The Competitive Advantages of a Managed Services Provider

A Managed Services Provider (MSP) is a critical component to managing contingent or statement of work (SOW) workers. It is an outsourced contingent workforce management solution that will manage the entire talent life cycle of contingent workers from acquisition to payment. An effective MSP will incorporate a vendor management system (VMS) that will provide companies with complete visibility into the status of each contingent or SOW worker.

The world of work continues to evolve—quicker than it ever has before since the coronavirus (COVID-19) swept across the world. Organizations are increasingly investing in the power of a contingent workforce to become more agile in these disruptive times. As employers everywhere are using more forms of contingent workers in their post-pandemic recovery strategies, it’s likely that your business is also getting on board with the same transformation.

For answers, organizations committed to a more strategic approach to contingent talent monitoring. Meanwhile, those in management are turning to an effective MSP solution.

If you’re considering investing in an effective MSP or are interested in learning how one can help optimize contingent workers to drive your business forward, then the following insights will help you make an informed decision.

What are managed services?


Today, managed services are one of the fastest-growing outsourced talent acquisition solutions. Everest Research Group reports that the global managed services market surged 10.1% between 2015 and 2016. An effective MSP will have the information technology (IT) infrastructure, expertise, and remote monitoring and management solutions in place to provide companies with complete visibility into their contingent workforce.

Why do organizations partner with an effective MSP?


As the effects of the pandemic continue to drive business strategies, it’s critical for companies to become more agile, and a contingent workforce is a widely adopted answer to bridging skills gaps and driving both growth and innovation.

At its most basic delivery level, the right MSP will help an organization easily streamline and manage its entire contingent workforce program by improving efficiency, controlling costs, and mitigating steep fines, penalties, and reputational damages associated with certain risks. 

While early managed services models maintained a focus on process improvements and cost savings, more mature MSPs, however, are now seeking ways to increase the access and delivery of talent while reducing time to hire. To do so through the use of technology stacks, managed services are leveraging direct sourcing solutions for greater access to talent pools and niche skills, sourcing alternative acquisition resources like Artificial Intelligence (AI) and other initiatives that increase savings. This is being done while ensuring quality talent engagement and retention.

Different types of MSP models


A typical MSP will have programs that fall into one of these models:

Vendor-neutral: All MSP vendors have the equal opportunity to fill a position within a specific time.

Master vendor: A preferred or master vendor is given preference to fill a position first, but must release the role to other vendors if they fail to find talent within a specific time.

Hybrid: This type of model will include elements of the first two programs.

Managed services drivers, MSP focus, and benefits


For most organizations partnering with an effective MSP,  there are seven key drivers that are aligned with specific operational challenges. These drivers include:

1. Operational challenge: Minimizing the risk of non-compliance


MSP focus: Onboarding and Offboarding with contingent workforce audits and rate compliance visibility.

Benefit: Improved compliance, rate compliance, worker onboarding and offboarding compliance, and better worker classification audits to minimize co-employment risks.

2. Operational challenge: Controlling rogue costs related to spend


MSP focus: Cost control.

Benefit: Greater visibility into costs using vendor performance metrics to ensure effective negotiations and the development of sourcing strategies.

3. Operational challenge: Drive for improved performance and cost efficiencies


MSP focus: Closer supplier management with access to benchmark rates.

Benefit: Increased contingent workforce quality and performance with reduced time to hire. This is a result of supplier base optimization and requisition optimization through hiring manager feedback on services and formal service level agreements (SLAs).

4. Operational challenge: Sourcing hard-to-find talent

MSP focus: Developing new sourcing models.

Benefit: Support in implementing technology in conjunction with delivering process change.

5. Operational challenge: Speed of change and large ramp up of worker volumes


MSP focus: Agility to support peaks and troughs of contingent worker needs.

Benefit: Outsourcing the MSP program can be a more effective way to manage business cycles.

6. Operational challenge: An increase in complex operations


MSP focus: Souring optimization to support diverse needs.

Benefit: Scaling your contingent workforce program to new markets where internal knowledge may be limited.

7. Operational challenge: Managing VMS technology and integrations


MSP focus: Services and technology support.

Benefit: Significant operational changes can require a new solution as it remodels its blended workforce. The right MSP will support these changes across the entire contingent workforce delivery.

Beyond these key drivers, competitive organizations are also turning to MSPs in order to build on their employer brand and leverage the use of predictive analytics to ensure a better contingent workforce program with access to niche skills.

Is the MSP solution right for my organization?


An effective MSP will require organizations to have a minimum amount of contingent workers to spend in order for the program to be successful and self-sufficient. When deciding whether or not the MSP solution is the right choice for your organization’s needs, there are first some basic and more complex factors to consider. First, it’s critical to understand how much contingent workers are currently costing your organization. It’s a unique number to an individual business, yet can be difficult to account for, as nearly 60% of contingent worker costs are unaccounted for in an average business.

You’ll also want to know how current buying is being done for the various elements of your contingent workforce and what controls are in place to manage the current program.

Additional questions on your managed services checklist should include:


For companies that are considering partnering with a managed services partner, below is a list of additional considerations:

  • Has my contingent workforce program outgrown my current IT infrastructure and management strategy? Are my needs becoming more complex?
  • Am I securing contingent workers in the required time frame?
  • Do I have clear visibility into contingent worker spend?
  • Have recent policy changes made me concerned about compliance?
  • Am I engaging more contingent workers now than I have in the past, and do I plan on securing more in the future?
  • Does my business need better cost control among staffing vendors?
  • Is my business looking for an IT infrastructure that ensures more detailed reporting, workforce analytics, and key insights to make better data-driven contingent labour decisions?
  • Could my business benefit from a workforce consultant with knowledge regarding labour trends and tailored solutions?


The role of a trusted managed services partner

A trusted managed services partner should be committed to advising on the best solutions available to meet an organization’s business goals and to delivering innovative services that transform how they acquire and manage talent. This is done by listening to an organization’s specific business needs and tailoring a solution that delivers both short and long-term value across an entire contingent workforce program. 

Are you interested in learning more about managed services?

View our case study to gain deeper insights into how Flextrack’s MSP and VMS solutions helped one client company achieve cost-saving and compliance.