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Internally managed MSPs can offer a big advantage to an organisation. By managing your contingent workforce in-house, you can improve visibility over your workforce, cut costs, and work towards creating a cohesive company culture.
But managing your contingent workforce in-house doesn’t mean you have to do it all on your own. At CXC, we believe that most internal MSPs are in desperate need of external support to make their contingent workforce programmes as cost-effective and efficient as possible — keep reading to find out why.
The role of internal MSPs
An internal MSP is a team or department within an organisation that’s responsible for managing the various aspects of the contingent workforce. For example, your internal MSP team might manage suppliers, build candidate pools, handle supplier invoices and source, vet and engage contractors.
While many organisations rely on external agencies to manage their contingent workforce needs, there are some key benefits to the internally managed approach. That said, we believe that many organisations with internal MSPs could benefit from external support in some key areas.
The benefits of managing your contingent worker programme in-house
Here are some of the advantages of internal MSPs:
- Increased visibility and control: When you manage your contingent workforce directly, you maintain a better level of visibility over the quality and performance of your temporary workers. This increased oversight allows you to ensure that the work delivered by contingent workers meets your internal standards. Ultimately, this can lead to higher-quality outcomes.
- Minimised and consolidated costs: Relying on external partners to manage your contingent workforce typically means introducing a lot of different middlemen into the process — and that comes at a cost. By leveraging an internal MSP, you can eliminate agency fees and mark-ups, and maintain better control over the overall costs of your workforce.
- A proactive approach to recruitment: Managing your contingent workforce internally involves investing time in building pools of available talent to meet your future needs. By building a robust pipeline of skilled workers who are familiar with your company’s culture and processes, you can ensure you’ll always have the people you need, when you need them.
- Cohesive company culture: Working with external agencies for contingent workforce management can dilute your company culture and create distance between you and your contingent workforce. With an internal MSP, on the other hand, you can integrate contingent workers more seamlessly into your business, promoting a cohesive company culture where contingent workers feel like valued members of the team.
The challenges faced by internal MSPs
Despite the benefits an internal MSP can bring to an organisation, this approach also comes with some key challenges:
- Limited visibility over the wider market: While your internal team might have a good idea of what’s going on within your business, they probably don’t have a clear picture of the overall market. Without an external support network, it can be difficult to stay ahead of the curve and prepare for incoming legislation and other external factors that could impact your business. Plus, internal teams are often focused on meeting their immediate needs, which doesn’t leave much time to take notice of emerging trends.
- Need for technology and data: Technology is crucial for mapping the external market, benchmarking salaries for contingent workers and converting workforce data into actionable insights. But, while there are many tools available, licensing them for your business can be expensive. Internal MSP teams often need to balance their needs against their budget, which can lead to inefficient processes and a lack of visibility over the workforce.
- Lack of compliance expertise: Hiring contingent workers inherently comes with a lot of risks, and many internal MSPs don’t have the necessary expertise to properly handle compliance. Plus, with many internal teams overstretched and working with limited resources, it’s often necessary to let compliance issues slide in the interest of getting talent hired and onboarded quickly. This can expose your business to significant risk.
Why internal MSPs need external contingent workforce management
While there are many benefits to an internally managed contingent workforce, internal MSPs often face resource constraints. That’s why we believe that even the most robust internal MSPs could benefit from some level of external support. Here are a few of the benefits that working with an external provider could bring to your internal MSP:
Expertise in compliance and risk mitigation
Labour and employment laws are constantly changing, and most internal MSP teams simply don’t have the bandwidth to consistently monitor them. This difficulty is multiplied if your contingent workforce spans multiple countries since you have several different sets of regulations to keep track of.
Contingent workforce management providers have whole teams dedicated to monitoring regulatory changes, so you don’t have to. That means you can avoid legal risks and jump compliance hurdles, without committing to the hours of work that usually entails.
Effective tail-spend management
Tail spend refers to the low-value, low-volume, non-strategic purchases that happen outside of an organisation’s official procurement channels. And, while each of these purchases is small on its own, together they can add up to a serious sum. Plus, spending outside of official channels carries a risk of fraud and non-compliance, which could cause big problems for your organisation.
Working with a contingent workforce management provider could help you to get your tail spend under control by consolidating suppliers, negotiating better deals and streamlining procurement processes. Over time, this could result in a significant saving for a business without sacrificing quality of service.
Scalability and flexibility
Every organisation’s needs change over time. And the ability to efficiently scale your operations up or down in line with your situation can be a key competitive advantage. The problem is, when your MSP is managed internally, the resources you need to pay for are relatively fixed.
With an external supplier, however, you can flex your solution up and down as you need to, without losing access to resources you might need in the future. That means you can downsize your workforce in leaner times, and be ready to quickly ramp back up when demand returns.
How an external contingent workforce management provider could enhance your internal MSP
It may sound strange to talk about using an external provider as part of your internal MSP. But the point isn’t to replace your current solution but to enhance it by making it as effective and cost-efficient as possible.
Here are some of the concrete services that an external contingent workforce provider like CXC could offer:
Expert recruitment support
External contingent workforce providers often have access to broad talent pools, which gives you a better chance of finding the right person for a role. They can also help you to source talent with specialised skills that you may not be able to find on your own. In short, a contingent workforce management provider could become a key partner in securing the talent you need to drive your business forward.
Smooth and effective payroll
Managing payroll for a contingent workforce can be complex, and comes with several compliance concerns and risks. When payroll mistakes creep in, this can be discouraging for the contingent workers concerned — and create a lot of work for your internal team. Using an external payroll provider like CXC ensures your contingent worker payroll is on time and accurate, with compliance guaranteed.
Streamlining and cost management
External contingent workforce management providers have the experience, knowledge and expertise needed to effectively manage your tail spend and reduce your costs. They may do this by consolidating suppliers, building strong relationships to secure better deals and streamlining and optimising your procurement processes. Over time, working with a skilled contingent workforce management provider could significantly reduce your workforce costs.
Regulatory advice and guidance
One of the key advantages of working with a contingent workforce management provider is the regulatory and legal advice they can offer. Providers such as CXC are constantly monitoring the latest regulatory changes, so they can help their clients to navigate them when they arrive. All of this means that your organisation will be able to better mitigate risks and avoid legal trouble.
The essential partnership for internal MSPs
Managing your contingent workforce in-house can help you to maintain control and visibility, reduce costs and build a cohesive and positive company culture. But, unless you have unlimited resources at your disposal, there are likely some limitations to what your internal team can achieve on their own.
By leveraging the support of an external contingent workforce provider like CXC, you can enhance your contingent workforce programme to ensure it’s as effective and efficient as possible. Over time, this will lead to a more cost-effective, flexible programme that delivers the best possible experience for your contractors.
Want to learn more about how CXC could enhance your internal MSP? Get in touch with our team today.
