New Research Paper! “Contingent Labour Review: Key Procurement Priorities”

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We have a new research paper available for download - “Contingent Labour Review: Key Procurement Priorities -  Setting the scene for change”.

This is a paper where the word “research” really means something. It wasn’t just our own Spend Matters views or analysis (nothing wrong with that I should say), but came from combining our ideas with half a dozen detailed interviews with senior procurement folk, each of whom has a particular knowledge of and interest in the Contingent (temporary) Labour spend category.

That included senior category managers and heads of Indirect Procurement, from organisations spanning pharmaceutical, the public sector, energy, food and drink, and travel/ transportation industries. A small sample, but really quite broad ranging, and our thanks go out to them for some really great input.

We have taken their views on the procurement of contingent labour, in terms of both how they see current market and issues, and a more forward-looking perspective, and combined that with our own thoughts based on regular exposure to some of the largest firms working in that market as managed services providers and VMS (software) providers. Indeed, we ended up with so much material, Comensura, the sponsors of the paper, decided we should publish it in two parts – part 1 is out now, part 2 will follow fairly quickly.

Comensura is a specialist supply management firm that manages the supply of temporary and contractor labour into large organisations in the public, private and not-for-profit sectors. We’re grateful for their support - but they did not influence our paper, other than feeding some of their own thoughts into the mix (and I have to say, the folk we work with at the firm are genuinely very thoughtful and informed about the future of the industry).

Anyway, you can read for yourself by downloading the paper here, free on registration. And we’ll have some excerpts here over coming days to give you a sample of what you can expect from the full paper (the quotes in italics come directly from our interviewees).

Key Procurement Priorities: Setting the scene for change

Introduction

Over the past 20 years, one of the most significant trends in the world of business and employment has been the growth of the contingent labour workforce.  Whereas 50 years ago, the vast majority of the people working on behalf of a large business (or indeed public sector body) would have been directly employed by that organisation, that is no longer the case.

That development has run in parallel with the growth of outsourcing, and indeed the reasons for organisations using both approaches are similar; in particular, converting fixed costs to variable is a central objective of both outsourcing and greater use of contingent staff.

So if we take a stroll around almost any large company now, physically or virtually, we will find that the receptionists and security team are often working as individual contractors or are employed by a facilities management company. The routine maintenance work may be outsourced to a specialist firm, or there may be a small internal employed management team supported by temporary staff brought in for specific jobs or projects.

At the management levels, we will find more contingent workers covering for maternity leave, or holding down a senior interim role whilst the organisation recruits. The IT function may well have a small employed team supported by both outsourced service contracts and a whole host of temporary staff carrying out specific projects - developing new software and apps, managing help desks and so on.

…. The end result is an industry that in the UK was worth some £31.5 billion in 2015, according to the Recruitment and Employment Confederation (REC). Their Trends Report[1] also says that both the average cost and length of temporary assignments is increasing, which suggests a growing importance of contingent labour to business.

…. For this analysis, we talked to senior procurement executives from six major organisations, spanning private sector firms in energy, food and drink, and transportation as well as from public sector organisations. Without exception, "contingent labour" is a very important spend category, and one that has grown in importance for the procurement function over the years - "it is somewhere between the "critical" and "strategic" Kraljic boxes in our analysis.”

… even where cost reduction is a strategic organisational imperative, contingent labour may buck that trend - "we are reducing staff numbers, so when there are recruitment freezes and constraints, the numbers of interims tends to increase.

[1] https://www.rec.uk.com/news-and-policy/help-and-advice/research/latest-research/recruitment-industry-trends-2014-2015

First Voice

  1. Ashley:

    Hi Peter,

    Thank you for putting this report together. I may have missed it during my reading, but I did not see the mention of one key component of the contingent management process – Freelance Management Systems. I’m not sure what the market is for this in the UK, but I know first-hand there is pretty significant growth of this technology in the USA. While it’s a relatively new trend, FMSs fit nicely in the labor management ecosystem – they’re easy for the MSP to use and often complement the VMS by providing visibility and access to individual contingent workers.

    Thanks!

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