3rd Party Labor Spend Optimization

THE CHALLENGE

Companies continue to allocate much of their IT operational budget towards onshore and offshore technical labor.  Despite the size of this category of spend, ClearEdge often observes opportunities with its client base for optimization due to:

  • Fragmented sourcing processes beginning with engagement in the business unit or IT group

  • The growing number of vendors adding complexity to vendor management process

  • Job titles and descriptions left unmanaged resulting in an inability to ensure competitive pricing and common talent levels across the vendor base 

  • Effective contracts have not been established

  • No VMO in place to closely manage outsourced and project-based engagements.

  • Lack of ongoing inspection and governance of continuing IT Labor acquisitions
     

These challenges limit a client’s ability to recognize pricing gaps and increase leverage within the spend category.

Optimizing 3rd Party Labor Spend

5 Steps for Success

PROGRAM SERVICES

To help clients identify, assess and improve the value they realize from the IT Labor spending category, ClearEdge can provide services to inspect a client’s 3rd Party Labor practices. While augmenting the resources already in place, ClearEdge will help clients identify fragmented process that once controlled will lead to increasing cost containment around existing 3rd party labor spend. ClearEdge through a fixed-price project can provide services that includes any one – or a combination of – the following five major activities.

Spend Analysis

Evaluate current state of 3rd party labor spending within the client's portfolio:

  • Where is the client buying from and how many vendors?

  • How is a client buying 3rd party labor: directly through vendors, through MSP models, Statement of Work?

  • How detailed and under what conditions and protections is included the way purchases are occurring?

  • What type of 3rd party labor is being purchase and for what reasons?

Job Classification & Rate Card Analysis

In order to improve a client’s front-end IT labor sourcing process, ClearEdge will work with a client to establish standard job titles and descriptions for their most commonly purchased roles and analyze rates for market competitiveness:

  • Establishment of market baselines for job titles and descriptions

  • Market Assessment of existing labor rates by position and location for market competitiveness

  • Identification of initial areas of focus or emphasis for improvement with other outsourced and project-based engagements.

Contract Review

Review current contracts with their IT labor and managed staffing vendors and highlight any areas of risk or opportunities for improvement through this project. The output of this review serves as the basis for negotiations with the consolidated vendor base.

  • Review business terms & Service Levels

  • Assess scope and requirements

Implementation of Vendor Selection & Consolidation

Establishing a basis for consolidating the client’s existing vendor base is appropriate and necessary to improve spending leverage and vendor management. Develop an implementation strategy, including the specific tasks required to accomplish this goal.

  • Current Vendor Assessment for strengths & weaknesses

  • Risk Analysis, including specific roles that would need to be sourced with a new vendor

  • Project Plan, with major tasks for the consolidation process

  • RFP development and management

  • Development of vendor selection process

  • Establishment of Rate Card across vendor base

  • Governance process review & recommendations

Need Our Assistance?

If you need assistance in optimizing your 3rd party labor spend, please contact us today.