The recruitment sector is paying three times too much for IT products, according to the third annual IT margins survey from KnowledgeBus.

This is due to a lack of awareness and transparency concerning product mark-ups meaning that employers believe they are still getting a good deal.

Research has revealed that the recruitment sector have paid average margins of 24 percent and in some extreme cases up to 341 percent above the trade price.

These margins are a cause for concern, the Society of IT Managers (SOCITM) states that margins should not exceed more than 3 percent of the trade price.

Al Nagar, head of benchmarking at KnowledgeBus, says:

“The size of some of the margins is a concern. In all likelihood these will be products that fall below the scrutiny radar – the one-off or low volume purchases, which may be a distress item or spontaneous buy. They may also be smaller items like extension cables, USB flash drives and SD cards.

“The scrutiny of spending on these items cannot be neglected, however, as they often make up a larger than expected percentage of the budget – in some cases as high as 25 percent.”

In general, organisations did show they are reducing the average margins paid overall on IT equipment. The average across all industries dropped from 21.1 percent in 2013 to 19.6 percent in 2014m but this is still well above the industry benchmark of 3 percent.

Nagar adds:

“A slight drop in average margins across all sectors suggests that many organisations are getting better at scrutinising their IT purchases,”

“Achieving the best price on IT products can be difficult, with trade prices in a constant state of flux, and yet product lifecycles send prices down over time. Securing optimum price requires careful monitoring of the market situation and data analysis. In the main, IT managers and procurement teams are becoming more vigilant but the research has shown better value and savings could be achieved.”





Amie Filcher is an editorial assistant at HRreview.