This article has been an interesting one for me to write. Having lived through this experience many times, I’ve seen the good, the bad, and the ugly. I am going to try and be as impartial as possible—but don’t let that stop you from expressing your opinion in the comments. 😉

Different client Organisations have different business focus areas and capabilities. Some see the value in setting up a structured procurement approach, department, and category management, while others don’t. It all really depends on their business strategy, and in some cases, the pain points they may be feeling.

There are Managed Service Providers (MSPs) that have historically been focused on the contingent workforce. MSPs and Business Process Outsource (BPO) suppliers have been investing in creating procurement practices to support Organisations, with a strong focus on services procurement (people-based delivery). Some have invested significantly and have real capability in this space.

Before deciding whether to include services procurement in your workforce program, you need to do your due diligence and evaluate your options. Below are my top five services procurement considerations before deciding how to proceed:

5. Your Organisation’s Strategy

Organisations typically invest in procurement when they start to feel pain around revenue, cost management, external spending levels, supplier reliance, and when finding the right goods or services becomes complex.

As we procurement professionals know, a procurement department’s capability often starts with these concerns but evolves into a broader business partnering role focused on:

·        Category strategy

·        Supplier management

·        Sustainability

·        Compliance and risk management

·        Process, controls, and operational efficiencies

·        Growth and scalability

So, what am I trying to say? 😉

Is procurement seen as a strategically important component of your Organisation? Does it make sense to have these people and operations as close to the business as possible, or could this be supported by an external party? What activities are considered strategic versus tactical for your Organisation?

4. Internal Capability

Services procurement engagements are typically linked to company strategic activities, focused on delivering results—whether revenue initiatives, operational efficiencies, or overall business support. These engagements often involve significant spending and high visibility.

Understanding the current capabilities of your procurement department at a sub-services category level is key to determining what should be managed internally and what could be outsourced. Start by base-lining:

·        Category structure and strategy:

o   Rules

o   Controls

o   Processes

·        Business relationship/alignment

·        Strategic importance to the business

·        Impact and tangible benefits of procurement’s involvement

·        Scope of what the sub-category team manages

·        Tools—including integrations that support automation

·        Supporting operations

3. Managed Service Providers / Business Process Outsource Capability

Not all outsourced service providers offer the same level of capability. If you are considering outsourcing components, thoroughly assess their capabilities using your baseline as a benchmark. Key considerations:

·        Who have they done this for?

o   References

o   Scope

o   White papers or case studies

·        Proven sub-category capabilities

·        Tools and technology they bring

·        How close they can get to the business

·        Subject matter expertise

·        Ability to represent you across all levels of business and supplier conversations

·        Back-end administration and operations

·        Oversight requirements

2. Wish List

If you are considering outsourcing, create a wish list—you might be surprised by what else could be brought to the table:

·        New technology

·        Industry insights

·        Benchmarks

·        Access to different purchasing channels and commercial models

·        Enhanced reporting

1. Scope

You don’t have to outsource everything. Depending on your Organisation’s capabilities, you can determine what should remain in-house and what can be handled externally.

This is why it’s essential to understand your Organisation’s strengths, what is critical to retain control over, and what you are comfortable delegating to a workforce management program.

In Summary

Whether it’s an in-house program, a partially outsourced model, or a fully outsourced solution supported by external partners, an external workforce management program that includes services procurement becomes an extension of your procurement team. The key is to align the approach with your Organisation’s needs, ensuring value, efficiency, and strategic impact.

Peter Drucker – “Do what you do best and outsource the rest.”