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From partnered delivery to self-sufficiency: How Zendesk boosted margins through strategic cost discipline
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- Case Study
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As the tech industry matures, chasing top-line growth is no longer enough; scalability and margin expansion demand sharper cost control. Tech executives must move beyond treating cost management as a reactive function and take advantage of its strategic potential. Zendesk’s post-acquisition transformation – resulting in 14% annualized savings and a percentage point gross margin increase – demonstrates the impact Procurement can deliver when positioned as a driver of financial performance.
Zendesk, a US-based SaaS company, was acquired by PE firms Permira and Hellman & Friedman in 2022. As part of a broader post-acquisition value creation plan, Efficio was engaged to assess the company’s cost structure and unlock procurement-driven savings.
Zendesk’s challenges were multi-dimensional, ranging from cultural to structural and technical. The engagement ultimately developed into a multi-year transformation that helped reposition Procurement as a credible, high-performing partner to the business, delivering cost savings, margin uplifts, and more.
Evolving focus: From high-impact delivery to internal capability
Phase 1: High-impact delivery and foundational enablement (months 1–14)
At the beginning of the partnership, Procurement was in the early stages of its maturity journey. It had limited influence over sourcing decisions, minimal collaboration with Finance on forecasting, and no formal savings tracking process. These gaps represented a clear opportunity to improve procurement performance and embed greater cost discipline.
Efficio was brought in to deliver immediate savings and lay the foundations for a more effective and commercially engaged function. Over the first 14 months, the focus was on driving high-impact sourcing outcomes across complex, high-spend categories, while introducing the structures, governance, and behaviors needed to establish Procurement as a credible partner to the business. Key enablers included a Finance-validated savings sign-off process, a structured renewal and sourcing pipeline, and tighter collaboration between Procurement, Finance, and Engineering.
Impact: This phase delivered significant savings, 40% of which were COGS savings, improving gross margin by 1 percentage point. Procurement began to gain recognition across the business as a strategic function that could unlock impactful, measurable value.
Phase 2: Capability transfer and sustainable value delivery (months 15–26)
With a robust foundation in place, the focus shifted from external delivery to internal enablement – a mindset shift from outsourcing delivery to owning processes, capability, and outcomes.
Zendesk extended its partnership with Efficio to focus on building internal capability. While still directly working on delivering savings, Efficio provided the practices, tools, and coaching required for Zendesk’s procurement team to independently manage pipelines, engage stakeholders, and run sourcing events. As a result, Procurement evolved into a strategic business partner, equipped to deliver value.
Impact: The second year of the Zendesk-Efficio partnership yielded additional savings, 32% of which were COGS savings, improving gross margin by half a percentage point. Crucially, Zendesk developed the internal capability to sustain performance. The procurement team now had:
- A centralized, structured contract repository for improved renewal planning and negotiation leverage
- A validated, bottom-up initiative pipeline with the credibility to inform finance planning
- A streamlined intake process, allowing Procurement to prioritize high-value initiatives
These capabilities gave Zendesk the structure and visibility to drive performance autonomously, marking a transition from external reliance to internal ownership.