Does outsourcing the management of your contingent workforce still make sense?

Published November 10, 2023

Category: Business Process

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With all of the advances in Vendor Management Technology (VMS), some companies are evaluating the idea of managing their cadre of non-employees internally. Much of the value brought to bear by a Managed Service Provider (MSP) is typically in the form of process efficiency and consistency. A mature contingent workforce program can bring those same benefits – so does it still make sense to have this third party manage it for you and charge a transaction fee to your staffing suppliers? That was the question and motivation behind SIG’s latest report, ‘A Business Case for Outsourcing the Management of Your Contingent Workforce’.
As the lead analyst and author of the report, I admit I had a certain bias. Back in the early ‘90s I was working for Manpower and I witnessed a dramatic change in the way contingent workers were being utilised. In addition to the industrial and secretarial demands that were the foundation of the industry, we saw new demands for engineers and programmers. These new requirements were considered the third leg in the stool: ‘Light Industrial’, ‘Clerical’ and now ‘Professional’. Within only a few short years, average charge rates skyrocketed from the $10/hr. range to over $50/hr. This really turned the industry upside down but it also drove a new type of solution, the Managed Services Program. With my history, I really expected to see more of the same services, solutions and benefits that I have grown used to seeing over the years.
Fast forward 20+ years and here I am leading this report. I had numerous interviews with companies that use an MSP, and some that do not. I also had six MSP providers complete a detailed questionnaire and provide me with their vision for the future. Besides giving me a chance to connect with old friends and get the latest perspective on the business landscape, I was surprised: the MSP solution has advanced tremendously since my early days.
Today an MSP is more than a few clerical staff on site filling temporary positions. Their teams are experts in HR and talent acquisition. They have mastered the optimisation of VMS and other important technologies that assure all open requirements are filled quickly and efficiently. Through their shared services departments they provide detailed analysis of their workforce usage and needs. Through predictive analytics an MSP can help their clients anticipate where demand and supply of labour is going to be and what the right rates are in a competitive geography. MSP programs are international and have expanded their scope to cover services procurement (SOW), freelancers and consultants. They have even added IC compliance and direct sourcing so all non-employees in the extended workforce can be incorporated in the scope of these programs providing the same value they have brought to the temporary workers through the staffing agencies.
What struck me more than all these new and innovative approaches was the positive and upbeat attitude of these providers in their outlook for the future. They are all building and partnering with technology providers and ancillary service to offer. They are also finding ways to make the Total Talent Management vision a reality. I think we are seeing just the beginning of what the MSP can bring to an enterprise.
Please take a look at the report and let us know what you think: click here for your free download.



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