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Research & Surveys

Making Professional Services Sourcing More Professional


RaeAnn Slaybaugh

September/October 2009, eSide Supply Management Vol. 2, No. 5

A Look at Consulting and Professional Services Firm Hiring Trends in the U.S.

A recent national research initiative by Glen Rock, New Jersey-based Clemente Communications Group has proven useful not only to professional-services firms on the sell side, but also to supply management professionals on the buy side.

"As more procurement leaders assume responsibility for hiring and evaluating professional services firms, they're finding different requirements in comparison to their historical direct-spend duties," explains Mark N. Clemente, president of Clemente Communications. "Interestingly, the [research] data combine to provide an educational, best-practices frame-of-reference for sourcing and managing outside advisors."

The research focused on the "pain points" and strategic issues driving companies' retention of management consultants, accountants, lawyers and other professional services firms in today's economic environment. Statistics detail key purchasing trends and buyers' decision-making criteria.

"The moribund economy continues to affect every aspect of business decision-making today," Clemente says. "This survey was designed to identify the issues that are impacting organizations' decisions regarding the consultants and other outside advisors they're hiring to cope with crucial management challenges."

Input was collected from about 250 companies with annual revenues of up to US $50 million, with findings and analyses based on information from three sources: quantitative data generated from online panel research; interviews with C-level and director-level procurement executives involved in retaining professional services firms; and a global Web content analysis of more than 100 Web sites and online information sources. Respondents to the quantitative survey were asked to indicate their hiring plans currently and into 2010.

"The findings are timely ... from a timing perspective," Clemente notes. "The research was conducted in Q2 and Q3 of 2009 at a time when most organizations began acting on the issues and strategies they were still sorting out in a largely 'wait-and-see' Q1 environment."

Professional Services: Graph 1
Key Findings

More than 45 percent of respondents report that the process of strategic diversification is a main driver for retaining professional-services support. Notably, companies are seeking the assistance of advisers to institute significant changes to their business models to survive in the near term and to reposition themselves for growth when the economy turns around.

Nearly 60 percent of the companies surveyed cite an "inability to reduce costs and operating expenses" as the most important issue influencing their decision to seek help from professional services firms, both now and in the near term. Specifically, respondents cite uncontrollable costs as their number-one worry when asked, "What are the main fears and/or concerns driving your company's decision to hire new professional-services firms or expand assignments to existing service providers?"

Forty-two (42) percent of companies are hiring outside firms to perform work previously done in-house. Additionally, 34 percent are enlisting these firms' help to deal with future personnel changes at the highest level of senior management.

More than 60 percent of respondents say they plan to hire large professional services firms. Respondents say they believe that smaller boutique firms cannot offer the broader capabilities, resources and staffing flexibility necessary to achieve their companies' goals.

Corporate purchasing executives expect to screen and interview a greater number of prospective services firms before making their hiring decisions. In comparison to their policies in years past, only 16 percent of respondents say they expect to review one or two prospective providers. Meanwhile, 84 percent plan to evaluate three or more firms before selecting one.

Professional Services: Graph 2
Developing a Strategic Sourcing Mind-Set

For supply management leaders, the findings related to corporate strategy highlight sourcing trends that are being addressed in boardrooms across the country.

The study probes the principal issues enterprises are grappling with in the economic recession. Questions address the specific challenges that are affecting internal resources and, in turn, driving the need for external support. Moreover, the data look at how today's market conditions are influencing decision-making relative to hiring specific firms — particularly in terms of the characteristics and capabilities those advisers must deliver.

"The strategic issues addressed in the study help procurement leaders develop a strategic orientation," Clemente says. "That's important for enhancing the working relationship between procurement and internal business owners. By understanding the business issues driving the need for professional services support, procurement professionals are able to 'speak the same language' as business owners and more effectively partner with them to meet organizational objectives.

A natural consequence of this is a heightening of the credibility of procurement in terms of advising on all aspects of professional services firm selection, management and quality measurement," he continues.

RaeAnn Slaybaugh is a senior writer for the Institute for Supply Management™. She can be reached by e-mail.

For more articles and resources on sourcing professional services, visit the ISM articles database.

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