Pre-COVID, professional services represented 77% of the total GDP (that’s $16.5 Trillion!). That share is remaining stable through 2022. Yet, at the same time, the September 2022 jobs report shows 10 million open jobs and 8.4 million unemployed. Yes, there are more available jobs than there are unemployed.
This unbalanced labor market has created acute shortages in specific sectors and categories and increased labor rates. Unsurprisingly, most organizations struggle to find the right talent—either talent they can afford, with the right skills and availability, or within the correct geographical location.
Enter: workforce augmentation. Finding other ways to get things done without traditional full time employees can be attractive in this market for many reasons. Whatever the main driver for looking to temporary agencies and third parties (flexibility, specialized skills, seasonality, cost etc.), procurement is needed to step up and source the best providers for these services, while dealing with internal pressures of their own.
They need to compete for labor resources in a compressed, recession-charged market.
Labor spend categories range from consultants to IT services to administrative functions and even janitorial services as companies return to work. Services continue to capture a higher share of organizational spend and those services are critical to revenue-generating operations, so procurement must be more efficient while being more effective in competing for this talent to keep up with corporate demand.
Procurement is under pressure to deliver more results with less.
They, too, suffer from the misalignment of the labor market, but the reality is procurement has operated lean comparably to other functions within the company. Meanwhile, they are tasked with getting their arms around more spend…without getting extra sets of hands to do it! Old-fashioned RFP methods have challenged them to stay on top of business needs.
Antiquated RFPs are not nimble enough for this scale.
The challenge only gets more convoluted when procurement uses antiquated methodologies to source for that talent. Teams are still using email and Excel spreadsheets to run sourcing events, or are stuck with too-heavy legacy systems that get in the way. Unfortunately, the old RFP way doesn’t scale, prolongs cycle times, is not easily repeatable, and in the end, is more costly. Instead, procurement teams leveraging AI to supplement their information and tools that remove manual effort from the process have the competitive advantage.
Professional services spending will continue to grow, and the role of procurement in finding those services will continue to be more critical. Is procurement prepared? They’ll need to be.