Services Procurement Trends — From the Trenches

A couple weeks ago, I asked the folks at ProcureStaff if they would like to share any trends or observations that they're seeing in the services procurement market. ProcureStaff, for those who do not know them, is a provider of services procurement software, content/expertise (e.g., KPIs) and services. I'll be publishing an in-depth analysis of their capabilities in a series of upcoming posts, but in the meantime, here are the market observations that they shared with me. I'll group these into common themes.

First: Services/contingent supply risk management. ProcureStaff suggests that, contingent labor is the "first place companies are going to reduce headcount, as a result, any MSP providers that were operating on thin margins and dancing between profitability and unprofitability are at risk". To this end, "companies are looking closer at staffing, suppliers' financials, and supplier dependency ratios (looking at what percentage of a supplier's total revenues are coming from their company -- typically anything above 25% raises a flag, and anything above 50% is a big problem)".

Second: Contingent labor driving flexible (and better) human capital management strategies. In this regard, ProcureStaff suggests that, "companies are beginning to see contingent labor not just as a way to gain access to additional supply during economic expansion, but as a much more flexible human capital solution in the downturn. Faster and easier to expand and contract workforce, and eliminates separation costs associated with employees." In addition, certain functional areas are still proving challenging to find top talent. ProcureStaff observes in this regard "IT, and specifically BI functions, are still struggling to find and retain quality resources, despite the market getting flooded with available candidates".

Third: Supply markets insight and strategy. Here, ProcureStaff suggests that everyone is "talking about workforce planning these days, mostly focused on internal predictions of demand, but there's a dearth of reliable insight about the best supply sources and strategies (looking at availability, competency, quality, cost, etc. of workforce)". To expand its value propositon ProcureStaff is "leveraging its data warehouse and rapidly increasing global footprint to create a supply analysis model that can be used to identify the optimal source of workers in both mature and emerging markets by skill category".

Fourth: Globalization and centralization of contingent labor spend management. Here, ProcureStaff suggests that they're seeing "more multi-national companies seeking a single, centralized global program for contingent labor management". In other words, companies are looking to drive results through process and information centralization even if services spend is geographically and functionally managed in a decentralized manner by business users outside of HR and procurement.

- Jason Busch

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