A Managed Service Provider (MSP) is a critical component to managing contingent or Statement of Work workers. An MSP is an outsourced contingent workforce management solution that will manage the entire talent life cycle of contingent workers from acquisition to payment. A Managed Service Provider (MSP) will incorporate a Vendor Management System (VMS) that will provide companies with complete visibility into the status of each contingent or SOW worker in the organization.
The world of work continues to evolve – quicker than it ever has before since the coronavirus swept across the world– and organizations are increasingly investing in the power of a contingent workforce to become more agile in these disruptive times. As employers everywhere are using more forms of contingent workers in their post coronavirus recovery strategies, it’s likely that your business is also getting on board with the same transformation.
For answers, organizations committed to a more strategic approach to contingent talent monitoring and management are turning to a Managed Services Provider or Managed Service Provider as an effective resource.
If you’re considering investing in a Managed Service Program or are interested in learning how one can help optimize contingent workers to drive your business forward, the following insights will help you make an informed decision.
What is MSP?
Today, Managed Services is one of the fastest growing outsourced talent acquisition solutions, with Everest Research Group reporting that the global Managed Services market surged 10.1 per cent between 2015-2016, with experts predicting the solution to outpace global economic growth. A Managed Services Provider will have the IT infrastructure, expertise and remote monitoring and management solutions in place to provide companies with complete visibility into their contingent workforce.
Why do organizations partner with a Managed Service Provider?
As effects of the pandemic continue to drive business strategies, it’s critical for companies to become more agile, and a contingent workforce is the widely-adopted answer to bridging skills gaps and driving both growth and innovation.
At its most basic delivery level, a Managed Service Provider will help an organization easily streamline and manage its entire contingent workforce program by improving efficiency, controlling costs and mitigating steep fines, penalties and reputational damages associated with certain risks.
While early Managed Service models maintained a focus on process improvements and cost savings, more mature Managed Service providers, however, are now seeking ways to increase access and delivery of high caliber talent while reducing time to hire. To do so through the use of technology stacks, Managed Services are leveraging direct sourcing solutions for greater access to talent pools and niche skills, sourcing alternative acquisition resources like Artificial Intelligence (AI) and other initiatives that increase savings while ensuring quality talent engagement and retention.
Different types of MSP models
Typically, a Managed Service Provider will have programs fall into one of these models:
Vendor neutral: All MSP vendors have equal opportunity to fill a position within a specific time.
Master vendor: A Preferred or Master Vendor is given preference to fill a position first but must release the role to other vendors if they fail to find talent within a specific time.
Hybrid: This type of model will include elements of the first two programs.
Managed Services drivers, MSP focus and benefits
For most organizations partnering with a Managed Service Providers there are seven key drivers that are aligned with specific operational challenges. These drivers include:
1. Operational challenge: Minimizing risk of non-compliance
MSP focus: On/Offboarding with contingent workforce audits and rate compliance visibility.
Benefit: Improved compliance, including rate compliance and worker on/offboarding compliance; better worker classification audits to minimize co-employment risks.
2. Operational challenge: Controlling rogue costs related to spend
MSP focus: Cost control.
Benefit: Greater visibility into costs using vendor performance metrics to ensure effective negotiations and development of sourcing strategies.
3. Operational challenge: Drive for improved performance and cost efficiencies
MSP focus: Closer supplier management with access to benchmark rates.
Benefit: Increased contingent workforce quality and performance with reduced time-to-hire. This is a result of supplier base optimization and requisition optimization through hiring manager feedback on services and formal Service Level Agreements (SLAs).
4. Operational challenge: Sourcing hard to find talent
MSP focus: Developing new sourcing models.
Benefit: Support in implementing technology in conjunction with delivering process change.
5. Operational challenge: Speed of change and large ramp up of worker volumes
MSP focus: Agility to support peaks and troughs of contingent worker needs.
Benefit: Outsourcing the MSP program can be a more effective way to manage business cycles.
6. Operational challenge: An increase in complex operations
MSP focus: Souring optimization to support diverse needs.
Benefit: Scaling your contingent workforce program to new markets where internal knowledge may be limited.
7. Operational challenge: Managing VMS technology and integrations
MSP focus: Services and technology support.
Benefit: Significant operational changes can require a new solution as it remodels its blended workforce. A Managed Services Provider will support these tech changes across the entire contingent workforce delivery.
Beyond these key drivers, competitive organizations are also turning to a Managed Service Providers in order to build on their employer brand and leverage the use of predictive analytics to ensure a better contingent workforce program with access to niche skills.
Is a Master services provider (MSP) right for me?
A Managed Service Provider will require organizations to have a minimum amount of contingent worker spend in order for the program to be successful and self-sufficient. When deciding whether or not a Managed service provider is the right solution for your organization’s needs, there are first some basic and more complex factors to consider. First, it’s critical to understand how much contingent workers are currently costing your organization. It’s a unique number to an individual business, yet can be difficult to account for, as nearly 60 per cent of contingent worker costs is unaccounted for in the average business.
You’ll also want to know how current buying is being done for the various elements of your contingent workforce and what controls are in place to manage the current program.
Additional questions on your Managed Services checklist should include:
When companies are considering partnering with a Managed Services or Managed Service partner, below is a list of additional considerations:
• Has my contingent workforce program outgrown my current IT infrastructure, management strategy and are my needs become more complex?
• Am I securing contingent workers in the time frame I need to?
• Do I have clear visibility into contingent worker spend?
• Have recent policy changes made me concerned about compliance?
• Am I engaging more contingent workers now than I have in the past, and do I plan on securing more in the future?
• Does my business need better cost control among staffing vendors?
• Is my business looking for IT infrastructure that ensures more detailed reporting, workforce analytics and key insights to make better data-driven contingent labor decisions?
• Could my business benefit from a workforce consultant with knowledge regarding labor trends and tailored solutions?
The role of a trusted Managed Services partner
A trusted Managed Services Partner partner should be committed to advising on the best solutions available to meet an organization’s business goals and to delivering innovative services that transform how they acquire and manage talent. This is done by listening to an organization’s specific business needs and tailoring a solution that delivers both short and long-term value across an entire contingent workforce program.
Your Managed Services partner will harness the power of a Vendor Management System to manage your contingent workforce.
Learn more about Vendor Management Systems with our insights into the technology.