Private sector – indirect procurement

On average, up to 50% of business purchases are attributed to indirect spend: expenditure on services and goods that support business processes and operations.

Growth in demand for business services

The business services with the highest growth in demand are creative services like design and marketing, technology services, and professional services like HR, Legal and Finance. Cost of business services projects, although showing slight fluctuations, increased by 17% from January 2015 to January 2016. In October 2015, this increase peaked at 25%.
This significant increase in the cost of business services projects comes at a time when there is a very real threat of another global recession, an economic downturn which economists predict is imminent, and cost reduction is becoming a key strategic driver for many of the world’s largest organisations.
If costs are to be reduced, particularly in indirect spend, and enterprises are to ride above the wave of economic uncertainty, an indirect procurement solution for sourcing business services cost effectively without compromising on quality, is needed in order to counteract this rise.

Candidate trends

More and more businesses are adopting a true category management structure, this in turn is resulting in the need for genuine specialists within specific category areas. As discussed above, we are seeing this trend particularly prevalent within the business services sector. Indirect procurement has evolved or certainly is evolving from a generalist, jack of all trades mentality to a more specialist, sector specific market which in turn is seeing candidates with this specialist experience commanding higher remuneration due to their high demand.
Motivations with candidates remain fairly constant, progression, financial reward and ability to make an impact. Part of the challenge we face as the world of indirect procurement evolves, is educating our clients on the shortage of these sought-after specialist professionals and the need to ensure all recruitment processes move with pace and momentum. Due to so many businesses embracing the change in focus, it is imperative we use our first-hand market knowledge to advise our clients of how to attract the top talent and guide them through a process, ensuring there are no surprises along the way.
As the market migrates to these specialist positions, it is no surprise and encouraging to see, average permanent salaries increase 6% from this time in 2015. This is mainly due to the aggressive war on talent we are seeing in the market coupled with the specialist category route embraced by clients resulting in increased budgets to ensure their favoured candidate is secured.
Job flow throughout 2015 and into the first half of 2016 has also been encouraging and we have seen an increase of 9% across the board, the biggest increase has been within the £50,000 - £75,000 range which sits at 13% again highlighting the step change in attitude and structure towards specialist category professionals.

In demand jobs

  • Category Manager – HR
  • Category Manager – IT/Technology
  • Category Manager – Marketing
  • Category Manager - FM

Client behaviour

As discussed previously, top talent is in high demand and with this in mind, candidates are typically involved in more than one process. It is more important than ever that the client proposition is attractive and in line with motivations of the candidates to ensure the client can successfully engage and ultimately succeed in securing their services. Partnership is key and working with a trusted, knowledgeable brand such as the PageGroup whilst taking on board our advice and guidance will help with this outcome. We are finding that clients are seeking our advice on a number of areas, in particular salary bench marking, scope of position and general market trends to ensure they attract the appropriate candidates.  Businesses that adopt a more fluid, fast paced recruitment process are seeing the best results while those who have procrastinated or elongate their processes are finding they are losing candidates to the competition, leading to longer time to hire and ultimately costing their business money, time and resource.
The key message of this article leans towards the industry becoming more specialist, top talent being in demand and the importance of partnering with the right business to ensure you have the support and market knowledge capable of solving your structural headaches efficiently.
Ben Carr
Operating Director
T:   +44 114 263 6026
M:  +447920118354