HR battle threatens agencies' margins. Increased control over HR spend by procurement departments is putting pressure on recruitment firms.
Agencies report that many clients have been forced to reduce their supplier lists in a bid to cut costs and improve efficiency. This has put pressure on margins and cut their ability to provide a good service.
According to Steve Twelftree, managed services director of Adecco, large recruitment accounts are becoming more of a procurement issue than an HR one, so there�s less focus on service. �Some organisations try and strike a balance where HR is part of the decision-making process but on the whole it�s driven by procurement,� he told Recruiter. �But if you reduce the price, then something has to give on the service.�
Jan Para, a director of generalist recruiter Pertemps, echoed these views: �What can happen is that the operations side which is employing the labour may have a different expectation of the level of service to that of the procurement department which is getting it in.�
A report commissioned by the technology firm Ariba highlighted the increasing importance of procurement professionals in making spending decisions. It found that 70% of procurement directors now have to report to the board, so expectations of their ability to bring cost efficiencies are on the rise.
The survey also revealed that more than half of procurement directors admit to having more difficulty managing services spend, such as temporary labour, than other aspects of company expenditure.
�HR departments will know how to spend their budget strategically,� said Steve Muddiman, European vice president of Ariba. �But procurement can give them the tools to spend it more efficiently.�
Jo Faragher RECRUITER