Subadhra Sriram's Blog

Tra La La La La: Why Services Procurement Strikes a Chord

Suppliers and customers are all raving about services procurement. But here’s the catch: It means different things to different people. So I decided to explore this term a bit by talking to a number of people in the know. After chatting with various industry folks, I think Agile-1’s chief sales officer, Stacie Habegger, said it best: “Services procurement encompasses the strategic management and procuring of complex category services like contract labor, consultancy services, marketing, print, travel, telecom, legal services, etc.”

The key word is services. It’s different from needing, say, 100 copiers or even 100 people. It’s not tangible merchandise. And this could be handled via a statement of work agreement or even a master service agreement, depending on the contract, says Beeline’s Colleen Tiner, VP of product management.

So why is this a big deal? Word on the street is that it represents 50 percent of corporate procurement spending. We are talking about billions of dollars. At this point, customers do not have the same clarity on what they spend on services compared with material goods. And if customers can develop a centralized strategy to procuring these services, it will result in savings for them now and over time.

And for the supplier, these savings could mean more business. “Centralized procurement results in a lower cost of sale to the supplier. Once a relationship is solidified and with insight to historical success, the client is more likely to re-engage with that supplier when additional opportunities arise,” says Habegger.

Ditto for the managed service provider. With services procurement, both sides of the staffing equation have something to gain. It only requires that we are all on the same page when it comes to explaining the terminology.


Add New Comment

Post comment

NOTE: Links will not be clickable.
Security text:*


Ted Weyn 11/30/2011 02:11 pm

From HCMWorks' perspective the definition you provided is accurate. This is the way that the majority of procurement professionals will look at services procurement or even, what's called, Indirect Procurement. The basic defintion between direct and indirect is that any purchases that directly impact the cost per unit (CPU)of the product delivered by a company is considered direct. i.e. steel to an automobile manufacturer. Any costs that "indirectly" impact the company's net margin is deemed indirect. Services corporations like Banks, Insurance companies, etc, arguably only have indirect spend.

The last comment I'll make is that "staffing companies" and VMS tools that only do temp labor and/or SOW type of spend, need to stop calling themselves Services Procurement. Until they can handle services like print, marketing, call centers, etc. They should not portray themselves as "service procurement".

AVP IT Procurement

Gini Wright 11/29/2011 05:11 pm

Well written article. Thank you!!

Total 2 comments

Recent Blog Posts

Before Leaping on the Metric Bandwagon, Define It

Everyone’s talking about metrics in the industry. From time to fill, submittal rates, open rates etc., the verbiage is being tossed around. SIA’s VP of research, Jon Osborne fields dozens of calls... Read More

Koosharem Downgrade a Sign of Pricing Pressures

It’s a wake-up call up for the entire staffing industry. Vendors as well as contingent workforce managers need to rethink the pricing of temps. I admit it’s hard to do in today’s economy. But Standard... Read More

And the Winners Are ...

In the contingent workforce world, the publication of the VMS and MSP Supplier Competitive Landscape report  is a little akin to Oscar night. The names are released and there is jubilation in some... Read More

Bon Appetite -- We Are A Tasty Read!

How do you choose where to eat out? I conducted a casual poll of my prized colleagues. Mundane considerations like time, money, geography notwithstanding, they look at referrals. The list includes word... Read More

CW Managers Come of Age

Contingent workforce management has grown up.  I saw seasoned professionals striding confidently exchanging ideas and chatting about trends at our 7th annual Contingent Workforce Management Summit... Read More

A Misclassification Moment with the IRS

Google the word “misclassification” and you get around 1.16 million hits. It is also the number one search term on Staffing Industry Analysts’ website. So it was no surprise that much of the conversation... Read More

The Age of Man

It’s not always about money. Contrary to conventional wisdom and cynics, workers want to be kept on their toes. And it doesn’t really matter if they are contingent or an employee; they want interesting,... Read More

What's In a Name?

When it comes to contingent workers, a lot. Here’s why. One contingent worker might consider him- or herself an independent contractor, another a freelancer, still another a statement of work (SOW) consultant.... Read More

What Are You But Your Reputation?

This could be a bumper sticker for this decade. Between social media and the zillion other forms of communication open to folks out there, it can take just one disgruntled worker going public and your... Read More