size, and resources, managing procurement in-house may not be the right choice for your teams

Outsourcing procurement can be a great alternative that leads to cost savings, increased efficiency, and improved scalability while freeing internal resources for more specialized tasks. But it’s hard to know if outsourcing is the right move. To help with your decision, we’ll cover different models of procurement outsourcing, scenarios where it makes sense, and some associated challenges and risks.

What is procurement outsourcing?

Procurement outsourcing involves transferring part or all of the procurement function to a third party, like sourcing, strategic supplier relationships, contracts, compliance, inventory management, and purchasing. There are a few common models that organizations use to do this.

Procurement outsourcing models

No single outsourcing model fits all organizations. Here are some common types:

Full procurement outsourcing

As the name suggests, full procurement outsourcing involves using a third party for the whole procurement process, from sourcing and purchasing to supplier management and compliance.

Benefits of full procurement outsourcing include:

• Cost savings: Reduces overhead by leveraging external expertise

• Efficiency: Streamlines procurement operations with dedicated specialists, while freeing up your teams to focus on what they do best

• Scalability: Adapts easily to business growth or changing needs

Selective procurement outsourcing

This model allows businesses to outsource specific procurement activities while retaining control over core strategic functions.

Benefits of selective procurement outsourcing include:

• Flexibility: Focuses outsourcing on non-core or high-effort tasks

• Expertise: Accesses specialized skills for complex procurement needs

• Cost control: Reduces costs without fully relinquishing control

Tactical procurement outsourcing

Tactical procurement outsourcing is a short-term or project-based approach where companies outsource procurement for specific purchases, categories, or initiatives.

Benefits of tactical procurement outsourcing include:

• Speed: Sources suppliers quickly for urgent or one-time needs

• Resource efficiency: Frees internal teams from time-consuming tasks

• Risk reduction: Ensures compliance and best practices for specialized purchases

   

When does procurement outsourcing make sense?

Not sure if procurement outsourcing is right for you? Here are some situations where outsourcing procurement may be the right move for your business:

1. When internal procurement is too costly or inefficient

According to our 2025 State of Procurement Data report, 21% of decision-makers cite costs and budgets as a common pain point in their procurement function. Leadership is constantly asking procurement teams to cut costs without compromising on quality, which can feel like an impossible task. 

Having an in-house procurement team may seem more cost-efficient on the surface, as you won’t have to pay for and manage an external agency. However, the cost to hire an effective internal procurement team—including salaries, benefits, and training—and scale that team adds up quickly.

In-house teams often have less time for innovation too. Often, admin work bogs them down, or they get stuck putting out the fires that inevitably crop up. However, having an external team focused on your procurement means you’ll be working with specialists who can handle the day-to-day while your internal pros develop a long-term strategy.

2. When scaling requires procurement support

Growth is the number one goal for most organizations. However, fast growth—or even just more-than-expected growth—can make internal procurement teams’ heads spin.

If your organization is expanding into new markets, increasing production, or experiencing a surge in demand, it can be too much for internal resources to handle. For example, if your organization is opening a new location, procurement must identify the new office’s needs, source suppliers, negotiate contracts, and manage payments. This may all be happening in locations that the team has never worked in before.

In this case, an outsourced procurement team can ensure a smooth opening by handling supplier negotiations, bulk purchasing, and logistics. This is a great use case for tactical procurement outsourcing, where you would hire an external team to help you set up the new locations on a project basis.

3. When supplier relationships and compliance become complex

Maintaining compliance can feel like walking through a minefield. Compliance requirements concerning climate- and sustainability-related government regulations will continue to increase, and near-constant changes in economic and global trade policies impact supply chains. As a result, it’s become essential for teams to continuously monitor key areas of trade and interpret rapidly changing foreign and domestic policies to ensure compliance—but some teams aren’t equipped for that.

Staying compliant involves coordinating with downstream suppliers, especially when you don’t have complete visibility into your supply chains. It’s important to not only vet your suppliers before you enter a contract but also continuously evaluate their performance, communication, and compliance standards.

This is a lot to manage on top of everyday work. Selective procurement outsourcing can help here by assigning an external agency to your team’s compliance work. This way, you’ll get access to highly specialized experts who can establish purchasing rules, procedures, and policies, as well as monitor new regulations. They can also take over supplier relationship management as needed.

4. When you need specialized procurement expertise

Outsourcing procurement is an excellent option if you need expertise in any area, not just compliance. Instead of relying solely on your internal team's knowledge, external specialists bring years of experience and established connections that can give your organization a competitive edge.

Digital procurement tools can also help fill in the gaps. By automating routine tasks, improving visibility, and streamlining collaboration, technology ensures both your internal team and outsourcing partners can focus on high-value initiatives, not paperwork.

The benefits of procurement outsourcing

The procurement outsourcing market is expecting growth at a compound annual growth rate of 15.5% in 2025 as more and more businesses are outsourcing contract and compliance management.

The following benefits show why outsourcing is a popular move for many procurement teams:

Cost savings

Outsourcing procurement minimizes overhead expenses by improving efficiency and leveraging economies of scale. Organizations can access pre-negotiated supplier contracts, bulk purchasing discounts, and optimized sourcing strategies when they work with procurement specialists. 

Moreover, outsourcing frequently forces teams to standardize their product lists, which helps to limit redundancies, enhance forecasting abilities, and allow for more accurate budget planning. Doing so can ultimately lower costs without sacrificing quality.

According to the 2024 Deloitte Global Outsourcing Survey, 34% of companies say cost reduction is their primary driver for outsourcing. But beyond direct savings, outsourcing also reduces the need for in-house procurement staff, training, and technology investments, freeing up resources for other critical business functions. 

Access to advanced technologies

Like every other area of business, procurement is increasingly technology-driven. From AI-driven analytics to automated purchasing workflows, these technologies can enhance decision-making, improve efficiency, and reduce human error. By partnering with procurement service providers, organizations can tap into these innovations to improve cost management, compliance, and supplier performance. These providers can also provide access to cutting-edge digital tools that might otherwise be too costly or complex to implement in-house.

One key trend with the potential to transform the industry is predictive procurement. Using AI and machine learning to analyze market trends, spending patterns, and supplier risks, businesses can make proactive purchasing decisions that mitigate disruptions and optimize inventory levels. 

In fact, 61% of decision-makers are prioritizing AI-driven procurement tools to optimize operations in the next couple of years, according to the 2025 State of Procurement Data report. Outsourcing procurement can help your team fast-track these capabilities and adopt cutting-edge solutions more quickly without the burden of internal development.

Additionally, cloud-based procurement tools can improve real-time collaboration between internal teams and external vendors, creating a more agile and transparent procurement process. With advanced digital solutions at their disposal, organizations can stay ahead of the curve and make smarter, data-driven purchasing decisions.

Enhanced focus on core competencies

Managing procurement in-house can be time-consuming and resource-intensive since it often pulls key personnel away from core business priorities. By outsourcing all or part of your procurement function, you can alleviate this burden so teams can shift their focus from daily tasks like supplier negotiations and contract management to driving innovation, fueling growth, and enhancing the customer experience.

This shift is particularly valuable for companies that are scaling rapidly or expanding into new markets, where agility and focus are crucial.

The challenges and risks of procurement outsourcing

As with any business decision, outsourcing some or all of your procurement functions is not without its drawbacks. Here are a few things to keep in mind if you decide to outsource:

Loss of control over procurement decisions

The words “loss of control” are never what a business leader wants to hear. However, when you outsource a function, you give up some authority over it. In procurement, that typically means placing critical purchasing decisions in a third party’s hands, which can create challenges in maintaining alignment with business priorities. 

With outsourcing, companies risk losing visibility into supplier selection, contract negotiations, and cost-saving opportunities, and the provider may not always put your best interests first. Without a clear governance structure, businesses may find themselves locked into supplier agreements that lack flexibility or fail to support their evolving needs.

Establishing strong oversight mechanisms is crucial for retaining control here. These include detailed service-level agreements, real-time reporting, detailed safety and compliance specifications, and frequent performance reviews that bridge the gap between internal expectations and outsourced execution. 

Potential data security and compliance risks

Handing procurement operations over to an external provider means sharing sensitive financial and supplier data, which increases exposure to security threats and compliance failures. If the outsourcing partner lacks robust cybersecurity measures, your confidential information could be at risk. Given that the average global data breach cost reached $4.88 million in 2024, companies can’t afford to overlook security when outsourcing procurement.

Regulatory compliance adds another layer of complexity. Since some regions and industries have strict data protection laws, an outsourcing partner operating across multiple markets must be capable of adhering to them all. Businesses should vet potential providers thoroughly to ensure that they implement strong encryption, access controls, and compliance frameworks to protect both proprietary and third-party data.

Supplier relationship challenges

In-house teams build direct supplier relationships based on trust and collaboration—but outsourcing introduces an intermediary, which can reduce communication and create misalignment. Suppliers may not feel the same loyalty or responsiveness to a third-party procurement partner as they would to an internal team. This disconnect can lead to delays, inconsistent service quality, or missed opportunities for negotiation. 

To avoid supplier disengagement, businesses should maintain some level of direct oversight. That might mean participating in key discussions, setting clear performance expectations, or ensuring that the provider prioritizes relationship management as much as cost savings.

Hidden costs

While we often position procurement outsourcing as a cost-saving measure, unexpected expenses can quickly add up. Transitioning procurement functions to an external provider may require integrations with existing systems, employee training, or process adjustments that you didn’t initially budget for. Some contracts also include variable pricing models, where costs fluctuate based on transaction volume or additional service requirements.

For example, a company might enter an agreement expecting fixed monthly fees but later find itself paying extra for urgent sourcing requests, contract renegotiations, or technology upgrades. To prevent these financial surprises, businesses should scrutinize contract terms, negotiate pricing structures up front, and establish clear cost expectations with their outsourcing partner.

Alternatives to full procurement outsourcing: How HAQM Business bridges the gap

Full procurement outsourcing isn’t always the right fit, especially if your business needs to retain control over spot buys or unpredictable, last-minute purchases. For many companies, the solution lies in a hybrid model: outsourcing large, planned purchases while internally managing indirect or unplanned spend, like equipment requests, janitorial supplies, and breakroom restocks.

That’s where HAQM Business steps in.

We bridge the gap between traditional procurement and full outsourcing with an integrated, flexible solution. Whether acting as a self-service option for your employees, automating approval processes, or even managing inventory through HAQM Business Restock, we help you streamline the parts of procurement you’re still handling in-house without overloading your team.

Here’s how HAQM Business supports hybrid procurement strategies:

Automated approvals for indirect spend

When you're managing last-minute or unplanned purchases, speed matters, but so does control. With HAQM Business, you can set custom user permissions, approval workflows, and spending limits tailored specifically to indirect spend categories like janitorial, IT accessories, or emergency equipment replacements.

Our Approval Workflows eliminate back-and-forth by enabling delegated approvers, mobile approvals, and bulk purchase reviews. This keeps your team agile while ensuring purchases still align with policy. Employees get what they need, when they need it, without delays or compliance risks.

Plus, with access to millions of business-relevant products and the ability to onboard your preferred suppliers, you gain flexibility without sacrificing procurement standards. You can even choose between shared or individual payment methods based on your organizational needs.

Spend tracking tailored to spot buys

Unplanned spend can be difficult to forecast and manage, but it doesn’t have to be a blind spot. With HAQM Business Analytics, you get real-time visibility into what’s being purchased, by whom, and for what purpose.

Customizable dashboards and detailed reports allow you to track everything from equipment purchases to office supply restocks. You can reconcile purchases with internal budgets, identify spending trends, and flag opportunities for cost savings. It’s procurement insight that empowers better decisions—even for purchases made on the fly.

Flexible delivery solutions

Whether your employees are in the office, working remotely, or out in the field, HAQM Business ensures they get what they need, where they need it.

• Residential delivery options make it easy to send laptops, tools, or supplies directly to remote workers.

• Custom delivery preferences help maintain a consistent flow of breakroom or janitorial supplies without micromanagement.

• Smart vending machines allow employees to grab urgently needed items—like PPE, chargers, or replacement tools—on the spot, without leaving their workstations. Learn more about smart, self-service procurement.

   

Customers like Vacasa rely on HAQM Business for fast, reliable delivery to even the most remote or dispersed teams. With a range of shipping and inventory tools—including HAQM Business Restock—you can maintain operational continuity without overburdening your staff.

In short, HAQM Business is more than a digital storefront. It’s a hybrid procurement partner that integrates seamlessly into your existing strategy, filling in the gaps so your team can stay focused on what matters most.

HAQM Business: Making the right procurement decision for your business

Effective procurement is about more than securing goods or services. With a strong procurement strategy in place, you can drive efficiency, reduce costs, and align purchasing decisions with your business goals. The “right” procurement model varies by organization, but you ultimately want a strategy that supports long-term growth, fosters stronger supplier relationships, and adapts to changing market dynamics.

Outsourcing procurement can provide the flexibility, tools, and expertise necessary to navigate today’s challenges, from managing supplier complexities to improving data visibility. With solutions like HAQM Business, you can optimize procurement processes, gain greater control over your spending, and position your business for sustainable success.

Ready to simplify procurement and elevate your business? Learn how HAQM Business can streamline purchasing, automate workflows, and enhance supplier management to give you greater control over your budget.