SI Review: February 2011

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Analyst Take

Senior Research Analyst, Staffing Industry AnalystsNoël Calvi manages surveys for Staffing Industry Analysts and is

finalizing the results of the latest Contingent Buyer Survey.

Q: Tell us about Staffing Industry Analysts’ latest survey of buyers.

NC: We collected the opinions of 217 contingent workforce managers from large companies [1,000+ employees]. It was a pretty varied group, about a fifth each from the finance sector, manufacturing, and tech/telecom and another 10% from the healthcare sector, with the rest spread out across other industries. Typical spend for these companies was about $65 million, but some actually had more than $1 billion in spend.

Q: Given that high level of spend, these large buyers must be pretty enthusiastic about temporary labor.

NC: Indeed they are. Of course, they use independent contractors and other contingents as well as temps, but, yes, they reported median overall savings through the use of this flexible labor force to be in the range of 15% in 2010. That’s comparable to the 17% savings we saw in the 2008 survey results, and up quite a bit from the 9% savings they reported in 2009. Think about that – 15% off your expense base! That’s pretty big.

Q: Every year you ask buyers to grade their primary supplier. What was the industry GPA this year?

NC: It was a B overall, roughly the same as last year. To put that in perspective, though, buyers gave the industry a solid C just six years ago in our first buyer survey. Back then, roughly 40% of buyers gave their primary supplier a D or F! Now, the number of buyers rating staffing firms so very negatively is negligible. It has really been a complete turnaround.

Q: I assume vendor management system usage among these larger buyers was up again?

NC: Yes, it was. That trend just keeps going. About 72% of these large buyers say they are currently using a VMS. Of course, that response varies by company size. The very largest buyers are most likely to go the VMS route and the smaller ones less so. In last year’s buyer survey, we also asked how much of a discount buyers actually realized through VMS use, and it was big – about 10%. So that’s the thing driving usage – it accomplishes exactly what it’s intended for.

Q: Is the use of managed service providers up as well?

NC: Oh yes, and in a big way. But it’s not all a bed of roses with MSPs. We invited the buyers to comment on what they thought their MSPs could do better, and the buyers had plenty to say. They want MSPs to be more of a strategic business partner, to provide best practices, to be more knowledgeable and more responsive.

Q: What other trends does the survey indicate?

NC: The final report will be about 150 pages, so there’s a lot to say. But there are a couple of things I think staffing firms should be more aware of. First of all, about half of these large buyers have programs to increase their usage of diversity/women/minority-owned staffing firms. Survey after survey has shown that. They take it very seriously, so firms with that status should make sure buyers know about it. Another thing staffing firms should be aware of is that, at least among these large buyers, globalization is really happening. For the third year in a row we saw an increase in the number of buyers that said they were managing their contingent workforce on a global basis. So if you’re working with a large buyer, having global capability is more and more a significant plus.

Q: Looking forward, do you get any sense from these large buyers that their use of temps and contingents of various kinds is anywhere near topping out?

NC: Not really. Usage will come and go with the economy, so I wouldn’t judge anything about long-term usage rates from what has happened recently. One of the things that came out of last year’s survey was that the old adage is true – buyers really do hire contingents first and they fire them first as well. So you have to expect the staffing business to be very volatile. Looking forward, these big buyers are still expanding their use of contingents, so I think there is still solid growth ahead.

If you would like to receive Calvi’s buyer survey reports, contact memberservices@staffingindustry.com or call 1-800-950-9496 and ask about corporate membership. If you are already a corporate member, such reports are included in your membership.

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