Keys for selecting a managed services program provider.
By Madeline Laurano
Managed services programs (MSPs) are often considered the bread and butter of any contingent workforce strategy. They manage all aspects of contingent labor and serve as the primary point of contact for suppliers, contractors, and managers. In some cases, they provide additional offerings such as vendor management systems (VMS), statement-of-work (SOW) management, and workforce management solutions.
Yet, despite the benefits of an MSP, organizations still struggle to build a business case and select the right provider. In fact, only 23 percent of organizations currently utilize an
MSP to manage their contingent workforce. Today’s leading organizations must rethink their approach to MSPs in order to drive corporate objectives, improve efficiencies, and provide greater insight and consistency around their contingent labor.
What are the Benefits of MSPs?
MSPs bring a consultative approach to contingent workforce management and assist organizations make day-to-day operations more efficient. MSPs also offer expertise in handling the nuances of the contingent workforce umbrella, including mitigation of risks associated with contractors, consistent tracking of milestones/delivery dates against agreements for SOW-based projects and services, and process improvements to improve the productivity of contingent labor.
When organizations invest in MSPs, they are more likely to have a proper onboarding strategy in place, ensure compliance, and provide visibility.
Onboarding. Onboarding is one of the most critical yet underutilized elements of contingent workforce management. A negative onboarding experience can leave an organization at risk in terms of compliance, lost productivity, and negative branding. Organizations that leverage MSPs are able to get contingent workers up to speed and contribute to business- driven initiatives much quicker.
Compliance. Although it may seem simple for organizations to make the distinction between independent contractors and full- time employees, many organizations still struggle to properly classify employees. As a result, the IRS and numerous federal, state, and local institutions are cracking down on organizations for the proper classification and co-employment.
When organizations misclassify workers as independent contractors, they violate laws around worker compensation, unemployment insurance, and overtime.
Visibility. Providing visibility into many aspects of the various components of contingent labor is a top priority (48 percent) and critical to ensure performance, productivity, and cost savings. Unfortunately, many organizations make ad-hoc decisions around contingent labor and lack the insight into what talent they have and what they need for the future.
What To Consider When Selecting a Provider
Global expansion. Global organizations have a unique set of requirements when selecting an MSP provider. They must look for providers with a deep domain expertise of supporting global organizations and can also balance a central strategy with local requirements and regulations. Global organizations leveraging MSPs have enhanced communication, provide consistency around mitigating risk, and offer greater access to data for a global contingent workforce.
Support for SOW-based projects. Today, 50 percent of best- in-class organizations have standardized processes in place for handling SOW-based projects. MSPs have helped organizations streamline management of these projects and services and drive quality and effectiveness for this critical component of modern contingent workforce management. Management of master agreement and tracking of spend allow organizations to stay compliant and lift the administrative burden placed on managers. Increased collaboration and ability to distinguish SOW from contingent in the requisition phases ensure that SOW-based projects align with business objectives in order to plan for future workforce needs.
Blended workforce. The pendulum swings back and forth between HR and procurement owning contingent labor management. In reality, both departments should play a role in the oversight of this critical workforce segment and collaborate to develop a single strategy for both full-time employees and non-traditional workers (blended workforce). Many MSP providers help organizations handle the combination of both contingent labor and full-time employees.
Madeline Laurano is Aberdeen Group’s research director for talent acquisition solutions. She can be reached at madeline.laurano@aberdeen.com.
Building the Business Case
