MSP / Contingent LaborTalent Acquisition

Global Finesse

Exporting MSP requires more than a bigger footprint—it means wearing different shoes.
 
 
By Caroline Storey-Sabetti
 
 
Expanding a Managed Service Provider (MSP) program globally begins with the understanding that going global is not as simple as duplicating what works in the United States and making that the standard around the world. Cultural, legal, and economic differences must be considered. The U.S. is a mature contingent staffing environment, free from many of the legal and regulatory complexities to staffing arrangements that exist elsewhere in the world. Therefore, when expanding an MSP program beyond the U.S., companies must strike a careful balance between deploying domestic program best practices and adapting the program to the local requirements.
 
 
Companies and their MSP provider should work carefully to establish an overarching global program strategy that allows for regional flexibility, local business case development, and program configuration that works culturally and legislatively. While recent years have seen successful large-scale MSP program implementations across all U.S. geographies in either a big bang or in quick succession, it is risky to adopt that approach with international implementations because of the extreme variability in legislation and culture country by country—let alone continent to continent.
 
 
Hand in hand with this measured approach is engaging key local stakeholders, both client and incumbent staffing suppliers, early in the process. Beyond the U.S., MSP practices are less common and not as easily accepted. Following closely behind the U.S. is the U.K., and then the Netherlands. Both are mature staffing markets, are experienced with MSP arrangements, have limited restrictions on such arrangements and reasonable program adoption rates. Beyond those fairly well established markets, there is a wide spectrum of experience with and flexibility to implement U.S.-style programs.
 
 
TRANSLATION REQUIRES COMMUNICATION
Given this variation, a good communication and marketing plan for local client stakeholders and key regional suppliers to educate them about MSP programs and the associated value proposition is crucial. Overlooking the need to sell the program in new regions and failing to get end-user buy-in and involvement early in creating the business case for change are some of the most common reasons for delays in global program expansions. Excluding key local and regional suppliers from the process can create challenges, particularly in markets like Brazil where client-supplier relationships are extremely important culturally and local suppliers are dominant. It can also lead to the loss of valuable insights on sometimes rapidly changing local issues—particularly in emerging markets.
 
 
It has been said many times, many ways, but it is worth saying once again—having an effective senior level executive sponsor is critical to program success. For a successful MSP deployment across multiple continents, this must be a senior level business leader or leaders with the ability to drive, and sometimes mandate, change across the organization and across geographies. Equally important will be having a project steering committee made up of individuals who are engaged in program management, knowledgeable of, and influential within, the organization, and who represent a variety of disciplines, user communities, and geographies. This committee will shape strategy, guide program implementation, determine program configuration by geography, and make or escalate critical decisions so that the day-to-day project management team and MSP provider can operate effectively. A clearly articulated business case that outlines program goals and ROI will be an important tool for these stakeholder groups and will go a long way toward ensuring success as program value is sold market-to-market at all levels of the organization.
 
 
Beyond engaging these key stakeholders, internal and external experts, including in-country legal advice, must be engaged on localization issues such as: employment law, tax law, privacy, and confidentiality—all of which vary considerably from country to country. Thorough country-specific due diligence must be prepared to understand the current climate and its limitations. Countries should be mapped from flexible to restrictive, and market maturity, experience with the MSP model, and staffing volume should be considered.
 
 
Restrictive markets such as Thailand and Vietnam should be studied carefully and might make sense for a later implementation slot and substantially modified delivery model. A market such as China, with significant labor mobility restrictions, or an unregulated market such as Bulgaria might not be a good fit for an MSP model. Some relatively flexible and mature staffing markets, such as the Czech Republic and Poland, might warrant close examination of the business case for change, because mandated temporary worker benefits might erode the cost benefit of an MSP model. Complicating factors such as markets where an existing temporary workforce cannot be transitioned from an incumbent supplier to a new supplier, as in Germany, must be taken into account when deciding on roll-out strategy.
 
 
STAFFING SUPPLIER STRATEGY
Global companies are increasingly interested in achieving a global staffing platform with an understanding that the program will vary significantly region to region. With a flexible approach and an adaptable framework, global MSP programs are possible. Even regions with restrictions on the ability of MSPs to operate as they do in the U.S. can be included in a program with significant modification of program configuration and a more limited MSP program scope. One program component likely to be modified is staffing supplier management. While U.S. MSP programs are heavily focused on supply chain management, in certain countries direct management of a staffing supplier by a third party is not permitted.
 
 
Of particular concern to many companies is staffing supplier contract standardization. In many regions companies are exposed because of subpar contracts—in some cases no contracts. When expanding an MSP program globally, companies often start out with a goal to standardize staffing supplier contracts enterprise-wide. However, regional nuances are critical in the contracting process because some terms might not be tolerated, practical, or legal in certain regions. Take, for example, Colombia, where extended payment terms will not be funded by banks. Just as with other aspects of global MSP programs, contract components must be examined closely to determine which have global applicability and which must be localized.
 
 
Supplier sourcing options should be considered at the country level with close examination of supplier capacity. Large global suppliers might have a strong presence in certain regions, while niche providers might dominate in other markets. Some markets might be good candidates to mirror the U.S. market approach with its focus on reducing the number of staffing suppliers, while others might require supplier diversification and an expanded supply base to meet talent demands.
 
 
Just as a staffing supplier’s global footprint must be assessed to ensure that it is a good fit in a specific market, its readiness must be evaluated market by market. Will the supplier be able to honor globally negotiated pricing in that market? It is important to consider how temporary workforce mobility, or lack of mobility, will impact supplier pricing and transition planning. Incumbent associates might not be able to transition to a new staffing supplier, temporarily reducing anticipated volume until existing associates naturally attrit out. If they can be transitioned, the incoming supplier might take on a financial burden for the transitioned associate from a mandated benefit standpoint. In addition to pricing, is the supplier structured in a way that will allow it to manage the program effectively? How might global acquisitions and mergers come into play? When they do, has the supplier established the necessary back-office integrations to allow for seamless service delivery in those regions? Finally, and most importantly, is the supplier’s executive team committed to apply the resources necessary to ensure program success?
 
 
As supplier rates are negotiated, an understanding of the economic factors at play must be considered and ultimately a balance must be struck between the aspiration for globally negotiated rates and what the local market will bear. As with other aspects of the program, the client and MSP provider must work closely to determine the specific value proposition for each marketplace. In certain markets, immediate cost savings might be realistic, while in others a longer term view might be required. Particularly in markets that will not immediately realize cost savings, underestimating the need to sell the value of the visibility and controls gained with program implementation and the long-term potential for cost reduction can cause major roadblocks.
 
 
Like staffing contracts, the VMS technology deployed as part of MSP programs must be examined for regional application. As programs expand globally, VMS software must be localized. For instance, in Belgium, where sequential purchase orders are a requirement, VMS software must be localized if it does not already allow for that functionality. In more restrictive markets, limited instances of VMS software are being offered. In countries where a company’s contingent staffing volume might not justify the cost of significant localization of the software, or in less mature staffing markets that are not ready for a full MSP model, these light versions can be used to gain administrative benefit when full functionality is not appropriate or cost effective. These light versions can also offer the benefit of a shorter implementation time frame with the option to migrate to a full instance of the software as the market matures or staffing usage grows.
 
 
Technology decisions should be reserved until program management strategy has been determined. Just as with staffing providers, VMS technology providers should be evaluated based on how well they align with the program’s global footprint, and their market readiness must also be assessed market by market. Additionally, the software should be evaluated to determine the configurability, how much localization has already taken place, and how flexible the software and the provider are to address new market localization requirements as they arise.
 
 
Employing an open-minded and flexible approach to program configuration allows companies to work toward the overarching goal of gaining global visibility rather than trying to force a one-size-fits-all strategy that is bound for failure. Economic factors, talent availability and regulatory complexity—coupled with contingent staffing volume and barriers to entry—must be considered when deciding on an expansion strategy that supports the overarching program strategy. By selecting markets for early phase implementation with fewer complexities, more cultural similarities, lower barriers to entry, and good staffing volume, providers and practitioners can reveal a compelling value proposition that will produce early wins to build the case for expansion.
 
 
Companies are increasingly interested in global expansion because they want to realize the same program efficiencies, risk mitigation, and cost savings that they have achieved in the U.S. An essential goal for many companies is workforce and supplier visibility.
 
 
Gaining visibility provides an understanding of the number, location, tenure, and skill sets of contingent workers. It also enhances supplier and workforce vetting, the contingent worker on-boarding process, and allows for process improvement and compliance management. With visibility also comes the ability to understand labor availability, bring some consistency to job title taxonomy and program terminology, drive cost savings, and leverage domestic program successes. Better information drives better strategy and innovation. With a measured and flexible approach, global expansion, particularly in emerging markets, can be successful.  
 
 
Caroline Storey-Sabetti is executive director of business solutions & marketing at Staff Management.

Tags: MSP / Contingent Labor, Talent Acquisition

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