Indirect Spend
Expenditure on goods and services that support business operations but are not directly incorporated into the products or services sold to customers, such as IT, facilities, marketing, and professional services.
Indirect spend covers everything an organization buys that does not become part of its end product or service. This typically includes IT hardware and software, office supplies, professional services (legal, consulting, audit), facilities management, travel, marketing, and HR services. In most organizations, indirect spend accounts for 15-30% of total revenue.
Indirect spend is historically harder to manage than direct spend because it is fragmented across many categories, requested by multiple departments, and often purchased outside formal procurement channels (maverick spend). Modern procurement software helps by providing catalog-based ordering, automated approvals, and spend analytics across all indirect categories.
Why it matters: A company with €100M in indirect spend that achieves a 10% reduction through better sourcing, demand management, and supplier consolidation delivers €10M straight to the bottom line — equivalent to a significant revenue increase.