The MSP – much more than a route to market for contingent labour

Managed service programmes (MSPs) can incorporate more than a contingent workforce – here’s how they can give you control over all your non-permanent engagements.

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When organisations take the decision to adopt an MSP for their recruitment needs, the majority do so to manage their contingent workforce, whether this be temporary workers or contractors.

However, the effectiveness of MSPs goes beyond traditional contingent labour sources. Managed service providers are increasingly incorporating other aspects of non-permanent requirements into MSPs, such as consultancy, services procurement and those operating on a statement of work basis.

There are compelling reasons to include these types of engagements in a managed service. However, organisations must ensure they have the support of all relevant internal stakeholders before doing so.

The journey to incorporating non-permanent requirements in an MSP

The introduction of an MSP is a journey for all organisations. They are likely moving from a process which encompassed preferred supplier agreements (PSAs) as the most formalised route to market. Getting hiring managers to move away from a process where they simply pick up the phone to their preferred contacts at recruitment firms when contingent requirements arise can be a challenging discussion.

Now envisage this conversation not only encompasses temporary workers and contractors, but all non-permanent resource. Those within an organisation who engage consultants, procure services and issue statements of work are unlikely to have even considered that these requirements would be incorporated into a managed service aimed at securing contingent workers.

As such, the mindset shift required will often be too great for an organisation to include non-permanent resource as part of a first-generation MSP solution. Once all internal parties are accustomed to accessing the MSP for contingent requirements it becomes a more natural step to incorporate other forms of non-permanent labour in second, third or even fourth-generation MSPs.

The desire for cost savings also dictates the length of the journey to incorporating statements of work and other non-permanent engagements as part of a managed service. MSPs are unsurpassed at maximising cost savings on contingent resource for many organisations, but there is a limit to the savings that can be made in one area. Instead, organisations will focus on making savings in other areas of labour spend – such as non-permanent engagements.

Adding statements of work to MSPs to derive best value

The benefits to incorporating non-permanent engagements such as statements of work into MSPs can be split into three areas.

Cost certainty and aggregation

Aggregating spend into one solution should generate cost savings. However, organisations using statements of work should aim for these engagements to produce best value and cost certainty, rather than simply having a laser-like focus on delivering vast cost savings.

It may be that engaging resource on a statement of work basis could lead to a greater up-front cost than simply paying a daily rate for the completion of project work. However, engaging resource in this way offers a fixed price, certainty over deliverables and outcomes, and provides a better idea of the timescales involved. This certainty will more often than not provide cost benefits when compared to undefined project work. It is the difference between perceived cost-effectiveness and actual best value.

Visibility and control

Secondly, working with one supplier can help avoid the ‘leakage’ which is common when the responsibility for engaging non-permanent resource rests with multiple internal stakeholders.

As with using an MSP for contingent labour, moving from multiple relationships with different recruitment companies to managing one relationship with a trusted partner offers better visibility and control, as well as streamlining invoicing, management information and other systems and processes.

Hiring managers have a lot of plates to keep spinning, and are often not experts in specialist areas such as compliance. Partnering with a temporary workforce expert will ensure all compliance requirements are met and bring about greater transparency. This can be seen, for example, with vetting requirements and IR35 which are often not as closely controlled in adhoc arrangements as they are in an MSP.

Developing a partnership

Finally, and perhaps most importantly, you can successfully work with your provider to understand when statements of work are appropriate to use. Too often organisations treat MSPs as an ordering system for contingent labour; they are most effective when the provider and customer work as a partnership.

Rather than simply looking for a provider to supply labour, offering them an insight into your strategic workforce planning and medium-to-long-term requirements allows them to triage your needs and determine the best route to market. By incorporating non-permanent engagements into an MSP, both you and the provider have greater options and flexibility when it comes to acquiring resource.

For example, a council has a requirement for several qualified social workers. If the council is working in partnership with its provider, then the latter would know this need has arisen to clear a backlog in cases. It would then recommend engaging the social workers on a statement of work basis, rather than as contingent resource, to provide best value.

This solution allows the council to receive a fixed price, set clearance of the backlog as the outcome of the project, and better define the timescales involved. If it hadn’t used the MSP provider’s expertise, it would’ve simply engaged the social workers on a contingent basis – leaving costs, outcomes and timescales completely open ended.

Forming a partnership with a provider who can triage your holistic strategic workforce needs and offer a full spectrum of solutions therefore gives you the opportunity to derive best value from non-permanent engagements such as statements of work.

Just as MSPs covering multiple categories of staff have replaced those only covering a single category, they are evolving to incorporate all non-permanent engagements – rather than just covering temporary and contract resource. Working with a provider who can triage your needs and offer experience and expertise in all non-permanent routes to market is vital for you to reap the benefits of an MSP.

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