Spend Matters welcomes this guest article by Terri Gallagher, president and CEO of Gallagher and Consultants.
Much has changed in the world of work since the first managed service provider (MSP)/vendor management system (VMS) model was introduced in the late ‘90s.
We are in the middle of a talent war; there are widening gaps in open positions and the talent to fill them in a “knowledge economy.” There is the explosion of the gig economy and usage of temp labor, which is expected to be 50% of our total workforce by 2020. The “Uber effect” won’t be slowing this down anytime soon. Add to that the globalization of our workforce — international competitive drivers are “flattening” our world and the need to access skilled knowledge workers and manage the growing complexity of regulatory, risk and employment requirements is growing. Technology and the evolution of work intermediation platforms (WIPs) are driving it all forward faster with online freelancer marketplaces and other work platforms quickly connecting high-quality talent directly to the end user.
The MSP model originally started out in the early ‘90s as a vendor on premise (VOP) to handle fulfillment and some administrative processes. The MSP was basically the “2.0” of the VOP, managed primarily by the large staffing firms. Currently, 72% of organizations have some type of centralized contingent workforce management program. The early VMS providers like Chimes have made way to mergers of today’s VMS providers: IQNavigator and ProcureStaff, SAP and Fieldglass, and we are seeing evolution of VMS capabilities, adding mobile features, IC management, and total talent management (TTM).
Buyers of workforce strategy solutions are far more knowledgeable and sophisticated than they were even a couple years ago. MSP satisfaction rates have been dropping (with staffing providers and clients) and continuous improvement has dropped off. In Staffing Industry Analyst’s 2014 Contingent Buyer Survey, the net promoter score for MSPs was 18%, down from 27% in 2011. MSPs have been successfully adapting to changes in the workforce since the first VOP model. However, recent changes are unprecedented. Can MSPs move beyond the functional control and procurement-based model that has dominated over the past 20 years?
Here are key changes MSPs can make to continue to stay relevant and deliver on client expectations:
- Integrate multiple technology solutions: some WIPs, including FMS and talent clouds, can be leveraged to vet and curate talent from sources in addition to staffing firms. The independent contractor population is expected to grow 33% from today’s population of 30 million to 40 million by 2019. This population also contains some of the most critical skills in the talent war: science, technology, engineering, math (STEM). Some VMS providers are already integrating these platforms into their technology.
- Move beyond functional model of oversight and control to TTM: provide workforce solutions that enable the right mix (perm, contingent, statement of work and IC) for the entire workforce that drives bottom-line results for clients and contributes directly to their growth and market share.
- The Operations Model must include true data analytics capabilities and technology expertise: data-driven decisions will become more important in the worldwide workforce. Having dedicated technology support to determine the right technology solutions and roadmap will also be key for client- and staffing-provider satisfaction.
- Incorporate change management and process engineering when setting up a contingent workforce program. The No. 1 challenge cited by contingent workforce managers is adoption of a program. Have this expertise available from the beginning to ensure all processes from onboarding to offboarding are established and efficient. Provide strategy to prepare the organization for the changes ahead and the specific buy-in needed will resolve the adoption issue.
- Global workforce strategy: companies that do not constantly innovate could be overtaken by competitors. This dynamic is “flattening” the global labor market. Given talent shortages, we can expect more engagement of “critical talent” by businesses in more places in the world. It is crucial MSPs work with global partners that are indigenous to the countries they expand to that can help navigate the complex taxation, local labor requirements, foreign work processes, regulator and data security requirements.
MSPs have continued to evolve over the past 20 years as the workforce landscape changes. However, the recent shifts are unprecedented in how we engage, leverage and manage our global workforce. These changes have been rapid and dramatic. MSPs will need to quickly shift gears to continue to support evolving customer demand, market conditions and technology evolution.
As Jack Welch, former CEO of GE, once said, “change before you have to.”