More than 55 percent of procurement and finance professionals expect a recession to begin before the end of 2020, and 30 percent of them say they’re not prepared to cope with an economic downturn if it hits.
According to research published by the Seattle-based financial system provider Suplari, many procurement and financial staff members see contract renegotiation and vendor consolidation as the key tactics to optimize spend. At the same time, they say travel will get the most scrutiny, followed by facilities, office supplies and marketing.If recession hits, procurement & financial staff see contract renegotiation and vendor consolidation as their key tactics to optimize spend. What's that mean for #HRTech? #HRBiz #HRTribe Click To Tweet
Also worth noting: 8 out of 10 companies have set cost-savings goals for the current fiscal year.
A number of economists and other financial experts have been talking more about recession lately. Economist and money manager Gary Shilling, for example, recently told MarketWatch, “I think we’re probably already in a recession, but I think [it will] probably be a run of the mill affair, which means real GDP would decline 1.5 percent to 2 percent.”
Meanwhile, a survey of business leaders by the National Association for Business Economists came to a conclusion much like Suplari’s: American executives are increasingly concerned about a downturn hitting by the end of 2020.
Facing a Recession
Among the report’s most notable findings:
- Healthcare and life science companies are more likely than average to look for savings in professional or HR services. Financial services firms, on the other hand, are less likely to scrutinize those areas.
- High technology and SaaS businesses are more likely to seek contract renegotiations.
- Companies with revenue below $250 million are less likely than larger companies to invoke outsourcing as a strategy. Companies with revenue that exceeds $5 billion, are more likely to delay project expenditures (53 percent) and less likely to focus on consolidating vendors.
- Top-tier and middle-tier suppliers are more likely to face scrutiny than “tail-tier” suppliers. However, small companies are less likely to focus on them
- Businesses with between $250 million and $1 billion in revenue are most likely to worry about “losing suppliers and/or contract partners.”
While many fundamentals suggest the economy remains healthy today, Suplari sees “looming signs of a slow-down, or even a recession.” The company cited analyst reports of business leaders being concerned that job markets, credit risk and tariffs could combine to put a brake on the economy.
“Finance and Procurement professionals operate closely and holistically in relation to the matters of spend management, purchasing activity, savings optimization and risk factors,” said Suplari CEO Nikesh Parekh. “They are likely to be the first in their organizations to perceive and deal with the impact of a recession.”
It’s an interesting survey, which can be downloaded here.
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