The rise of Statement of Work to manage services procurement

Written by: Mark Coyle, CEO APAC Impellam Group, APSCo Director

Companies are increasingly using Statement of Work (SOW) to drive outcome-based value from their services procurement, creating opportunities for recruitment suppliers.

SOW is an alternative to input-focused time and materials contracts and enables companies to scale at pace, better control costs and generate savings, with suppliers paid based on agreed deliverables and milestones.

For recruitment suppliers, SOW creates an opportunity to compete with consulting firms and increase the bottom line through the delivery of people-based services.

The rise of the non-permanent workforce, from freelancers to contractors, is one of the most significant changes to the world of work in recent times. Remote working has also given organisations access to a more diverse and geographically spread talent pool.

And it’s changed the way we measure a worker’s contribution, from valuing presenteeism and hours worked, to focusing on their output.

This, in turn, has contributed to a shift in the way organisations tackle projects to focus more on operational outcomes aligned to clear milestones.

When a piece of work has a beginning, middle and end, services procurement provides more bang for your buck It changes the focus from the provision of skills or labour to the management and delivery of a project, with exacting timelines, predicted costs and clearly defined scope.

With SOW, suppliers get paid based on results. This means additional responsibility to manage performance, quality, and churn amongst resources, but also allows for higher margins for the service.

We’re seeing increasing demand for the inclusion of SOW management or services procurement in Managed Service Provider (MSP) contracts.

This shift to centralised SOW management will only accelerate in 2024 as companies seek greater visibility, control and compliance of their services procurement spend.

Now is the time for recruitment suppliers to develop their approach to SOW delivery and proposals to capitalise on this trend.

Engage with your MSP partners to let them know your SOW capabilities for inclusion in supply chains that help companies engage the right people, for the right projects.