The *three powerful forces driving change* in the world of work
Technology, globalisation and demographic shifts
Building on the benefits of MSP after your initial contract term
A successful first-generation MSP solution should have provided your business with the basics: cost savings, pay rate management, compliance and vetting.
If you feel that you have yet to fully achieve these, there’s still value to be unlocked before thinking about expansion.
But it’s also important to understand that workforces are becoming more complex, the percentage share of contingent workers in most businesses is growing, and talent is becoming harder to source. As a business, you need to start thinking about how you can win the battle for the best contingent talent in the future.
So what should you be looking out for?
The three major forces driving disruption in the workplace of today:
- Technology, Automation and AI
- Demographic change
Technology, automation and AI
Automation, AI and the impact of technological change have only just begun.
Today, digital technology is just as important as human capital.
In some sectors, technology will replace vast swathes of jobs. In others, it will augment existing roles, enhancing productivity and enable people to develop their skillsets and become more rounded, intelligent human beings.
Whether your business is planning for full-scale automation or seeking cloud-based software to enable your people to work smarter, you need to be prepared for the inevitable disruption that technology will no doubt unleash on your business.
Globalisation continues to drive significant economic disruption
Global markets are rapidly shifting as trade deals are being ripped up, rewritten and created anew.
From the US to China, the UK to India, it is impossible to predict where the markets will be next month, never mind the next decade. This, of course, brings challenges for businesses.
At the same time, globalisation has helped lift more than one billion people out of poverty.
Rapidly advancing economies have created millions of jobs for millions of people, facilitating great steps forward for people who would have previously tended the land.
These changes have consequently added millions of people to the global talent marketplace.
We are living and working longer. According to the CIPD, over 30% of people in employment in the UK are over the age of 50. There are unlikely to be enough younger people entering the labour market to replace this group once they leave the workforce.
The talent shortages we’re currently experiencing are also unlikely to improve to any great degree without changing primary and secondary education and on-the-job training — the latter of which is fundamentally underdeveloped within the majority of businesses.
Work is also being reinvented, with demographic and cultural demands for flexibility, equality and diversity reshaping the workforce, and the workplace.
Most businesses, to some degree, are accepting this. But the wider business community is not fully prepared. Businesses in western economies are still structured around a conventional nine-to-five schedule, for example. This will need to change if businesses want to ensure future success.
Of course, these changes aren’t just affecting businesses themselves. To meet these demands, contingent workforce solutions providers must rethink the way they develop their MSP solutions.
So what are the leaders in the industry doing to meet such monumental change?
Future-proofed workforce solutions
How the *MSP industry should be reacting* to today's shifting workforce outlook
A survey of Guidant Global clients in 2019 revealed that “buyers are increasingly demanding next-generation services to deal with transformation in the talent landscape, with the role of the MSP evolving from transactional to strategic.”
MSP solutions are becoming increasingly complex and innovative to drive greater value.
In the Fourth Industrial Revolution, MSPs will need to provide much more than basic supplier management.
To offer truly game-changing solutions for customers, they will need to take risks, invest in the right people and technology, and adapt to changing markets.
Once you’re past your first MSP contract term (when basic cost savings and compliance have already been achieved), you should assess whether your workforce solutions provider understands the latest trends and is shifting accordingly to ensure that your business doesn’t lag behind the competition.
Across the next few pages, we will cover the fundamental shifts changing the MSP market today.
1. Flexible work, MSP spend and the talent ecosystem are expanding
According to Deloitte, 40% of the workforce will be contingent by the end of the year. This figure is set to rise as we progress deeper into the 2020s.
The traditional employer-employee relationship is being replaced by a diverse workforce ecosystem with a varied portfolio of workers, talent networks, gig workers and service providers that offer employers greater flexibility and agility.
Better incorporating different types of workers into talent pipelines will surely be a strategic imperative for businesses this decade.
The global MSP market is growing steadily on the back of this rising demand for contingent workers across geographies and industries.
For those working in HR or procurement, this will be known knowledge, at least to some degree.
According to the latest Everest Group report, the total annual contingent workforce spend managed by MSP service providers stood at $US144-149 billion in 2018, with 13% year-over-year growth.
But such an increase in demand is not a result of increasing demand for antiquated, supplier-management MSP solutions.
Businesses are seeking advanced solutions that truly reflect the ever-shifting talent marketplace.
2. Talent analytics and strategic workforce planning
Ensuring the right talent is in place to deliver long-term business goals is essential for any organisation
Strategic workforce planning is one of the most important strategies to achieve this.
Though strategic workforce planning is a significant undertaking for HR departments to develop themselves, some forward-thinking MSP providers are incorporating it within their programmes.
"19% of MSPs now include the provision of strategic workforce planning services."
Staffing Industry Analysts (SIA)
Meanwhile, two-thirds of hiring managers in the US believe that implementing strategic workforce planning will help cushion the impact of rapid technological change on the way we work.
So what does this tell us? Long story short, the majority of MSP solutions simply aren’t yet meeting the expectations of business.
If your business is to achieve maximum value out of an MSP solution as we drive deeper into the 2020s, your provider needs to have the ability and agility to harness data insights, as well as the right expertise in place to interpret complex data and deliver effective strategic workforce planning.
Without such systems in place your business will likely struggle to attract and retain talent as the world of work unceasingly changes.
3. Total talent management
As the contingent workforce continues to grow, talent expectations simultaneously evolve.
A decade ago, a business would have placed little consideration on candidate experience, employer branding and employee value propositions when attempting to attract a contractor.
Today, things have changed. Potential hires expect employers to offer a hands=on experience with numerous touchpoints, even when the former is not seeking permanent employment.
To address this, greater equilibrium between permanent and contingent hiring is needed.
The best MSP providers understand this, with those at the forefront rolling the best elements of their permanent RPO programmes into their contingent offerings.
With this in mind, opting for a total talent solution makes a great deal of sense.
Though there has been a great deal of hype around Total Talent Management, we are now reaching the stage where it is a real possibility.
Expanding your MSP programme to include RPO (or likewise, the other way around) gives businesses a single point of contact, a singular vision and consistent hiring practices across both permanent and contingent talent, ensuring consistency across all talent types.
There is emerging evidence that despite a slow start, ‘Total Talent’ solutions are finally beginning to gain traction, with 15% of MSP spend associated with a blended MSP/RPO service, (a YoY increase of 10%).
More providers are also actively promoting Total Talent services”
Staffing Industry Analysts (SIA)
4. Contingent RPO and direct sourcing
Direct sourcing is already included in 31% of MSP programmes, up from 25% in 2018. Client employer branding is also utilised in 12% of programmes, up 4% from the previous year.
Staffing Industry Analysts
One of the biggest advances we’re likely to see this decade is the rapid development of Contingent RPO and direct sourcing within MSP programmes.
By enabling companies to leverage their employer brand to build highly targeted contingent talent pools, it will empower businesses to halt over-reliance on supply chains.
With contingent talent taking up a larger share of the workforce than ever before, businesses are looking beyond the traditional approaches to employer branding.
To attract the best talent, employer branding needs to expand beyond the permanent hiring domain. It needs to be an integral part of contingent hiring, too.
For an MSP solution to be prepared for the future of work, it needs to effectively incorporate Contingent RPO and direct sourcing. If not now, then most definitely in the near future.
5. Statement of Work (SOW), services procurement, and consultancy
A natural part of MSP programme evolution is to consider Statement of Work (SOW) management as the first area for optimisation once an initial contract comes to a close.
High-value contractors take up a significant share of organisational costs, particularly for multinational businesses.
With hundreds of contractors extended across different departments within organisations, costs can quickly escalate. Meanwhile achieving complete visibility can become nigh-on impossible.
Managing all statement of work contracts with a single point of contact (your MSP provider) can save a business a significant amount of money through consolidation.
Long-term, SOW management also gives senior decision-makers complete visibility of their contractor spend. Once an initial, first-generation MSP contract is closing, SOW management is the natural next step.
Currently, SOW management is experiencing more growth than temp/contract spend, with SOW/outsourcing representing 22% of reported spend under management.
For the same reasons, project-based services procurement spend is another obvious port of call for MSP buyers looking to take their solution to the next level.
This growth will no doubt accelerate as the decade progresses.
Since 2016, global services procurement managed spend has almost doubled — rising from US$22-23 billion to US$40-45 billion in 2019.
6. Larger multi-country deals
As MSP solutions advance, businesses often look to outsource the management of additional types of talent in multiple geographies. As a result, the size of MSP deals are increasing.
According to Everest Group, single-country deals constitute 50-55% of current MSP deals, but buyers are increasingly looking for a single provider to service global locations.
In response, MSP providers are expanding their geographical reach to service these often complex, global deals.
Of course, no two MSP providers are the same. Many are bound to limited geographical capabilities, particularly those that lack the data and insights to facilitate strategic hiring globally.
Knowing where the talent of the future is located, for example, will be a key differentiator, especially as skills shortages grow increasingly acute across developed economies.