The rise of the VMS (vendor management system) came out of the market demand for a better way to manage contingent labor. The software infrastructure to track, pay, and onboard your contingent workers only solves part of the need. Companies need to understand how to build an engagement process that is efficient, compliant, and effective.
To maximize results, companies typically lean on 3rd parties with the in-house expertise to guide them on contingent workforce management. One of the major trends for the past 20 years has been to fully outsource these programs using a Managed Service Provider (MSP).
However, in more recent years, companies have begun to show stronger interest in managing programs themselves, which leaves a gap for the rich expertise that MSP’s offer. This has ushered in a new era for standalone consulting, servicing clients with a menu of options without the limitations of a one-size-fits-all outsourced program.
Managed Service Provider: Effectively Outsourced or Out of Control?
MSPs provide an excellent solution for clients who are looking for an all-in-one package to implement, manage, and support their contingent labor. This solution is highly effective and cost efficient for clients with little to no in-house expertise. It provides the client the lowest risk option and can sometimes be the fastest path to success.
The MSP package draws a lot of appeal and provides immediate ROI and savings, which is why it is so popular across the contingent labor space. While the MSP model offers a multitude of benefits, there are draw-backs to consider.
Key Benefits to using an MSP
- Full support package to cover implementation, stabilization, and long-term maintenance all included
- Highly cost effective and can be vendor funded
- Reliable outsourced model ensures ongoing program continuity
- Ability to flex volumes up or down without impacting internal resources
- Leveraging the MSP’s ongoing industry knowledge across their entire client base
- Productized reporting & analytics capabilities
- Alleviates the burden of supplier contract management and creates an additional layer of contractual distance between client and contingent workers
Key Challenges with the MSP Model
- Client control over the day-to-day management of contractors and processes is limited
- Internal client resources could become redundant after partnering with an MSP
- Highly dependent on the MSP should their performance be less than expected (critical to choose the right partner)
- Vendor funded model can create discord among vendors
- Loss of “ownership” of the process and supplier agreements is a potential risk
- Relationship between client and supplier community evolves relying heavier on the MSP program team to manage those relationships
Contingent Workforce Consulting: Get What You Need and Nothing Else
While the MSP model provides an excellent service for clients without the in-house support to manage a program, it also takes away some of the client’s control over their own labor. Some clients are unwilling to take the risk on outsourcing so much of this critical procurement channel and prefer to keep the overall management within their own governance.
So how does a client keep the internal controls they desire without sacrificing the rich industry expertise an MSP offers? There are several reasons why a client might decide the MSP model is not right for them. We will explore some of the main client attributes that would make the MSP model an uncertain solution. Even if the MSP model is not the right fit, companies still need support, guidance, and expertise on the contingent workforce and are often lacking the internal resources to be successful. These companies will benefit greatly from a partner who can offer them stand-alone consulting services to support their program, without being required to enter a fully outsourced situation.
The great news for these types of companies is that there are options beyond the MSP. There are specialized companies who have built up years of industry experience and maintain in-house staff with expert-level skills around VMS, implementation, supplier engagement, and program management. Clients can decide to manage their contingent workforce program internally, but also recognize that they need some assistance in certain areas.
Why an MSP Model Might Not Be the Ideal Solution
- Annual spend on contingent labor is smaller or highly variable
- Client has a desire to maintain internal control of their contingent labor
- Preference to retain or use an existing in-house team with understanding of the company’s unique nuances
- Company perceives too much risk with outsourcing supplier payment and contracts to a 3rd party
- Company culture rejects outsourcing or use of 3rd parties in a managed service capacity
Real-Life Examples of Consulting Projects That Can Be Purchased on Their Own
The contingent workforce management space is evolving and becoming more flexible to meet client demands. Companies should know they have options and can seek out the solution that is the perfect fit for their business needs. The first step is finding a partner with both the expertise and the agility to custom tailor a solution that is right for you. Companies should not be limited to providers who only offer MSP models, and should keep an open mind on what the market can offer.
You have the internal staff to run the program, but you are lacking the configuration knowledge and best practices to choose and implement your VMS. Consider bringing in a team of consultants to guide you and help stand up the VMS on your behalf, with the intention of handing it over for you to manage internally.
You have a functioning contingent workforce program but have not been able to realize the benefits of consolidating and cleaning up your vendor list. Leverage a company to come in and conduct an RFP, consolidate, and analyze your program metrics, make recommendations on how to maximize your buying power, and help you realize your new supplier engagement model.
Rate Card Creation or Refresh
You are limited to the rate data you have in-house and have not been able to do a formal comparison to the market. Bring in a 3rd party who has the market data and purchase a 1-time rate card analysis.
Managed Service Provider and Contingent Workforce Consulting with Monument Consulting
Monument Consulting continues to evolve with the CW industry. In addition to fully outsourced MSP programs, Monument has grown a global CW Consulting practice that leverages our depth of experience in running programs with an agile consultative approach to see how best practices and technical VMS deployments can address our clients’ challenges.
Monument recognizes the emerging trend in the industry where companies are either internally managing a program or looking for a contingent workforce expert. As a third-party solution, Monument has the desire and the expertise to meet both needs.
Are you looking to connect with Monument Consulting? Contact us today to ask about our contingent workforce consulting or managed service provider (MSP) services!