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Leveraging contingent workers has become a smart move for modern businesses looking to stay competitive amid market dynamics. This strategic approach comes with a lot of advantages, from operational flexibility and access to specialised skills to cost efficiency.
However, managing and engaging contingent workers can present significant challenges, especially if your HR and recruitment teams lack experience in handling on-demand labour arrangements.This is where partnering with a managed service provider (MSP) makes all the difference. By teaming up with an MSP, you can get customised solutions for your contingent workforce management needs.
What is a Managed Service Provider (MSP)?
A managed service provider is a third-party company that specialises in providing extensive support services tailored to your business needs, covering IT infrastructure, cybersecurity, contingent staffing, and a broad range of operational requirements.
In the area of contingent staffing, an MSP acts as a strategic ally, handling the sourcing, hiring, onboarding, and management of your contingent workforce. This partnership allows your company to delegate the complex responsibilities associated with temporary staffing, freeing up your resources to concentrate on other important aspects of your business.
How a managed service provider can help your business
In terms of contingent staffing, here are some ways in which an MSP can support your business:
- Strategic talent sourcing, vetting, and engaging contractors compliantly
MSPs have extensive networks and resources for finding, assessing, and recruiting highly skilled contingent talent. They streamline the entire hiring process, from sourcing candidates to conducting interviews and onboarding.
- Compliance and risk management
MSPs possess in-depth knowledge of labour laws, regulations, and compliance requirements. They ensure that your contingent staffing practices align with legal standards to minimise any potential risks and liabilities for your organisation.
- Vendor management
MSPs act as a central point of contact for managing various staffing vendors. They oversee vendor relationships, negotiate contracts, review supplier contracts, and ensure consistent quality and adherence to service level agreements (SLAs).
- Vendor introductions and partnerships
MSPs continually scout and introduce new, high-quality vendors to support your organisation’s staffing requirements and promote innovation in workforce management.
- Onboarding and training
MSPs can handle the onboarding and training of contingent workers to ensure a smooth transition into your organisation. They can provide necessary orientation, facilitate skills training, and help align contingent workers with your company’s goals and culture.
- Workforce analytics and insights
MSPs utilise advanced technology platforms to track the performance and productivity of your contingent workforce. Through data analysis, they can provide valuable insights into workforce patterns and identify areas for improved efficiency.
- Cost control and budgeting
MSPs can help you manage the budget allocated for contingent staffing. They can provide cost analysis, benchmarking, and optimisation strategies to help you with forecasting. They also negotiate favourable rates with vendors and monitor expenses.
Optimising the strength of VMS and MSP
When you combine MSP and a vendor management system (VMS) for contingent workforce management needs, it creates a powerful synergy. This combination provides greater visibility for your workforce. It also helps reduce risks for your organisation by providing better control and oversight.
A VMS is a technology platform that automates and manages the procurement and management of contingent labour. It centralises data and provides tools for requisitioning, tracking, and reporting on contingent workers.
With the strengths of VMS and MSP together, they streamline processes, ensure compliance, optimise costs, and enhance vendor management, leading to a more efficient and effective contingent workforce program.
| Key features of VMS | Key features of MSP |
| Supplier engagement | Vendor engagement |
| Timekeeping | Supply chain management |
| Approvals | End-to-end requisition management, offboarding |
| Expense management | Benchmarking fees and score, rate card management |
| Billing | Supplier compliance |
| Reporting | Consolidated billing, expense management |
| Contract care |
Strategic advantages of combining VMS and MSP for your contingent staffing needs
Centralised control
Both the MSP and VMS work together to ensure that all contingent worker activities are managed through a single platform. This simplifies processes and reduces administrative overhead.
Comprehensive insights
Combining the strategic oversight of the MSP with the data-driven insights of the VMS offers a holistic view of contingent staffing activities.
Risk mitigation
With centralised data and oversight, companies can identify and address potential risks more effectively, which reduces the likelihood of non-compliance issues.
Cost efficiency and optimisation
The MSP can leverage the VMS data to negotiate better rates and identify cost-saving opportunities, while the VMS provides insights into spending patterns, helping both the MSP and the organisation make informed decisions to control costs.
Scalability and flexibility
Organisations can quickly adjust their contingent labour strategies based on real-time data and insights provided by both the MSP and VMS.
Leveraging managed service provider (MSP) to mitigate risk associated with contingent workers
Engaging with contingent workers poses potential legal and financial risks if not managed with due diligence. These risks, which stem primarily from non-compliance, can negatively impact your operations and the integrity of your organisation.
At CXC, our extensive experience has provided us with a deep understanding of how workforce management missteps can quickly escalate into larger issues that could potentially impact your business operations and growth. Here’s how leveraging a managed service provider (MSP) for your contingent workforce can mitigate these risks effectively.
Lack of internal specialised knowledge and expertise
Challenge: In their quest for growth, a company ventured into new international markets, relying on its in-house talent team to fulfil staffing needs. However, their internal team was not well-versed in the labour laws of several countries in which the company was establishing its presence.
The assumption was made that the employment standards and practices of their home country could be applied universally. This oversight led to a series of non-compliant hiring decisions, culminating in a compliance nightmare that included fines, legal disputes, and a tarnished reputation. One instance involved was the mishandling of international payroll complexities, resulting in underpayments and penalties for late tax submissions.
Solution:
To mitigate such compliance risks, companies can:
- Ensure staffing strategies comply with both local and international laws.
- Partner with a reliable managed service provider (MSP) like CXC to support your business with the necessary expertise on in-country specific labour laws and regulations, ensuring compliance and preventing costly penalties.
- Leverage both in-house capabilities and external expertise to strengthen your recruitment strategies. This collaboration fosters innovation and keeps you aligned with the best industry practices, allowing you to scale flexibly in response to evolving demands.
Vendor compliance oversight
Challenge: Managing multiple vendor relationships can lead to inconsistencies in compliance practices across different suppliers, increasing the risk of non-compliance with regulations and contractual obligations. This can lead to compliance violations, exposing your business to legal risks, penalties, and reputational damage.
Solution:
To mitigate compliance risk, companies can:
- Establish a robust vendor management program with clear compliance requirements, regular audits, and performance evaluations to ensure vendors adhere to regulatory standards.
- MSPs need to perform thorough due diligence when onboarding vendors. This includes assessing the vendor’s financial stability, security protocols, compliance track record, and adherence to industry standards.
- MSPs should establish clear contractual obligations for vendors related to data security, privacy regulations, service levels, and other compliance requirements. These requirements should be routinely monitored and enforced.
In our detailed eBook, we explore the other compliance issues that can affect your business and offer strategic solutions to overcome these challenges. Get a copy below…
Potential challenges of using an MSP
Now that you’re aware of how an MSP can transform your contingent workforce program, it’s important to address any potential challenges head-on.
While an MSP can bring significant benefits to your organisation, it’s essential to take a proactive approach to overcome challenges that may arise, including:
Fostering seamless communication
One potential challenge lies in fostering seamless communication between your organisation and the MSP. Aligning goals, expectations, and strategies is critical for success. Regular communication and feedback loops can effectively mitigate this challenge.
Integrating existing technology systems
Integrating the MSP’s systems and processes with your existing technology infrastructure can be complex. During the vetting process, it’s essential to ask about and review the technological capabilities of the provider to avoid this issue during the implementation.
Lack of expertise
Depending on your industry, there may be a learning curve for the MSP to understand the intricacies of your business. It’s important to choose an MSP with experience or expertise in your specific industry to ensure effective management of your contingent workforce.
Managing suppliers efficiently
Monitoring the performance, compliance, and responsiveness of suppliers can be a challenge. Your MSP should have robust systems and processes to effectively manage and engage with suppliers.
Scalability and flexibility
Can your MSP accommodate your needs when your organisation wants to scale down? Your MSP should have the ability to adapt when changes in demand occur.
Transparency
While an MSP can bring cost-saving opportunities, it’s important to continuously monitor and manage costs. Transparency in pricing models, visibility into invoicing, and regular cost reviews are essential to ensuring that you are maximising the value delivered by the MSP.
Key considerations when choosing an MSP provider
After gaining a thorough understanding of both the benefits and challenges of using a managed service provider (MSP), you are now equipped with the necessary insights to select the MSP that meet your organisation’s needs.
The success of your workforce strategy depends on this decision. Selecting the right MSP can significantly enhance your operational efficiency and help you achieve your business goals. However, making the wrong choice might expose you to unnecessary risks.
You can use the below checklist if you are currently evaluating various providers.
Service excellence and support
Proven track record
What is the MSP’s track record in managing projects similar to yours in scale and complexity? Do they have documented success stories or case studies that demonstrate their capability?
Vendor neutral
Does the MSP commit to vendor neutrality? Do they have a transparent process for selecting suppliers? Are suppliers chosen based on merit and compatibility with client’s needs?
Establishing strong partnership with MSP
Strategic alignment
Does the MSP demonstrate a clear understanding of your business objectives and workforce needs? Is there evidence of strong, trust-based relationships with current clients?
Operational efficiency and talent optimisation
How does the MSP utilise its expertise to optimise talent acquisition and management? Does the MSP provide strategies to enhance operational efficiency within your contingent workforce program? Can the MSP offer examples of cost savings and process improvements from current or past partnerships?
Access to international or offshore talent
Global recruitment capabilities
Can they demonstrate successful placements in the specialised skills and niche roles your company requires? How does the MSP ensure they access top-tier talent globally?
Compliance and legal support
Is the MSP equipped with the legal expertise to navigate international visa and employment laws? How does the MSP handle immigration and work authorization processes? Do they provide consistent updates on changing regulations that could affect your workforce strategy?
Transparency
Visibility of performance metrics
Does the MSP have robust systems and tech tools for tracking and reporting metrics?
Detailed cost structures
Can the MSP provide a breakdown of the costs involved
Scalability and agility
Flexibility in workforce management
Are they capable of adjusting the size of your contingent workforce in response to business fluctuations, without compromising quality or efficiency?
Rapid deployment capabilities
Can the provider quickly secure highly skilled talent to meet your company’s project deadline and respond to market demands?
Commitment to diversity and inclusion
Diverse talent sourcing strategies
What are their ways to identify and engage with diverse talent pools? Does the MSP have established networks and sourcing channels that access a wide variety of talent?
Transparent reporting on diversity metrics
Can the MSP provide transparent reporting with specific metrics on diversity and inclusion efforts? Data-driven insights can help track progress and identify areas for improvement.
Enhance your MSP engagement with CXC
Don’t let the complexities of managing contingent workers deter your growth and success. At CXC, we’re here to help streamline the entire process of your contingent workforce, from sourcing and engagement to payment, supply chain management, and compliance. Our goal is to help you free up your time so that you can focus on growing your business while we handle the time-consuming tasks of engaging and managing contingent workers.
With CXC, you have the flexibility to choose the level of support that suits your needs. Whether you prefer to partner with us to hand over the entire supply chain or simply select services that require extra support, our tailored approach ensures that you receive the necessary support without being charged for functions you’re comfortable managing in-house.
Reach out to us today to discover more about the various types of MSP programs we offer and the significant benefits they can bring to your company’s contingent workforce management strategy.
