Comensura and Matrix face stiff competition in £389m London local authority market
13 March 2014
Managed service companies Comensura and Matrix Supply Chain Management hold a dominant share of the temporary agency market among London authorities, according to a report by public sector procurement consultancy Spend Network.
Thu, 13 Mar 2014 | By Colin Cottell
Managed service companies Comensura and Matrix Supply Chain Management hold a dominant share of the temporary agency market among London authorities, according to a report by public sector procurement consultancy Spend Network.
However, they along with other suppliers face rising competition, according to industry experts.
The report shows that Comensura billed the London boroughs £264,866,433 in the two years ending October 2013, giving it a 34.71% share. The next biggest biller was Matrix Supply Chain Management, with £99,601,709, a 13.05% share. However, most of this – though the amount is not recorded in the public records analysed by Spend Network – is then passed onto the agencies that supply through Comensura and Matrix.
Overall, the six biggest suppliers into the London local authority market billed the 33 London boroughs more than £282m in the 12 months ending October 2103, up from £278m in the previous 12 months.
The analysis by Spend Network shows that the 33 London Boroughs spent £389,191,716 on agency staff in the 12 months ending October 2013, a rise of 4.93% on the previous 12 months. This figure is higher than the £282m amount billed by the top six biggest suppliers because it includes spending on suppliers outside the top six.
Among the six biggest London local authority users of agency staff, spend rose by 13.8% to £141,704,495.
Of the six biggest suppliers, Manpower saw a 15.4% increase in its revenue in the two-year period, with its sales rising from £18.46m to £24.58m. However, Hays’ revenue fell by 17.7% from £30.58m to £20.72m
Comparing the period November 2011 to October 2013 with the period April 2011 to March 2013 reveals that Comensura’s marketshare fell from 36.4% to 34.71%.
According to Ian Makgill, author of the report, while “Comensura remains at the top, it appears to be experiencing more competition”.
None of the suppliers mentioned in this article would comment on the findings.
Sue Dodd, director of the Agile Intelligence, tells Recruiter: “The challenge for recruiters has been to jockey for marketshare. Given the dominant position of managed services inevitably it is the large MSP providers who have supplied, either as master or neutral vendor, the lion’s share of the business.
“A brief analysis suggests first that the gains/losses are relatively minor over the period but rising competition is evident as both Reed and Manpower see good spend growth at the expense of Hays in particular. However, it is a complex picture with some share erosion seen from Comensura, Hays and even over a two-year rolling period, Manpower, with Reed the clear gainer.
“Nevertheless, Comensura and to a lesser extent Matrix dominate the market and their ability to increase on contract penetration in those boroughs it is contracted to is the real key to raising its spend under management.
“Here Comensura has a strong record with any off-contract spend to competitors restricted to only 6% in Ealing and 16% in Islington. By contrast Matrix sees 26% of spend off-contract in Enfield. Big contracts will determine the large shifts in marketshare but attention to the detail in individual contracts will be the key to small, steady gains and optimising the opportunities on contract extensions and new tenders.”
Spend Network’s Makgill says that he is surprised to see spending by London local authorities rising at a time of continuing austerity. “The government has announced more cuts to local government, and we are seeing councils like Wolverhampton threatened with insolvency. The last thing they want is an increase in one of the primary categories of spend, which is agency spend, but that is what they are getting.”
One exception is Ealing Council that, according to the figures produced by Spend Network, cut its expenditure on agency staff from £20,675,051 in the year to October 2012 to £19,714,498 in the 12 months ending October 2013.
A spokesperson from Ealing Council tells Recruiter: “Ealing Council has been able to cut its spend on agency staff by joining with other public sector organisations under the national Managed Service to Temporary Agency Resources framework. By combining purchasing power, the framework was able to offer record-low agency fees, which gives Ealing residents better value for money.”
As Recruiter reports in the March issue of the magazine, Ealing is not the only council that is trying bear down on its spending on agency staff, with the London Borough of Islington setting out plans to cut both its spend and its reliance on temporary agency workers.
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However, they along with other suppliers face rising competition, according to industry experts.
The report shows that Comensura billed the London boroughs £264,866,433 in the two years ending October 2013, giving it a 34.71% share. The next biggest biller was Matrix Supply Chain Management, with £99,601,709, a 13.05% share. However, most of this – though the amount is not recorded in the public records analysed by Spend Network – is then passed onto the agencies that supply through Comensura and Matrix.
The analysis by Spend Network shows that the 33 London Boroughs spent £389,191,716 on agency staff in the 12 months ending October 2013, a rise of 4.93% on the previous 12 months. This figure is higher than the £282m amount billed by the top six biggest suppliers because it includes spending on suppliers outside the top six.
Among the six biggest London local authority users of agency staff, spend rose by 13.8% to £141,704,495.
Of the six biggest suppliers, Manpower saw a 15.4% increase in its revenue in the two-year period, with its sales rising from £18.46m to £24.58m. However, Hays’ revenue fell by 17.7% from £30.58m to £20.72m
According to Ian Makgill, author of the report, while “Comensura remains at the top, it appears to be experiencing more competition”.
None of the suppliers mentioned in this article would comment on the findings.
Sue Dodd, director of the Agile Intelligence, tells Recruiter: “The challenge for recruiters has been to jockey for marketshare. Given the dominant position of managed services inevitably it is the large MSP providers who have supplied, either as master or neutral vendor, the lion’s share of the business.
“A brief analysis suggests first that the gains/losses are relatively minor over the period but rising competition is evident as both Reed and Manpower see good spend growth at the expense of Hays in particular. However, it is a complex picture with some share erosion seen from Comensura, Hays and even over a two-year rolling period, Manpower, with Reed the clear gainer.
“Nevertheless, Comensura and to a lesser extent Matrix dominate the market and their ability to increase on contract penetration in those boroughs it is contracted to is the real key to raising its spend under management.
“Here Comensura has a strong record with any off-contract spend to competitors restricted to only 6% in Ealing and 16% in Islington. By contrast Matrix sees 26% of spend off-contract in Enfield. Big contracts will determine the large shifts in marketshare but attention to the detail in individual contracts will be the key to small, steady gains and optimising the opportunities on contract extensions and new tenders.”
Spend Network’s Makgill says that he is surprised to see spending by London local authorities rising at a time of continuing austerity. “The government has announced more cuts to local government, and we are seeing councils like Wolverhampton threatened with insolvency. The last thing they want is an increase in one of the primary categories of spend, which is agency spend, but that is what they are getting.”
One exception is Ealing Council that, according to the figures produced by Spend Network, cut its expenditure on agency staff from £20,675,051 in the year to October 2012 to £19,714,498 in the 12 months ending October 2013.
A spokesperson from Ealing Council tells Recruiter: “Ealing Council has been able to cut its spend on agency staff by joining with other public sector organisations under the national Managed Service to Temporary Agency Resources framework. By combining purchasing power, the framework was able to offer record-low agency fees, which gives Ealing residents better value for money.”
As Recruiter reports in the March issue of the magazine, Ealing is not the only council that is trying bear down on its spending on agency staff, with the London Borough of Islington setting out plans to cut both its spend and its reliance on temporary agency workers.
• Want to comment on this story? The Comment box is at the bottom of the page. Sorry for the glitch but just scroll right down and share your opinions!
