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What’s Up with Contingent Workforce Programs and MSPs: A Chat with EverHive’s Brandon Moreno

09/12/2018 By

The old way of sourcing and managing contingent workforce and services is on its way out, that much is certain. Compared with the first MSP offerings from the 1990s, the number of options for engaging external workers and their work outputs has expanded considerably, making the task of choosing the right kind of program or solution partner for a business all the more difficult.

To get a sense of where the industry has been and where it might be going, we sat down with Brandon Moreno, president of EverHive, for a quick Q&A on the state of contingent workforce programs and MSPs. As the former head of talent acquisition and contingent workforce at Herbalife and now leader of an emerging global contingent workforce solutions firm, Moreno knows firsthand what the barriers to enabling agile programs are, what constitutes a solid foundation off of which to scale a program and what the MSP of the future looks like.

Andrew Karpie: Thanks for talking with us today and sharing your perspective on how contingent workforce management programs and managed services models are changing. You’ve been in the “the industry” on both the contingent workforce and HR side of things for some time, and I know prior to your starting your new business, EverHive, you were the head of talent acquisition and contingent workforce at Herbalife. Over the time you’ve been in the industry, what would you say have been some of the big changes that stand out for you?

Brandon Moreno: By far, the biggest changes have been both the staggering growth in the number of contingent workers and the spread of technology used to engage and manage them. On the upside, technology solutions, like ATS and VMS, have enabled organizations to efficiently scale their contingent workforce and enjoy the economic benefits that come with it. On the downside, from a service standpoint, the erosion of true, strategic partnerships between third-party and client companies has been mind-blowing. It’s one of my major concerns for companies working to make their contingent workforce programs more agile.

AK: In the early 1990s, the first MSPs or VOPs gained traction by helping organizations gain control over their supply base, cost, compliance and the like. In a sense that was how contingent workforce management programs were born. Now fast-forward to recent times and today, when we talk about externally managed programs, internally managed programs and hybrid programs. There’s lots of technology involved, and MSPs of old have expanded their solution footprints. What was the typical evolutionary path of MSPs over the past 10–15 years? Why did many large organizations embrace them and their expanded offerings? And why is it that others did not?

BM: Things changed a lot in the 1990s. As the technology and internet boom were ramping up full speed, companies were increasingly pressed to find a faster and more effective way to attract, select and manage their workers. New tech and web startups were emerging on every corner and offering unheard of sign on bonuses, from new cars to flights in a jet. Some of the staple companies had to pivot in order to lure workers away from the more appealing new companies. Some of the non-tech firms did not feel the initial impact and may have been slower to feel the changes. Even as the traditional employee workforce was relatively well-managed, but stretched, within the HR framework, the growing non-employee workforce was an entirely different story.

Most organizations had limited know-how or sufficient technology to stand-up a robust program. Since the focus was primarily hiring regular employees, many companies just wanted the contingent worker problem solved as quickly as possible. The staffing industry obliged by offering managed service programs (MSPs) as the answer — and MSPs took off. At that time, it was an easy sell to executives, MSPs added significant value and they were seen as strategic partners, not simply back-office outsourcers. They brought some much-needed relief to HR and staffing organizations by helping their clients develop a completely new way to efficiently source and effectively manage a temporary workforce.

Organizations that opted out of MSP models — or, externally managed programs — did so because they were able to build robust internally managed programs (IMP) on their own or their hiring requirements and spend weren’t high enough to warrant total outsourcing.

As the bubble popped and a recession was brought upon us, the staffing model began to change once again. In mid 2000s, while companies were downsizing, their contingent workforce was increasing at a steady pace. As companies found themselves making their organizations more lean, they realized they were using a very large number of non-employee workers. In some ways, their contingent worker programs were like “Jack and the Bean Stalk”— growing faster than their ability to manage it. Understandably, most went with what they knew: They ran to a traditional MSP to fix it.

But as many companies started to discover, because they didn’t have a robust and solid internal infrastructure in place, these programs yielded poor hiring manager satisfaction, poor worker satisfaction, significant decline in communication with their staffing supplier and little to no solid ROI.

AK: So here we are in the middle of 2018. How do you think organizations view managed services today, of course, given that different organizations have different perspectives and needs? What’s going on with externally managed versus internally managed programs, outsourced versus insourced? Do you have more involvement from HR and C Suite?

BM: It is quite different today. Many organizations today are questioning the value of traditional MSPs — and rightfully so. Over the years, traditional MSPs seem to have forgotten their role as a strategic partner, a partner that enables and coaches an organization to adapt to changing labor markets, technology and sourcing channels. As a result, I see more and more companies who are considering managing their programs internally, so they can own the process, proactively partner with the business and keep up with or get out ahead of changes in the labor markets and technology and integrate the emergence of new sourcing and engagement models

But there’s something even more fundamental. More and more companies of every size have such a large population of their workforce as non-employees, some reaching higher than 50%. Having such high numbers contributes to significant impacts on organizations’ operational and financial strategies. Year over year, these workers and programs become a more integral part of organizations’ business models and the bottom line impact is finally starting to be felt and be visible — all the way to the C-Suite. No longer is it an easy sell to have the traditional MSPs of yesterday simply plug into the organization. HR, staffing and procurement leaders are having to show their executives that they have a grasp on the enormous spend and/or amount of non-employee workers. They’re being held accountable to show the ROI for continued use of traditional MSPs or remaining status-quo. Contingent workforce programs are being tagged as priorities for improvement — whether that be addressing the quality of hires, costs, worker integration and engagement, enhanced compliance, supplier success and optimization, hiring manager satisfaction or an entire overhaul.

Companies are also recognizing that their SOW populations have significant rogue spend. Usually, there is little oversight to how these workers are classified and oftentimes they are miscategorized, which can result in compliance issues and higher spends that is unnecessary. As executives are starting to pay more attention to their non-employee workforce, they want visibility into all non-employees. This typically includes staff augmentation, independent contractors and SOW workers. VMS technology has come a long way and is able to support all non-employee workers into their platform, giving users instant visibility into these workers. In addition, the VMS technology also is providing better on/offboarding for these workers, which allows for a smoother integration.

Just as a builder wouldn’t start with the roof, contingent worker programs must start with a solid foundation, regardless of where companies are at today. Programs that haven’t evolved over the years or been developed will have to begin making this a priority, as executives will be demanding it.

AK: A lot seems to be brewing in the overall human capital space, but in some ways much of it can be viewed as a continuation of earlier trends. For example, generally speaking, organizations continue to move toward having an increasingly flexible and dynamic workforce, and now there are the new forms of on-demand, online/remote work and a growing preference for buying outcomes rather than work. Add in technology, global business and the vast stubborn web of laws and regulations. So, looking out over the next five years, how will contingent workforce management programs and managed services providers change?

BM: Organizations will need to be more creative than ever before in accessing their labor pools and staying on top of the latest technology. As the painful need for and the adoption of different ways of sourcing and engaging workers or utilizing services continue to rise, more and more technology solutions and innovative intermediaries are coming to market to make it easier to access work and services, while integrating themselves into current ATS or VMS tools. The managed services providers — or whatever they should be called — who are returning to the roots of being strategic partners to organizations are having the most success. Companies value these firms and see them as an extension of their teams and as trusted advisors that can lead them out of the wilderness to the promised land. As I look at my crystal ball, I predict that over the next five years there will be significant decline in use of MSPs that are not able to become strategic, transformational partners once again. And more organizations will have internally managed programs that they can shape and scale to their liking.