Procurement Staff Augmentation: Savings for (Almost) Nothing and Consultants for Cheap

Well, it's not quite worthy of being immortalized in a Dire Straits tune, but the latest Spend Matters Perspective, Analyzing the Rise of Procurement Staff Augmentation Services: 2011 Update is now available. Back in 2008, we set out to understand in our very first piece of downloadable research why staff augmentation services within procurement were on the rise. Flash forward three years to 2011, and our early analysis is still relevant, given the boom in overall demand for temporary skill bodies in procurement organizations. There are several reasons behind the evolution of how CPOs and procurement management are tapping third-party resources to drive sourcing and related changes, not the least of which is that staff augmentation resources are easier to get through internal approval processes than consultants (which perhaps explains why a range of consultants are more aggressively targeting this growing and potentially lucrative market).

Given the interest in the subject, we decided to revisit our 2008 analysis and give it an update for Spend Matters readers. One of the most interesting market features in terms of sourcing is how fragmented it is -- good luck going to a Manpower or Adecco and trying to get skilled procurement bodies onsite next week. Moreover, part of the value proposition that procurement staff augmentation firms bring is the expertise and network behind the individual warm body that will sit in your facility. They can even bring e-sourcing and spend analysis software in certain cases. Sound a bit like consulting? You bet, although there are a number of differences, not the least of which is engagement model and cost.

In reviewing this original paper from 2008, much of what we said at the time has proved accurate and we hope helpful as companies explore staff augmentation options. As we looked to update this material for 2011, what has changed most in our observation is the introduction of a more mature marketplace of both decision makers and providers. In this Spend Matters Perspective, we answer the following types of questions:

  • What do procurement staff augmentation services look like?
  • Why (and how) can it ever make sense to bring in contingent labor that is above the cost of the internal fully burdened rate?
  • How can companies get the most out of contingent labor within procurement?
  • What types of projects and areas are best suited to contingent labor?
  • When does it make the most sense to bring in contingent labor versus hiring a consulting team (or building out an internal organization)?

In this updated version, we also consider:

  • Overall updated observations (e.g., rate increases since 2008)
  • The rise of domain/category specific skills (e.g. the category skill-sets that are in demand and whether companies really need highly specific contingent sourcing expertise -- or not)
  • Decision criteria and sustainability of programs (e.g., who is the decision maker and who has budget authority for procurement staff augmentation)

If you're looking for a primer on the benefits of procurement staff augmentation services, Analyzing the Rise of Procurement Staff Augmentation Services: 2011 Update, is a great place to come up to speed on the market. Even if you read our original paper, this one offers a fresh take on what you need to know about the different engagement models, philosophies, trends and providers.

Jason Busch

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