Here’s an excerpt from our Procurement Quarterly Market Update for the second quarter of 2015 which addresses recruitment market trends and the availability of skills in the consulting sector.

Procurement Consultancy

The picture in the consultancy space is not as bullish as in quarter one. It is somewhat mixed as some niche areas (spend management) are doing well but many others are either static or struggling to win new deals and hence we have seen a number of examples of organisations pulling back on previous expansion plans.

Most consultancies are still recruiting but not at the rate anticipated or merely to cover leavers  or to backfill promotions. The picture varies according to each organisation’s project pipeline and this can change week by week currently. This is impacting on recruitment as candidates become nervous when recruitment drives are delayed or even cancelled.

Much of the new project work being awarded centres around technology led procurement transformation and many of these organisations are successfully ‘on-selling’ other services. In our view organisations not offering access to a technology solution seem to be at a disadvantage in the current market

The larger outsourcing deals appear to be less in number as many CPO’s or senior Procurement Leaders have indicated to us that they are focusing on ‘targeted help or consultancy on specific areas of spend or to speed up specific projects’ This implies they want to retain full control and don’t want to commit to the costs or risks of a long term outsource unless there is a long standing relationship or a specific business problem beyond the in-house capabilities.

Some organisations are in effect running transformation projects internally by carefully utilising interims directly instead of ‘outsourcing’. However there remains a shortage of experienced consultants with the requisite skill set to deliver major transformation projects in procurement and supply chain at senior levels.

An increasing trend that we have reported before is the shortage of junior level consultancy candidates with 2-3 years experience. Many consultancies are increasingly delivering projects via a tiered delivery model with good junior people increasingly being used to support senior people on-site from day one. Therefore they can only consider those with existing client facing skills and experience as they cannot risk putting those without this straight into this environment. This increasing demand means salary rates for these levels are becoming increasingly inflated as competition for good candidates becomes more intense.

As an example we are finding that good junior people with 2-4 years experience can command a base salary of £45-50k for a move to another consultancy. There are examples of individuals with only 3 years experience being offered £55k to move to some of the smaller niche consultancies. This we think will cause increasing problems for the bigger players or those organisations with strictly controlled salary and career bands who are unable to flex.

If you wish to discuss any of the points raised in this article, please contact Peter Brophy.