BenefitsEngaged Workforce

Managed Services: The “Other” Talent Outsourcing Model

After a decade in the market, managed talent services may finally be ready for prime time. A more robust offering will surely get employers more excited.

by Brett Gerard

Permanent placement hiring volumes have dramatically increased during the past several years: More than 8,000 Baby Boomers are retiring every day, causing a serious shortage in experienced talent. Companies are challenged with meeting Women and Minority Business Enterprise (WMBE) and other government regulations. And other challenges have risen with screening and permanent placement.

To fill the talent gap that has resulted from the tightening of the labor market, companies have turned to temporary staffing agencies to supply their organizations with needed contract employees. However, this method of hiring temporary employees is often cost prohibitive due to skyrocketing temporary staffing costs. In response, vendor-neutral managed services have emerged.

A Decade of existence
Managed services have been around with some degree of success for more than a decade. Nevertheless, they were never really in a position in which the market would endorse the model as a viable outsourcing solution—until recently. Today, unlike when managed services first appeared, managed services have skilled and seasoned staff, robust technology, and a well-defined talent procurement process.

The managed services model delivers a sophisticated project management office, creating a single point of accountability, consolidated billing, and years of staffing expertise and market knowledge. It also creates a solid compliance structure mitigating risk and standardizing the enterprise-wide processes. Most importantly, it drives significant cost control through a competitive procurement process—including bill rate management, negotiating, data warehousing, real time benchmarking and market research—while maintaining the quality of talent.

Today, there are managed services that are “vendor-neutral.” A vendor-neutral managed services model involves a specialized provider engaged to design and manage the process, distribute job orders, and acquire quality temporary labor without bias and devoid of any preferential treatment to a single vendor. For example, the provider—normally on-site at the organization, issues a requisition for an open position. Staffing agencies then “bid” on the job. The provider, in essence, manages the people, process, and technology.

By the end of 2007, the Gartner Group predicts that 30 percent of Fortune 1000 enterprises will use service procurement software and managed service providers to better manage their contract labor.

Kick the Tires

We’ve seen organizations move quickly to leverage a similar model for hiring permanent employees—recruitment process outsourcing (RPO)—and, as a result, it has become the fastest growing segment in HR outsourcing. Vender-neutral managed services for staffing are becoming just as popular, and now might be the right time to take a look.

Similar to the maturation of outsourcing service providers—which resulted in enhanced capabilities, streamlined processes, and other advantages—managed services is getting a whole new level of financing and sophisticated technology. In response to market demand, several of the prominent staffing firms have made large investments in this model, creating a separate infrastructure to avoid a conflict of interest in their core businesses. We’ve also seen a number of stand-alone and very successful providers enter the market, leveraging mature vendor management systems and experience leadership teams. In fact, the key staffing managed service providers have at least $3 billion managed through each of their models."

As competition drives cost savings, we suggest investigating the vendor-neutral model.

Tags: Benefits, Engaged Workforce

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