MSP’s Evolution for Extended Workforce Management and Beyond

As MSP programs come of age, they become a strategic part of an organization’s workforce planning function by providing visibility and planning across multiple talent streams. While the idea of total workforce management is still in its infancy as it relates to the merger of MSP and RPO, the drive to effectively manage your extended workforce across traditional contingent labor, independent contractors, Statement of Work (SOW) and services engagements, etc. is real.

Companies are looking to include new work categories in MSP programs to drive optimization beyond traditional contingent labor and to ensure ongoing ROI and measurable results. One of the major hot topics for staffing buyers over the last few years has been the expansion of MSP program scope to include services spend as well as contingent. Many early adopters started this expansion by addressing independent contractor administration and now those clients are looking at true services spend. In the recent HRO Today article Going Mainstream, Anne Osty, Staff Management | SMX Vice President of Sales and Marketing explains “Ultimately, our clients want to include all non-employee worker types in their programs, contingent and SOW consultants as well as outsourced services, which include diverse functions from call center operations and IT help desks to food and lawn care services. We also have clients who are bringing in deliverable-based services that wouldn’t traditionally fall under an MSP, but because the supplier management process is similar, such as Learning and Development, they can obtain the benefits of MSP management.”

A Holistic Approach to Talent Management

The overarching trend is that clients want to ensure that all of their nonemployee headcount is included in their MSP programs. Regardless of location or skill category, clients want visibility to all contractors whether they are on-site at their facility, working off-site or at their client’s facility. This drive for holistic talent management is also expanding beyond nonemployees to include the exploration of total workforce management to manage a company’s nonemployee and full-time talent streams through the merger of MSP and RPO platforms. While for several years this has been supplier driven conversation, there is no doubt that more clients are now evaluating the benefits of combining these distinct talent streams. This combined approach is still truly an emerging trend that has gotten limited traction in practice. There are not a significant number of companies operating with RPO and MSP on a single platform, and the larger the organization the more complex a merger of this sort becomes.

So, while there is real curiosity from buyers about a combined solution, it is too soon to tell how quickly this concept will gain wider adoption. We are leveraging our expertise and best practices from both the RPO and contingent workforce management segment to help our clients consider their options for the long-term. In the near-term, we have found that our larger scale MSP clients continue to contemplate the evolution of MSP services but are more focused on incorporating other areas of outsourced spend and achieving MSP program governance than in combining their MSP and RPO platforms. Today that means automating the decision point to help managers understand if they need traditional staff augmentation or Statement of Work. As MSP programs and VMS technology continue to evolve to support total workforce management, that decision path can also indicate that they might need a full-time worker.

This drive for holistic management of the talent supply chain also extends beyond geographic borders with many MSP buyers focused on expanding their MSP programs internationally with an emphasis on global capabilities from program inception. Those that have implemented international programs over the last few years are now focused on expanding the scope beyond heavy usage countries. More and more, clients are looking for an option to manage contingent spend in lower usage countries in order to get the benefits and controls of an MSP program. Clients want to stay abreast of fast-changing staffing regulations and legislation, particularly in emerging markets. Programs for lower usage countries are often less robust, but include the essential components of an MSP program such as administrative MSP and VMS technology management, standardized rate cards, contract negotiations and some procurement support. As programs expand further, clients are working to define their governance structure to provide truly global umbrella management.

One Size Doesn’t Fit All

Another emerging area in the evolution of MSP services is MSP programs for small to mid-sized users of contingent staffing who are interested in achieving the same visibility and control as their larger counterparts. In Going Mainstream Osty elaborates on this trend, “MSP providers have generally not invested in an effective solution to meet the needs of the smaller market, those with $10M or less of primarily domestic spend, but we have a proven track record of meeting the needs of these clients and have invested in the infrastructure and technology necessary to create highly configurable and customized solutions that align with the goals of clients in that market size. While we manage some of the largest and most complex MSP programs in the industry, we also continue to focus on smaller and mid-size clients and believe that those users will yield further opportunity for growth and expansion.”

In addition to small to mid-sized users becoming interested in MSP solutions, we are also seeing wider interest by buyers in the inclusion of light industrial staffing as well as heavier industrial positions such as drivers. While we have successfully managed large scale industrial usage via MSP programs for over 10 years, many MSP and VMS providers have shied away from this segment. Osty explains that “there has been a feeling in the market place that light industrial wasn’t the right fit for MSP…because of its complexity, lower margins and higher risks. Now, buyers are more and more interested in getting a better handle on all aspects of their labor supply chain.” We are even seeing clients with self-managed programs looking to partner for MSP management exclusively for their industrial segment because of the complexities of managing that category. Clients are ready to include even the most transactional positions, such as true day labor, in their MSP programs. This requires sourcing and workflow processes that are highly configurable based on assignment type and a deep understanding of the light industrial environment.

Whether expanding across different talent streams, geographies, skill sets or to support non-traditional MSP clients, MSP solutions providers must continue to evolve their tactics and capabilities to keep pace with buyer demands for holistic talent management. In today’s just-in-time business environment companies require quicker more efficient access to their extended workforce as they continue to grow their reliance on non-traditional workforces. As a result, enabling effective strategic planning for your organization’s extended workforce and beyond provides the promise of a real critical competitive advantage for the future.