11 November 2021

Contingent Workforce Management: What is an MSP and Do I Need One?

3 min read

The world of work continues to evolve. Organizations across North America, and the world, are increasingly investing in the contingent workforce to access skilled workers, increase business agility, find new cost savings and improve the quality of their workforce. Yet while engaging staffing agencies helps your business fill those needs, it comes with its own set of challenges.

Any contingent workforce management program requires a large amount of data, and that information must be successfully managed and analyzed for continual workforce improvements and cost savings. 

Yet most companies don’t have the resources, investment or expertise to manage their staffing agencies and contingent workforce correctly. This results in a complete lack of visibility and control over their contingent workforce, leading to rogue spend, low workforce quality and poor decision making.

That’s where a managed services provider can help. 

What is a managed services provider?

A Managed service Provider (MSP) is an outsourced company that provides your business with a highly-effective way to manage its contingent workforce program, including your nontraditional workforce and your staffing agencies.

Essentially, an MSP is a team of contingent workforce experts who help your company source and manage temporary workers (or permanent if hired through a staffing vendor) from their preferred staffing agencies.

An MSP will take over the day-to-day management of your entire (or just the parts you want) contingent workforce program. That means they’ll manage the entire talent life cycle of contingent workers and staffing agencies from acquisition to payment.

A managed services provider will facilitate tasks such as requisition processing, managing supplier performance, on-boarding facilitation, collecting timesheets and approvals, supply chain management, onboarding, invoicing & payments and much more.

What are the different types of MSP models? 

While all MSPs aim to achieve the same results, they can use different models to make that happen. Typically, a Managed Service Provider will run programs that fall into one of these two categories.

Vendor neutral: The MSP works with a number of vendors who all have equal opportunity to fill a position within a specific time. True neutrality also means the MSP is not owned by, and is not affiliated with, a staffing agency.

Master vendor MSP: A scaled back version of a full MSP program, a master vendor model will act as your single point of contact for all of your externally-sourced staffing needs - working with pre-approved staffing agencies to fulfill your temp and perm workforce requirements. This model is typically more flexible and more simple to allow for a faster setup process but does not contain the entire suite of services like a full MSP program.

What are the benefits of an MSP?

The foundation of an MSP is to help your organization streamline and manage its entire contingent workforce program. That includes improving efficiencies, gaining visibility into the program, controlling costs, improving workforce quality and mitigating risks. 

Here are a few ways in which partnering with an MSP will benefit your business:

  • Improve your access to quality talent.
  • Improve efficiencies and reduce process complexity.
  • Give your organization greater visibility of nontraditional workforce and staffing agency spend.
  • Improve hiring metrics such as time-to-fill and turnover.
  • Reduce workforce costs.
  • Give your business the time it needs to focus on core functions.
  • Ensure compliance with contingent workforce regulations. 
  • Access to VMS technologies and integrations that support the management of your contingent workforce.

How much does an MSP program cost?

It’s impossible to say exactly how much a managed services provider program costs as it’s different for all organizations, depending largely on the size of the program and their contingent workforce budget.

However, there are two common pricing structures for MSP programs.

Supplier-funded model: This model is 100 percent funded by the supplier. A transaction fee is charged to all suppliers to offset the costs of setting up, managing and operating the MSP program. This saves your organization money, but it can, in some cases, result in a more difficult implementation and supplier push back

Client-funded model: This model is funded by the client, which pays a fee to their MSP partner. While the cost is coming out of your company’s own pocket, the cost savings you incur from an MSP model and the high-quality talent placed into your organization still make it a great ROI.

Are you interested in learning more about MSP models and how they can help you better manage your contingent workforce program, for improved cost savings and better workforce quality? Get in touch with Contrax today. Our team of non-employee workforce experts would love to answer your questions.

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