Is it Time to Consider a Procurement Services Provider for Contingent Labor?


Your procurement department is probably well-equipped to source the goods your organization needs. From raw materials needed to produce products to office supplies, they’ve got it well in hand. However, services procurement – that is buying services such as contingent labor of all varieties like temp labor, project workers, and independent contractors – is a completely different kind of purchasing. For these more complex procurement needs, many organizations turn to a procurement services provider or ‘PSP’. What is a procurement services provider and is it time to consider engaging one to support your contingent workforce management sourcing needs?

Buying goods like, let’s say, printer ink or cardboard shipping boxes is simpler because the same items can be sourced from numerous vendors and the competition is fixed solely on price for like-kind items. However, when sourcing a half dozen .PHP software developers, there can be a wide array of difference between all the available candidates offered by competing staffing providers. Beyond the differences among the candidates themselves (years of experience in the field, desired pay rates, education levels, etc.) there is also a wide range of considerations about the suppliers themselves (like levels of insurance coverage, tax/benefits compliance capabilities, financial solvency, service levels, etc.). This is why your internal procurement function may not be up to the task.

Enter the Procurement Service Provider. There are PSPs specializing in services procurement and even ones focused entirely on the effective procurement of contingent labor. At nextSource, many of our clients are optimizing the use of non-employee labor resources to build highly efficient, nimble, and cost-effective contingent workforces, working in tandem with their full-time workforces to achieve business goals. The growing array of worker types – traditional temps, Independent Contractors, Statement of Work/Project teams and even human cloud/gig workers – has driven an expanding ecosystem of providers of niche labor classes. Each presenting its own, unique procurement challenges.

Procurement Service Providers, properly vetted, provide credible, third party consultation that can effectively supplement internal procurement departments. Top PSP’s maintain significant internal expertise and resources to aid in a variety of tasks for their clients. These tasks include: strategic planning, implementing best practices, supplier rationalization, supplier collaboration, strategic sourcing, and negotiation.

According to Aberdeen Research, “Enterprises utilizing PSP’s have been able to improve spending coverage, reduce costs for goods and services, employ industry best practices, leverage the latest procurement technologies, and streamline source-to-pay processes – all without taking on the risks and assets required to achieve such results.”

If you’re considering engaging a contingent workforce initiative, talk to your internal procurement team to gauge their appetite and ability to effectively manage services procurement. If they aren’t ready, willing and able to spring into action in this niche area of procurement, ask nextSource about how to find and engage an appropriate procurement service provider.

To read more on this subject, turn to nextSource for expert guidance and visit our services procurement page.

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