Contingent worker managed service solutions have been in existence for more than two decades, providing visibility, control, standardisation of supply chains and improved rates.
However, when a contingent MSP is mature, it can be difficult to see how further cashable savings can be made.
As part of our recent webinar, ‘Delivering cost savings in mature contingent resource programmes’ we spoke to Principal Consultant at Proxima, Christine Morton, Managing Consultant at Reed Talent Solutions, Ailsa Hegarty, and Operations Director at Evolving Solutions, Jamie O’Connor, about how added value can be driven from MSPs.
What are the challenges in delivering savings on an ongoing basis?
Proxima's Christine Morton, said challenges on how to deliver continued cost savings on mature programmes “are largely internal”.
“You will always have finance teams asking for more savings,” she said.
“If you are listing your indirect spend items, contingent labour is usually one of the largest.
“There is also the perception that one of the main measures of procurement department success is savings and that can get people twisted into Pretzels trying to measure them.
“If I was a Harry Potter fan, I would say savings calculations would be taught under the Defence of the Dark Arts course.”
Christine said the reality is there is no shame in having a mature programme that is commercially sound, with market appropriate fees and that delivers talent as and when needed.
She added: “It doesn’t mean you can’t make improvements to that service to make it even better, so the challenge is convincing internal stakeholders of that value and showing them that through the programme data.”
Reed Talent Solutions' Ailsa Hegarty, said choosing the right partner is essential when facing such challenges.
“There has got to be the energy, the motivation, and the mandate to start looking at where you are, where do you need to be and how can you find more value across the board,” she said.
“You can easily stand there and say I’m going to ignore some of this and just stay where we are as we are doing ok. Having that energy and desire to move forward is important.”
Ailsa added that one of the most important things for organisations is not to be complacent.
She said: “You can’t think you are locked down on rates and costs. You have to be always looking for the next evolution because the market is changing.
“Stepping back a moment and allowing things to drift is definitely not something you can do. I like to call it value rather than cost.”
How can you make ongoing cost savings?
Evolving Solutions' Jamie O’Connor, specialises in supporting procurement in the public sector including advising two of the largest collaborations for contingent labour contracts, the London Collaboration – which consists of 20 London boroughs - and the Greater London Authority Collaboration.
He said many mature MSPs across London are now looking at social value rather than simply cost savings.
“It’s about how can the suppliers affect the local community, and how can we use the suppliers’ skills and expertise in recruitment to focus on some of those furthest from the labour market and getting them into jobs,” Jamie said.
He said there has been a development from the use of basic workshops to job creation shops which “go out to the local community and help them find work”.
Jamie said one practical example of this kind of work has seen the creation of programmes where people in London on Universal Credit have been helped to find work on the London living wage.
“It is not specifically a saving for the council, but it is creating social mobility in the local area and this is what a lot of councils are now trying to focus on,” he said.
“The key thing is it is now being measured. At one London council I know of, in the last year 50 people were taken from being on universal credit into full-time London living wage roles. That’s worth round about, in a cash value, £250,000.
“You are not going to get savings from the margins anymore. It is all about what these suppliers can add in.”
Ailsa Hegarty said she sees ongoing savings as coming in “three buckets”.
“Your first bucket is you’ve reviewed your current MSP, you know where you are at, and you have also looked at your cost savings and maybe they have been realised,” she said.
“The second bucket is looking at your efficiencies and along with that at other services; what more can the provider you are working with realise for you? Whether that is joint venture work, looking at off-contract spend, or looking at employee value proposition.
“Third, is looking at statement of work consultancy – what else should be included in your MSP to drive savings and value.”