The Contrax Workforce Blog

Should You Use an MSP or Self-Manage Your Contingent Workforce?

Written by John Clark | Feb 2, 2022 6:43:31 PM

When it comes to managing your contingent workforce, your organization typically has two choices. Do you partner with a Managed Services Provider (MSP) that specializes in the contingent workforce, or do you manage your contingent workforce internally? 

The right answer depends entirely on the requirements of your organization and the resources you have available. There is no one size fits all. Either an MSP or a self-managed program could be right for you, but how do you find out?

In this blog, we’re going to look at some of the pros and cons of managing your contingent workforce internally, as well as outsourcing that management to an MSP. Before we get into that, let’s first take a quick look at what an effective contingent workforce management program is crucial to the success of your business. 

Why you need to implement an effective contingent workforce management program

As the contingent workforce grows, so has the importance of managing it correctly. In fact, the growing number of businesses that are increasing their use of contingent workers means that contingent workforce management is now a business priority

Yet many organizations don’t see it that way, especially those with smaller volumes of contingent workers. The problem here is that when contingent workforce management isn’t taken seriously, organizations don’t put company-wide processes in place. 

That leaves hiring managers engaging staffing agencies on their own terms and at their own rates - with no trail of what has been paid and what workers have been sourced.

This leaves companies with a number of issues, including a lack of visibility into their contingent workforce, no control over where money is being spent, no insights into the performance of their staffing agencies, and a lack of documentation that could lead to compliance issues such as misclassification or co-employment. 

All these issues mean two things. Your business is:

  1. paying way more for your contingent program than it should be, with no visibility into spend;
  2. hiring low-quality workers at a slower pace than you need them.

MSP Vs. in-house: What’s best for your business? 

Thankfully, the above challenges can all be addressed by simply implementing an effective contingent workforce management strategy into your organization. But is it best for your organization to manage this in house (with the help of a Vendor Management System), or should you partner with a contingent workforce MSP?

This question will come down to the requirements and resources that your business has, but typically here at Contrax we find that most organizations don’t have the time, resources or expertise available to implement and run a successful contingent workforce management program - especially those businesses with smaller volumes of contingent workers. 

The pros of using a contingent workforce MSP

An MSP will work with you to build and implement an effective contingent workforce management program, including the implementation of innovative software like a Vendor Management System and the recommendation of staffing vendors, that works for your company’s specific needs. From sourcing vendors to making payments, a managed services provider will manage all aspects of your contingent workforce program to improve all areas of cost, risk, quality and visibility. While outsourcing the management of your contingent workforce might be more expensive than doing it in house, the money you save will bring your organization hugel return on investment. 

The cons of using a contingent workforce MSP

In an MSP arrangement the outsourced company will be responsible for managing all aspects of your contingent workforce, from setting up the program, interacting with vendors, hiring contingent workers, onboarding, offboarding, billing and much more. If you don't partner with the right MSP, it’s possible that your organization could be wasting money that doesn’t help you to reduce spend and doesn’t improve your workforce quality.  That’s why if you choose to work with an MSP, you take the time to make sure you partner with the right provider. 

The pros of managing your contingent workforce in house

Companies that have the resources and expertise to successfully manage their own contingent workforce program can save money - assuming they are implementing an effective program that gives them visibility into workforce quality and cost. For businesses that want to go this route, there are Vendor Management System options that give them the ability to effectively manage processes such as maintaining vendor relationships, measuring staffing agency performance, sourcing workers, and making payments all on one company-wide piece of software. A contingent workforce consultant can help your business find the right VMS software for your company’s unique needs.

The cons of managing your contingent workforce in house

When you implement a contingent workforce management program in house, you need expertise in the contingent category. Unless your business is a large enterprise corporation, it’s unlikely that your business has this specialized knowledge and experience. This is important because a poorly implemented contingent workforce program can seriously impact your bottom line and talent quality. If you don’t have this expertise, it’s recommended you work with an expert consultant. ]

Interested in learning more about how you can improve your contingent workforce program? Contrax has a range of solutions to help your organization better manage its contingent workforce and staffing agencies. Get in touch today. Our team of contingent workforce experts would love to help.