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The Future of MSPs: 3 Characteristics of Successfully Evolving Providers

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The world of work continues to change, and managed service providers (MSPs) need to evolve to remain relevant.

Gone are the days where enterprise contingent workforce programs required little more from MSPs than managing a base of temporary staffing suppliers, regulating contingent workforce spend, and enforcing baseline program compliance. Today, these programs must also be built to navigate an expanding contingent workforce ecosystem, guard against increasing regulatory risks, and integrate data and analytics to provide program value beyond simple costs savings.

While most MSPs can handle the basic requirements of contingent workforce programs of 20 years ago, they often fall short of the emerging standard. MSPs that have not adapted to serve these new requirements — a distinct possibility for many current providers — risk becoming obsolete.

If these providers are interested in change, there is a path forward. By repositioning themselves as expert advisors on contingent workforce management and adopting the latest technologies to augment their offerings, successfully evolving MSPs are carving out a place for themselves in this new world of work. They are doing so through three key updates to their approach.

The First Characteristic: Enabling a Multichannel Strategy 

As new technologies and workforce trends have changed labor markets, businesses now have many more options for sourcing talent than they did even a decade ago. Sometimes, though, these exciting opportunities come a feeling of talent-channel overload because businesses often lack the knowledge and resources to effectively manage what becomes a multichannel strategy.

When businesses attempt a multichannel approach on their own, the results are often mixed. Because there are so many different channels available — ranging from traditional staffing to digital work/services platforms to SOW/services — knowing which ones to choose can be difficult. Without an industry insider’s knowledge of these various channels, internal teams can struggle to properly structure their program. A common consequence is more than they can manage, leading to a deluge of resumes and additional tactical work, instead of spending time on strategic priorities.

This is an essential direction successfully evolving MSPs must lead their clients if they want all parties (and programs) to remain relevant. Forward-thinking, effective MSPs serve as the trusted advisor for their clients, maintaining regular contact with enterprise labor requirements and changing workforce preferences.  They understand the differences between various talent channels and how to effectively access these sources in the context of a client’s contingent workforce program. This knowledge ultimately positions those MSPs to be the best choice for vetting, planning, and operationalizing a multichannel strategy for their clients.

One way to think about how successfully evolving MSPs fit in here is to conceive of these multiple channels as a contingent workforce ecosystem. In this situation, MSPs serve as the ecosystem hub, orchestrating access to the many sources and channels for workers that businesses cannot fully and optimally manage on their own. What’s more, MSPs can help guide program design, gradually opening new channels for program managers to become acquainted with, and then helping those managers scale their program as internal demand develops.

The Second Characteristic: Identifying Risks and Ensuring Compliance 

Of course, talent-channel overload is not the only reason businesses find contingent workforce ecosystems challenging. Along with these growing labor pools comes increasing amounts of risk that non-employee labor managers must address — if they even have the visibility necessary to identify it.

In many legacy programs, the scale of contingent workforce use is often unknown, poorly tracked, or difficult to identify. Rogue requisitioners, for instance, may engage a freelancer without using established sourcing and quality controls, leading to unreliable results. In even less desirable scenarios, rogue selection of contingent labor can open the business to regulatory risks (e.g., improper worker classification that can lead to lawsuits).  These increased factors have elevated risk and compliance to the same level of concern typically afforded to cost savings.

Fortunately, successfully evolving MSPs can bring the same level of expertise to risk and compliance processes as they do to a multichannel talent approach. . In setting up a multichannel engagement strategy, MSPs can design tracking and visibility into the program, helping fix the visibility gap while allowing businesses to take advantage of growing talent segments without introducing new headaches.

To do this, successfully evolving MSPs need to take a more consultative approach, advising their clients on talent strategy and coordinating the labor needs of various business functions. By providing a holistic solution, the MSP brings the contingent workforce strategies of the entire business into alignment. This ultimately helps prevents the introduction of new risks, while offering the updated approaches to contingent workforce engagement these companies desire.

The Third Characteristic: Integrating Data and Analytics to Improve Programs 

To support a multichannel strategy, complete with its additional risk and compliance issues, successfully evolving MSPs will need to embrace new technologies that enable such an approach. These new solutions go beyond the typical functionality of standard MSP offerings, allowing businesses to source and manage contingent labor with insights that improve program quality and introduce innovation.

In most current MSP programs, businesses have little data beyond the historical data extracted from their VMS. This limits their abilities to establish strategies and undertake analysis based on anything beyond information gleaned from the experience of internal teams.  This approach also provides little to no data about talent quality or productivity, making it difficult to base program decisions on anything more than price.

Successfully evolving MSPs are raising the bar when it comes to what contingent workforce programs can offer. They are doing so by providing externally benchmarked rates for labor, segmenting these insights into separate categories including skill sets, job types and geographic regions. In addition, these MSPs are applying advanced predictive analytics to their own internal systems, allowing them to provide guidance about where rates could go and how talent is likely to perform based on previous performance for multiple businesses.

Building the MSP of the Future 

Of course, not all MSPs will successfully evolve. While the three contingent workforce programs characteristic discussed here may seem simple, putting them in practice requires an updated philosophy about how MSPs approach client relationships.

Process updates can only go so far. What MSPs must do to ensure sustainable, long-term success is become a trusted advisor for all of a company’s non-employee labor needs, bringing a consultative approach to program management that goes far beyond savings and risk.

What exactly does that look like? Stay tuned for part three of this series, where we profile a modern, successfully evolving MSP.

This article was written on behalf of Geometric Results Inc. (GRI) by the Spend Matters Brand Studio team and not by the Spend Matters editorial or analyst teams.

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First Voice

  1. Steve Dern:

    Indeed, the expectation of enterprise clients, and the talent acquisition strategies have evolved. MSP providers must evolve with their offerings and ability to execute both strategically and tactically must follow suit. Otherwise, as the industry evolves and M&A activity becomes part of the mature industry, those that do not evolve will become the small fish acquired by the innovative leaders in the space.

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