The MSP Handbook Part 1
This first guide in our series on MSP will give you the full picture of a first-generation MSP solution.
The MSP handbook
The complete guide to securing a first-generation MSP solution for your business
The *rise of flexible talent* is difficult to ignore for businesses across the globe.
What is a Managed Service Provider?
A company that takes on primary responsibility for managing an organisation’s contingent workforce program. Typical responsibilities of an MSP include overall program management, reporting and tracking, supplier selection and management, order distribution and consolidated billing.
Staffing Industry Analysts
The dramatic changes experienced due to COVID-19 are almost certain to impact the years to come.
Despite rising unemployment, technical skills shortages are almost certain to still exist post-COVID-19 pandemic. Digital transformation may be rapidly advancing today, but this will inevitably increase the need for technical expertise.
Economic uncertainty is impacting almost every business, which makes permanent hiring a higher-risk decision. The desire for flexible work has intensified as people learn they’re equally productive working from home.
All of these factors combined suggest that the business community’s long-standing shift towards flexible, contingent talent is set to continue as we exit the coronavirus crisis.
Of course, temporary and contracted talent was not just a minor supplement to a business’ fixed, permanent workforce, even before the crisis.
Only 42% of 11,000 respondents reported their business was primarily made up of permanent employees.
- Deloitte, Global Human Capital Trends report
In Deloitte’s Global Human Capital Trends report, only 42% of 11,000 respondents reported their business was primarily made up of permanent employees.
Meanwhile, 50% were using a significant number of contracted workers, 23% were using a significant number of freelancers, and 13% of businesses using a significant amount of gig workers. We have entered a new age.
The rapid rise of flexible talent is, of course, beneficial to businesses — advancing their agility, elasticity and resilience to change — something we’re all acutely aware of. But this trend also adds complexity, especially as large organisations engage contingent talent across multiple functions and territories. Indeed, if a contingent workforce is not well coordinated and managed, it can add an unacceptable level of risk to any organisation.
For one, a lack of data visibility and transparency causes deep anxiety, especially where businesses aren’t able to make high-cost investments in workforce management technology.
Compliance is also an added source of trouble. Staying on top of one nation’s ever-evolving contingent worker law is difficult enough for businesses (take IR35 in the UK, and the changing regulations across US states, for example), but for global organisations, ensuring contingent talent is compliant in multiple geographies can lead to serious complications.
In light of this, businesses are leveraging the compliance expertise, workforce technology and talent acquisition prowess of managed service providers (MSP) to solve their most pressing concerns.
For first-generation buyers, the world of MSP can be a complex landscape to navigate.
From getting business buy-in at the top level to managing the complex implementation of a managed service program, a contingent workforce solution isn’t always an easy sell — even as businesses focus on building stronger temporary workforces.
Likewise, finding an MSP partner that aligns with your values and you can trust, going through the RFP and selection process can be convoluted and time-consuming.
To help you navigate the challenges of finding and securing a contingent workforce solution, the rest of this guide will answer the most common questions and concerns we experience from those new to MSP. We’ll also present advice from experts within our business on the best approaches to securing the right solution.
This guide is intended to give you the full picture so you can make the best decision for your business. I hope that you find it useful.
The *rapid rise of the MSP* market
The *rise of the contingent workforce* has mirrored the maturity of the MSP market, with further growth expected as businesses become more flexible.
The latest figures from Staffing Industry Analysts indicate 2018 marked an 8% growth in the global MSP market, following a 12% rise in 2017. Interestingly, though 50% of the market remains in the US (growing 1% overall last year), we are seeing higher growth in EMEA (19% in 2018) and APAC (9% in 2018).
Market analysis by Statista also indicates the global managed services market is expected to grow to US$296 billion by 2023
So what’s driving such a strong and sustained growth in the MSP market? The expansion of the contingent talent market is the most obvious answer, but the reality is more interesting.
Businesses with no prior experience of working with an MSP are recognising that while an MSP is often the most cost-effective way to manage a growing flexible workforce, managed service solutions have more to give. By taking care of compliance, technology and the management of contingent workers, an MSP can free up HR to focus on work more closely aligned to their strengths.
The rise of managed service programs is also a reflection of businesses wanting to remain competitive in increasingly aggressive markets. If a competitor is saving time and money managing their contingent workforce through an MSP, the likelihood is they’ll have more money to invest in other parts of their business, or at the very least, they’ll be able to run a tighter ship.
Thanks to changes in the way MSP programs are now modelled, businesses with a more modest spend can also utilise MSP. Since 2018, 68% of MSP contracts were awarded to businesses with no prior experience of using an MSP - in other words, first-generation buyers like yourself.
Globally, businesses from every sector - from retail to pharmaceuticals - are partnering with an MSP to manage their expanding contingent workforce.
To remain competitive, engaging with an MSP should be a major discussion point for any organisation utilising contingent talent
It’s businesses like yours that are driving the growth of MSP.
68% of MSP contracts in 2018 were awarded to businesses with no prior experience of using an MSP
Staffing Industry Analysts
MSP solutions *deliver big benefits* for businesses
With the *rise of a dynamic, flexible contingent workforce*, working with an MSP can allow businesses to *adapt to changing needs*.
Senior Vice President, Program Management
For a partnership with an MSP to be worthwhile, it needs to provide a business with measurable impact.
Though in years past, a managed service solution was assumed to only bring cost savings, a well-designed, well-implemented MSP can produce a number of significant benefits
One of the main reasons businesses seek an MSP is to ensure all of their contingent workers are compliant with employment law.
When you employ hundreds, or thousands of different contractors, working in multiple countries, in different departments, it’s a huge challenge to ensure all of them are compliant with local legislation.
Many businesses assume that recruitment businesses undertake compliance checks, but few actually follow up without auditing. Often, contractors can be non-compliant without the business realising.
This scenario is a (potentially costly) headache. By handing over the end-to-end management of contingent workers to an MSP (whose job it is to ensure compliance of every worker under the program) you reduce the stress of having to continuously assess and reassess workers, while simultaneously removing the risk of financial damages.
When a business partners with a managed service provider, they no longer have to deal with hundreds of invoices from multiple suppliers.
After MSP implementation, hundreds of invoices become one - with the MSP handling all supplier relationships. As contingent workforces expand and increase in complexity, this can be hugely beneficial.
Hundreds of man hours can be saved, with internal teams able to focus on other key strategic business areas.
Frank Fernandes, Project Manager, Guidant Global
Increased visibility and control of the contingent workforce
As the contingent workforce grows increasingly complex, having visibility of spend across multiple business functions becomes tough, especially if the right processes aren’t in place.
Multiple departments use different staffing suppliers, providing identical contingent talent at entirely different rates, and without visibility or control. Inevitably, this leads to cost inefficiencies, a complex invoicing process and inconsistencies.
Bring all contingent workers under an MSP, however, and these challenges disappear. With an MSP you have a single point of contact, with consolidated supply chains, and consistent contractual terms, ultimately providing a business with complete control and visibility of its contingent workforce.
70% of businesses rely on their MSP programs for technology solutions.
Staffing Industry Analysts
The introduction of technology, benchmarking and rate management
Like it or not, technology is changing the way businesses operate. But implementing workforce management technology, like vendor management systems (VMS), can be eye-wateringly expensive.
With pressure from every business function demanding the latest tech, getting sign-off on a VMS can be virtually impossible for HR and procurement professionals.
As such, it is no great surprise to learn that 70% of businesses rely on their MSP programs for technology solutions.
An MSP’s sole focus is on talent management, so it’s in their interest to harness the power of the latest recruitment tech.
From VMS platforms like Beeline, SAP Fieldglass and Coupa to salary benchmarking and rate management technology - such as Brightfield’s Talent Data Exchange (TDX) - an effective MSP program harnesses the data, insight and talent management capabilities these technologies provide to ensure a business’ contingent talent is fully optimised.
Technologies also ensure compliance. Hiring managers and HR functions often have CVs sat in their inbox for weeks or months - in the EU, this would break GDPR regulation. With a VMS in place, every CV, cover letter and other personal data is fully protected.
What is a Vendor Management System (VMS)?
An internet-enabled, often web-based application that acts as a mechanism for business to manage and procure staffing services (temporary help as well as, in some cases, permanent placement services) as well as outside contract or contingent labour. Typical features of a VMS include order distribution, consolidated billing and significant enhancements in reporting
Staffing Industry Analysts
A solid foundation for the future
Workforces are becoming more flexible - contingent talent is becoming an increasingly vital driver of business success.
By ensuring you’re managing your contingent workforce in the most effective way possible, an MSP program ensures you’re built for future prosperity.
While a first-generation MSP program brings the benefits alluded to, it’s also able to rapidly react to any changes in the market.
As skills shortages become more acute, talent becomes scarce and the competition for talent heats up, through partnering with an MSP, your business will be well-prepared for any unexpected market turbulence.
Likewise, MSP providers constantly seek to improve as the relationship develops.
Whether it be further cost savings, efficiencies or program expansion, their expertise will help you drive greater value from your contingent workforce over the long term.
An employer brand to attract the best talent
To attract the best people in today’s complex talent market, a business’ brand needs to be strong - even for contingent workers. This is a step change from a decade ago, when a business’ name alone would be enough to attract quality talent.
Today, even global behemoths like Microsoft, Apple and Google have to optimise their employer brand to attract the people they need. Candidates have more power and choice than ever, and businesses have to work increasingly harder to attract and retain the best talent.
In response, more emphasis has been placed on employer branding and employer value propositions (EVP). Traditionally, this would not be MSP territory. Increasingly, however, we are seeing MSPs utilising employer branding experts to help their customers improve the way they present their brand to contingent talent.
This new approach is commonly (and confusingly) referred to as Contingent RPO. Contingent RPO enhances an MSP program or area of the program, to ensure a business’ brand resonates with contingent talent. While it’s certainly not something every MSP offers, done well it improves a business’ ability to attract, retain and engage temporary workers
What is Contingent RPO?
Contingent RPO is a phrase that has been appearing a lot over the past few years, especially within HR and procurement circles.
Though the name may at first seem confusing (RPO traditionally being the preserve of permanent workforce solutions), put simply, contingent RPO takes all the benefits of the best permanent RPO solutions (such as employer branding, EVP, technology implementation, branded marketing campaigns and direct sourcing teams) and implements them within a contingent MSP program.
Is an MSP *the best solution* for your organisation?
An outsourced workforce solution is a significant commitment and it can take a year to confirm your requirements
An outsourced workforce solution is a significant commitment. Even for billion-dollar global enterprises, it can take upwards of a year to confirm your requirements, engage potential providers, choose a suitable partner and implement the program.
For this reason, it can lead to HR and procurement professionals questioning whether an MSP is the best solution. But the business value which can be unlocked - both operational and financial - is significant.
For some businesses, however, an MSP may be the wrong choice. If you don’t use a significant number of contingent workers (and we’re talking about dozens in a key location or hundreds/ thousands across your wider business) you might achieve better value sooner with a smaller-scale solution.
Before deciding to pursue an MSP, you should ask yourself the following questions:
- Is your contingent workforce becoming more complex?
- Are you employing more contingent labour than you have done previously?
- Do you have concerns about the compliance of your temporary workforce?
- Is having visibility of contingent workforce spend throughout your business a challenge?
- Are you struggling to find the talent you need to drive business success?
- Does recruiting and managing contingent workers distract your managers from their core priorities?
If your answers to any of these questions are a firm ‘yes’, then the chances are, an MSP solution could be the right one for you.
If not, it may be worth considering other options.
Building a *better business case* for an MSP
Writing a business case is not a simple process. To help, here are some tips for building a winning business case for MSP.
1. Start with the pain points
These could be anything from spending too much money on the contingent workforce, uncertainty surrounding compliance, a lack of transparency across the business, risky hiring practices or simply inefficient or inconsistent processes.
Of course, not every HR or talent acquisition team will encounter all of these pain points - often, pain points can vary from department to department, region to region - but if your business case is to be successful, you need to effectively gather these pain points in a powerful problem statement.
2. Get the right people on board within your business
For your business case to be successful, you will need the support of senior stakeholders to help drive the initial implementation of the MSP solution.
If you listen, understand their problems and present an effective potential solution, getting the buy-in for an MSP solution should be relatively seamless.
3. Discuss your pain points with MSP providers
While it’s important to understand your own business, it’s also worth seeking out the opinions of MSP providers. Doing so will allow you to work out which solutions will effectively solve the problems unique to your business.
Through these discussions, you will be able to work out which MSP provider aligns best with your business, and potentially, remove a long, painful RFP process.
4. A Request for Proposal (RFP) isn’t always the best approach
On the surface, an RFP makes a great deal of sense. Done well, an RFP is contextually complete and deep with data, providing workforce solutions providers with all the information they need to build a detailed, comprehensive proposal.
But in many cases, businesses go down the RFP route when a simpler, less time-consuming option would be more appropriate.
The alternatives to RFP
For an in-depth guide to the alternatives to RFP, read Andrew Erlichman’s (Guidant’s VP, Sales and Channel Partner Strategy) insights here
Finding an MSP partner *you can trust*
Choosing the right MSP for your business is key to a long-lasting and successful partnership
Procuring an MSP solution isn’t always about saving money, it’s often about building partnerships that help to grow your business long-term - saving money, or spending it better should be a given if your program and partner are in sync.
It’s also about working with a partner that closely aligns with your core company values, that understands your business, and becomes an extension of your existing teams.
A hands-off supplier management approach is an option, but if you want to attract, retain and engage your growing contingent talent, the partner managing them needs to be closely aligned with what you believe in as a business.
Without this, the friction between your permanent and contingent talent could lead to high attrition rates and low productivity - the two scourges of modern business.
There are also an increasing number of workforce solutions providers who build their business on a tech-focused approach, where the tech does the work, and the human element is forgotten.
For some, the attraction of AI and machine learning will be enough. But for others, a relationship will need to be built on honest conversations, and face-to-face feedback.
When you’re assessing potential MSP partners, make sure that it’s one you, your senior leadership team, your procurement and your HR functions will all want to work with. These relationships lead to greater understanding and honest conversations, ultimately driving long-term success.
And finally, lean on your chosen partner’s expertise to help build your business case. If you answered ‘yes’ to some of those questions in the previous chapter then there’s clearly a case to be made for an MSP. But to make sure that your decision lands correctly with each stakeholder group, utilise the knowledge and experience of your partner.
That partner may not be Guidant Global, where we value a people-led approach, it may be another workforce solutions provider. Whichever first-generation MSP you choose, make sure it’s one that in five years time, you’ll still want to work with.