Fieldglass – more on VMS market development in Europe

We featured Fieldglass yesterday, with their latest business update, and I met some of their senior management team in Europe including Mikael Lindmark, their European VP, and Anna Burke, Marketing Director, a couple of weeks back to discuss their business.

They don't release detailed revenue and growth figures. But my US-based colleague Jason Bush has previously estimated that the firm is in the hundred million dollar revenue type bracket now, and extrapolating from some of the available information, we might assume a growth rate around the 30% or even higher level currently – all very healthy.

Europe is an increasing priority for the firm. They have over 400 employees globally, over 100 of whom were hired in 2013, a sign of the firm's growth (rather than high staff turnover)!  Around 60 staff are based in Europe now. Their 250 clients spend over $30 billion every year now through the Fieldglass VMS system. And of course those impressive stats demonstrate clearly what an important spend category contingent labour has become for many major organisations.

Early international expansion initially for Fieldglass was largely through their US headquartered clients wanting their help to support their overseas operations. But now, around 30% of the spend they manage is outside the US. And increasingly Fieldglass are winning business from European based firms, and more than half their European clients are ‘local’ firms such as a major continental bank, a huge engineering corporation and a well known automotive firm.

As we said in our last piece, statement of works (SOW) projects are becoming an increasingly important element of the overall business . Such projects tend to be more complicated to handle and systemise than ‘straightforward’ contingent labour. So in these more complex cases, the Fieldglass system supports client management of deliverables, supplier performance and payments rather than just recording basic employment information.

That growth was evident by the 180 new projects last year that Fieldglass executed. Around 50% were current clients expanding their use of the platform - for example from just contingent spend into SOW. 33% were new clients and the rest were upgrades and similar. The move into SOW and more complex spend areas is not just good news for Fieldglass (and their competitors), but also suggests that category managers in the contingent labour space may be extending their influence.

And one of the key issues in this space for category managers, (as well as human resources and line managers) is the complex raft of rules and regulations concerning contingent labour across Europe. Many of these are, in theory, at European level , such as the European Workers Directive. But problems  sometimes arise because of national interpretation of these regulations.

Indeed, those complexities  can reinforce monopolies in some countries, where a few suppliers of contingent labour establish dominant positions, partly because of the complexity and the difficulty of new firms to move into the market. Fieldglass therefore position themselves as supporting the client organisation to manage these markets and oligopoly situations better.

As Fieldglass only provide software and don't act as managed service providers themselves, they have avoided too many conflicts of interest with the service providers (such as Manpower, Adecco, and Comensura.) Their team stress the culture of partnerships with both the managed service providers and their customers. And independent evidence seems to support this, as they have scored regularly and very highly in customer satisfaction surveys such as the SIA (Staffing Industry Analysts) surveys.

What’s the future look like? The growth of the temporary work force appears to be continuing, despite some of the legislation which arguably has attempted to push people back into more permanent employment. But the benefits of flexibility, and indeed availability of skills at the top end of the market, means that the growth in use of contingent labour seems unlikely to reverse any time soon.

We’re planning to feature more on services procurement during 2014, in areas such as contingent labour, professional services and related spend categories, so look out for more in the not too distant future.

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