As the market matures, MSP is set to have a greater role in strategic talent planning.
By Debbie Bolla
Contingent labor is leaving a big imprint on workforce trends. As we’ve reported throughout 2012, the non-permanent workforce is growing at an exponential rate, topping at 26 percent this year. Organizations have had to improve their strategies on managing contingent labor, often turning to an outsourced managed services program to gain visibility on cost and performance. But what’s next for contingent labor as the market continues to grow and mature?
There has been momentum surrounding companies managing their entire labor umbrella with a total workforce solution, including both permanent and contingent workers. The jury is still out on this approach.
Andrew Zarkadas, senior vice president of client solutions and strategies for Impellam Group sees the current rising for businesses blending their workforce solutions into one. “The interest in total workforce solutions has increased exponentially over the last year as predicted. We are currently engaged in the expansion of a number of our current client programs to include a fully integrated total workforce solution that addresses both their contract and direct hire talent acquisition needs,” he notes. “Much of the interest lies around wrapping complex areas of contingent spend into our programs including independent contractor compliance services and statement of work management. However, the most interesting is the increase in requests for blending our MSP and RPO solutions into a single platform.”
Candy Lewandowski, vice president and human capital strategist for KellyOCG, agrees. “We are continuing to see a trend in buyer interest in an integrated approach to meet an organization’s talent needs and drive their strategic directives. To be successful and fully leverage the large talent pool today, organizations must have a more comprehensive understanding of the availability and competition for talent within given sectors, including inside and outside their own companies,” she notes.
Clients are looking for solutions that deliver the right talent, in the right approach, whether full-time, contingent, project consultants. We expect these trends to continue to evolve over the next three years as solution providers are engaged to provide visibility and management of more than contingent labor; clients are now looking to engage a partner that will ensure they remain competitive by effectively managing their talent supply chain.”
On the other hand, Joan Davison, president and COO for Staff Management | SMX, is seeing less of a demand in total workforce solutions. Instead clients are seeking help managing the intricate categories of contingent labor. “There has been a notable increase in business expansion within all of the contingent labor categories, especially statement of work, independent contractors and outsourced workforce management,” she reports. “Due to the anticipated challenges in economic conditions and forthcoming healthcare reforms, American businesses, and in particular those that operate globally, are looking for business partners that can bring them guidance on cost effective competition for best talent as well as preparing for the upcoming changes in policy and regulations across all of those classifications.”
Analysts are also forecasting MSP to have a greater role in workforce planning as contingent labor continues to increase its overall footprint in the workforce. Lewandowski says this process of identifying human capital needs to meet business objectives with a longer-term view should include the entire force (see Figure 1). By only focusing on full-time employees excludes the potential impact and value that a fairly large group brings to an organization.
“MSP can be involved in workforce planning by providing valuable data and insights that support decision-making, help mitigate risk and contribute to future workforce scenarios,” she says.
For example, knowledge of external supply/demand for pivotal or critical roles at the local level is an important input to the environmental scanning component. Providing key insights into the work style preferences (psychographics) of various workforce segments can aid decision making too.
The inclusion of contingent labor in the strategic workforce planning process ensures an organization has considered the best possible way to engage talent to meet their specific business needs and achieve their strategic goals.”
Zarkadas says MSP’s dramatic maturity has evolved from an administrative service into a strategic solution. Providers can now play a strong role in workforce planning since they have the ability to capture and analyze an enormous amount of data that is essential for companies when seeking and growing talent.
“We are ingrained in the company’s day to day corporate culture and can view the nuances of that company from a consultative, unbiased perspective,” he explains. “This uniquely positions us to partner and consult with our clients to drive their workforce planning and strategy with amazing accuracy and insight.”
Davison agrees. “We are the key source for insights into each talent marketplace, the economic factors that impact the true cost of best talent and the best practices in structuring a network of providers to ensure the right talent is available at the right price and at the right time when they’re needed.”
So what will 2013 bring?
Zarkadas reports, “Without a doubt, the convergence of the MSP and RPO solutions will be the biggest trend in the space. It is inevitable that these two worlds will come together, which will drive continued M&A activity in our industry. The buy side will begin to think about purchasing these solutions collectively and the HR and procurement divide will shrink significantly. There is still one large gap and inhibitor that exists between the two worlds: technology. We all will be watching closely to see what transpires in that arena.”
Davison says, “We anticipate that businesses around the world will continue to move toward the centralization of the management processes of all of the contingent labor categories; and that the solutions for outsourced workforce management and managed services will become more and more flexible in order to address the dynamics of the varying needs of these categories and the corporate stakeholders and hiring managers that we service.”
Change and growth says Lewandowski. “As companies begin to proactively examine their workforce, including contingent talent, we expect to see an increase in key industries in the need for high caliber contingent labor, globally. While we see some clients beginning to hire full-time staff, others are following a more conservative approach and changing their full time to contingent mix of talent. This will allow them to remain competitive, while engaging talent where they need it and when they need it. Also, we are being engaged more frequently by our clients and prospects to help them examine how they should be procuring talent, which may shift the mix even more as service providers and independent contractors are now being included in the mix.”