Telstra has named the five suppliers that will vie for up to $1 billion worth of contract labour business over the next three years.
Andersen Contracting, Candle Australia, Intellimark, ISES, and Paxus Australia will supply all Telstra's contract labour needs for the next three years after being chosen via a tender process.
Tom Pearson, Telstra's general manager of strategic sourcing, told Computerworld the telco previously dealt with about 20 suppliers.
He admitted that the past method of obtaining contract labour "wasn't particularly slick".
He said pricing and incentive arrangements with Telstra's original suppliers had not been designed, but had "developed and evolved".
"We weren't making use of our leverage in the market," he said.
But under the new panel arrangement, Telstra has established a pricing model based on fixed dollar rates for 30 categories of IT staff.
Telstra will also implement an e-procurement system to enable suppliers to compete to offer the best deal whenever the telco has a demand for contract labour.
The system will also simplify communications between Telstra and its suppliers.
Suppliers will receive an additional management margin for any contract labour they secure and, as an added bonus, will share in any cost savings they deliver to Telstra.
Telstra's panel arrangement with the contract labour suppliers will run for three years, but the telco will review performances every six months, reserving the right to discontinue its arrangement with any supplier who does not meet determined criteria. According to Pearson, Telstra uses between 1000 and 1500 contractors a day across its business units.
He said there are no plans for Telstra to significantly change those numbers in the future.