Last month, top European software company SAP bought Ariba in a $4.3 billion deal, its latest manoeuvre against Oracle in the fast-growing internet-based computing market. Ariba is now a SAP company. Its group director and head of sales for the Indian subcontinent, Amit Bhatia, says that e-sourcing initiatives have been prevalent in India for the last two decades. “The difference,” he says, “is that it was earlier restricted to large companies in select sectors. Such companies typically turned to technology during a slowdown to save on costs. As a result, the market penetration in India was really low.” In the last four years, however, the penetration has increased sharply. “Today, Indian companies across the board are reaping the benefits from e-sourcing,” he tells Sudhir Chowdhary in a recent interaction. Excerpts:
How do e-procurement and e-sourcing help companies to cut cost?
E-sourcing and procurement does more than simply set up an electronic mechanism for buyers and sellers to seamlessly interact. Its benefits also go beyond simple cost reduction. It helps streamline work flows, enhances efficiency and drives transparency in buyer-seller relationship. It also improves the availability and accuracy of information on both supply and demand side facilitating collaboration and control and compliance. That knowledge makes up for more informed talks and richer arbitrage opportunities.
E-sourcing frees up purchasing personnel to help them focus on more strategic concerns such as supply base development and relationship management. In a nutshell, e-sourcing and procurement creates immense value by lowering spend costs, streamlining processes and creating transparency, driving control, compliance and prevent fraud risk.
For SMBs, this becomes more important as they get immense help in solving two challenges—lack of procurement talent for hiring and buying muscle power due to small spends. Typically, SMBs are owner-driven companies and they have greater need for transparency as they cannot afford to have inefficiencies and malpractices in sourcing and procurement at all.
What is the scenario in India with reference to e-sourcing and e-procurement?
India is a vast and spread out market, not just geographically but also cutting across companies of various sizes and verticals. While large companies had taken up to e-sourcing across last ten years and have fairly matured, it is the relatively smaller companies that are lapping it up nowadays. They are seeing the value in terms of reducing cost and introducing transparency in their sourcing processes.
Secondly, the larger and more mature companies are moving further up the value chain and