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U.S. Public Sector Accelerating Procurement Modernization

State and local organizations achieve cost savings, compliance, improved processes through growing investments in platforms and outsourcing, ISG Provider Lens™ report says

Investments in procurement outsourcing and platforms continue to grow in the U.S. public sector as it emerges from years of delayed digital modernization, according to a new research report published today by Information Services Group (ISG) (Nasdaq: III), a leading global technology research and advisory firm.

The 2023 ISG Provider Lens™ Procurement BPO, Transformation and Software Platforms report for the U.S. Public Sector finds many state, local and educational organizations still planning or carrying out modernization of their procurement systems and practices as part of a wave of initiatives kicked off by disruptions related to the COVID-19 pandemic. Supply chain interruptions, cost-cutting requirements and widespread resignations from government IT organizations brought the need for modernization to a head, and new federal funds made many projects possible.

“Public sector procurement in the U.S. has gone from stagnation to rapid change almost overnight,” said Nathan Frey, partner and lead, ISG Public Sector, for the U.S. “We expect this trend to continue at least through 2025 — and probably accelerate.”

For the first time, providers of procurement outsourcing and platforms are beginning to invest heavily in the capability to serve the U.S. public sector, ISG says.

Procurement platforms remain the cornerstone of effective digital modernization. Many public sector organizations adopted early cloud-based procurement systems in a fragmented way more than a decade ago and built their operations around them, the report says. To streamline processes, reduce costs and comply with a growing number of cybersecurity and privacy regulations, agencies are now implementing more modern platforms that are modular and include interfaces to related functions such as finance, making way for higher efficiency and tighter control.

The new platforms offer standardized application and enforcement of policies, with improved user experience, and enable sharing of clean, trusted procurement data throughout the organization, ISG says. Many also include automation features powered by machine learning and natural language processing that can improve operations and reveal new opportunities for optimization.

While outsourcing remains politically challenging in some public-sector agencies, many are including it in their transformation initiatives as their procurement staffs shrink and skilled replacements prove hard to hire and retain, ISG says.

“The public sector suffered more than any other in the Great Resignation that followed the pandemic,” said Jan Erik Aase, partner and global leader, ISG Provider Lens Research. “Outsourcing providers offer a lifeline to agencies that need to maintain and improve procurement functions.”

For more insights into the procurement challenges of the U.S. public sector and advice on successful modernization strategies — including self-funding projects through gainsharing provider contracts — see the ISG Provider Lens™ Focal Points briefing here.

The 2023 ISG Provider Lens™ Procurement BPO, Transformation and Software Platforms report for the U.S. Public Sector evaluates the capabilities of 37 providers across three quadrants: Software Platforms and Solutions, BPO Services and Transformation Consulting Services.

The report names CGI and GEP as Leaders in all three quadrants. It names Accenture, Deloitte, IBM and Infosys as Leaders in two quadrants each. Coupa, Infor, Ivalua, JAGGAER, Oracle, SAP Ariba and Workday are named as Leaders in one quadrant each.

In addition, HCLTech is named as a Rising Star — a company with a “promising portfolio” and “high future potential” by ISG’s definition — in one quadrant.

The 2023 ISG Provider Lens™ Procurement BPO, Transformation and Software Platforms report for the U.S. Public Sector is available to subscribers or for one-time purchase on this webpage.

About ISG Provider Lens™ Research

The ISG Provider Lens™ Quadrant research series is the only service provider evaluation of its kind to combine empirical, data-driven research and market analysis with the real-world experience and observations of ISG's global advisory team. Enterprises will find a wealth of detailed data and market analysis to help guide their selection of appropriate sourcing partners, while ISG advisors use the reports to validate their own market knowledge and make recommendations to ISG's enterprise clients. The research currently covers providers offering their services globally, across Europe, as well as in the U.S., Canada, Brazil, the U.K., France, Benelux, Germany, Switzerland, the Nordics, Australia and Singapore/Malaysia, with additional markets to be added in the future. For more information about ISG Provider Lens research, please visit this webpage.

A companion research series, the ISG Provider Lens Archetype reports, offer a first-of-its-kind evaluation of providers from the perspective of specific buyer types.

About ISG

ISG (Information Services Group) (Nasdaq: III) is a leading global technology research and advisory firm. A trusted business partner to more than 900 clients, including more than 75 of the world’s top 100 enterprises, ISG is committed to helping corporations, public sector organizations, and service and technology providers achieve operational excellence and faster growth. The firm specializes in digital transformation services, including automation, cloud and data analytics; sourcing advisory; managed governance and risk services; network carrier services; strategy and operations design; change management; market intelligence and technology research and analysis. Founded in 2006, and based in Stamford, Conn., ISG employs more than 1,600 digital-ready professionals operating in more than 20 countries—a global team known for its innovative thinking, market influence, deep industry and technology expertise, and world-class research and analytical capabilities based on the industry’s most comprehensive marketplace data. For more information, visit


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