Why use contingent talent from a Managed Services provider?

Contingent Talent has been a long-standing key constituent of the workforce of many organisations, with the ‘Gig Economy’, currently valued at £20bn in the UK, consisting of an approximate 1.7M workers. The concept of being able to engage and utilise workers ‘on-demand’, with the ability to onboard and offboard quickly, and often obtain very specific skills and experience that your business may be lacking, are all key reasons why Contingent Talent remains an absolute mainstay of most workforces.

Are contingent/temporary workers always the answer? No. It’s about getting the right blend for your organisation, but for most, this entails a proportion (to varying degrees) of non-permanent workers. This blend can of course change, for example if your business is delivering a number of key projects and in growth mode versus a static state, the ratio of non-permanent workers is likely to look different.

What are the different ways in which an organisation can engage contingent talent?

To hire and manage a contingent workforce of any size, some kind of structure is essential to ensure cost control, value, efficiency, compliance and quality. A normal initial approach to this is to establish a Preferred Supplier List (PSL) of recruitment agencies that are know and trusted to deliver contingent workers when needed, and often to a pre-defined set of commercial terms. This gives you control over costs, the ability to manage performance, and healthy competition.

In the past 20 years, and in particular the latter 10, there has been an increasing trend towards evolving a PSL approach into a Managed Service Programme (MSP). In fact, SIA (Staffing Industry Analysts) recently reported that over 60% of organisations of over 1,000 staff have an MSP in place. In this article we explore the reasons behind this, and outline the benefits an MSP can deliver.

What are the key reasons many organisations have opted for Managed Service Programme (MSP) over a PSL?

In reality there are many potential reasons, but important also to emphasise though that every organisation is different. Some of these factors will be more relevant and important to some than others, and the true business case for an MSP will be unique to your business. Below is some detail around the typical ‘headline’ reasons an MSP delivers benefit:

Accountability

Ultimately, this is a game-changer. Running a PSL yourself can be very effective if you can commit the ongoing time, resource and energy. But it’s still your problem if a position doesn’t get filled, a supplier is under-performing, there is a compliance issue, or the commercial terms need re-negotiating.

Appointing an MSP provider immediately enables you to hold your chosen partner to account for everything: compliance, delivery, customer satisfaction, supply chain management, reporting, strategic support. We will focus on these areas of accountability now.

Cost Control

Whilst the aforementioned PSL enables cost control and provides some economies of scale, an MSP is a new level of commitment and therefore an opportunity for immediate savings. At Gattaca Solutions, we have consistently been able to save customers between 10 and 20% overnight, by evolving their contingent model from PSL into an MSP.

But cost control doesn’t end there. Having an effective MSP enables a host of additional cost savings throughout the tenure of the programme via supplier costs, contractor costs, and indirect costs. A reputable MSP provider would implement a robust Continuous Improvement programme as part of their service, and within this, can be held to account to deliver consistent and ongoing cost savings and control.

It doesn’t even end there either! Remember, when you have a PSL it’s your responsibility to engage and manage your suppliers. This is not an easy thing to do. What if some of your hiring managers start to use new (unapproved) suppliers?

From experience, such situations can be a source of significant overspend. And even if your PSL is under complete control, viewing all contractors in one place through a ‘single source of truth’ is very challenging. Therefore, it’s difficult to know how much you’re spending, what you’re forecast to spend, and a comprehensive list of all workers and their start dates, end dates etc. Proper visibility of all of this optimises your ability to make the right decisions.

An MSP can solve all of this. By providing a fit-for-purpose Vendor Management System (VMS) and a suite of reporting, visibility for every contingent worker will be achieved, regardless of their source. Because under an MSP, all suppliers work under the same programme. In other words, under a PSL you manage your suppliers, under and MSP, your provider does

Delivery

The programme has to deliver the contingent talent your business needs, both now and throughout the tenure of the service. Without this, any wider ‘bells and whistles’ the service provides, are largely obsolete. Closely tied in to accountability, the onus will be on the provider to ensure all demand is fulfilled, and to the required standards of performance (i.e. the agreed Service Level Agreements or SLAs, and Key Performance Indicators or KPIs).

Some programmes will depend heavily on the in-house delivery capability of the provider and are common in industries where niche skills are required (known as a Master Vendor Model), some are heavily or potentially entirely oriented towards delivery from a neutrally-run supply chain, more commonly seen on programmes requiring high volumes of ‘repeat’ skills (known as a neutral vendor model).

But whatever the expected balance of delivery between the provider’s capabilities versus the appointed supply chain, delivery is firmly the accountability of your MSP provider. This means the supply chain needs to remain continually fit for purpose and able to fulfil all types and volumes of demand.

Efficiencies

The above means you achieve two key efficiencies by having an MSP in place.

Firstly, from an invoicing perspective: You will no longer have all suppliers invoicing you separately. You will have a single invoice from your MSP provider, once per month if you wish. This efficiency gain alone often enables customers to be able to redeploy FTE into other tasks.

Secondly, from a process perspective: You are only having to engage with one party during the contractor hiring and onboarding process. Gone are the days of 4-5 qualification calls (depending on PSL size), 4-5 different parties to liaise with for CV submission, interview arrangement and offers. The MSP provider (along with the aforementioned VMS) will facilitate this for you with all suppliers.

Compliance

A singular system and process for all hiring and tenure management of contractors means a consistent approach. This process can continually evolve to ensure changing legislations such as IR35 or Employer’s National Insurance contributions (as recent examples), are seamlessly embedded. Supply chain compliance is also firmly the responsibility of your MSP provider, and another key responsibility you can relinquish by outsourcing your contingent recruitment.

Agility

Is your need for contingent workers fluctuating? Have you suddenly developed a need for a type of worker you’ve never needed to hire before? Is there is an urgent project that needs a huge ‘sprint’ to engage a number of contingent workers really quicky? Is a campaign needed to support this?

All of these could cause significant headaches to a business that is owning contingent recruitment in-house and running a PSL. With an MSP, all of these situation examples would be seamlessly absorbed by your partner. They will address the challenge around bringing in our standing down resource to drive the service, it’s not your problem.

Strategic support and external market perspective

This is perhaps harder to articulate in as finite a manner as many of the above benefits, but if you are in an industry where you require niche skills from the contingent market, are competing fiercely with your peers for this talent, and want to make sure you are the ‘assignment’ of choice, partnering with an MSP provider that is proven in your sector could prove invaluable.

Whether it’s providing accurate rate benchmarking, competitor analysis, bespoke and tailored industry insights, networking or even business development opportunities, a good MSP can deliver. If something key is changing that impacts the contingent dynamics in your industry, having a partner that lives and breathes your sector can truly be your eyes and ears.

The concept of an Employer Value Proposition is very well-established, but more and more organisations are now considering what their AVP is (Assignment Value Proposition). The buying behaviours and priorities of contingent workers have evolved. Aspects such as brand, ESG, ED&I, purpose and culture genuinely matter, even for contingent workers. A successful MSP will enable you to define this proposition, take it to market, and enable your organisation to compete strongly for interim talent amongst your peers.

Continuous improvement

Closely aligned with strategic support, a high-performing MSP should entail a structured Continuous Improvement Programme. This can focus on any aspect of the service, to ensure it continually evolves, and never stops adding value. Workstreams could include: Technology roadmap, performance (eg time to hire, time to productivity, CV to interview ratios etc), cost control & savings, reporting, or customer satisfaction. The workstreams and objectives are agreed in partnership, and normally reviewed as part of the formal business reviews of the service (typically quarterly).

It is really continuous improvement that differentiates an effective MSP that does what it set out to do, versus a true partnership that evolves and adapts as the landscape inevitably changes. Ultimately, the programme should be aligned to the wider talent and business objectives of your organisation, and only via continuous inspection and adaption, can you ensure this continually remains the case.

Statement of Work/outsourced services

Although not traditionally included within the scope of an MSP, there is an increasing trend towards programmes including services procurement as part of the wider vendor management. A key benefit of having all non-FTE labour within a single programme is the enablement of a ‘triage’ approach that can determine for any given project, what is the optimum vehicle to procure the resource (or indeed, the right blend). A key benefit of doing this effectively is balancing accountability for project delivery, with cost control.

Final thoughts

Could your business run its contingent workforce itself via a PSL? Absolutely, and there are many organisations that do (from small, up to some of the largest). As this article has hopefully demonstrated, there are a number of compelling reasons why your organisation should consider a Managed Service Programme if you engage contingent workers on any kind of scale (30 workers or more). The fact that over 60% of business with over 1,000 staff have one in place endorses this, and reflects the widespread confidence in adopting the model.

Importantly though, if your business has decided an MSP is the right model for you, key is making sure you partner with the right provider. A programme of 5,000 workers with huge volumes of generalist skills is vastly different to a 40 worker programme in for example the Defence sector, requiring in-depth expertise in the industry and skills required.

Therefore in turn, the type of provider that is best-suited, will also vary. Cultural alignment is also key. This is a partnership, you need to be able to work well together, collaboratively and harmoniously. But get the right model AND the right partner, you can expect success.

If you would like to discuss your challenges and aspirations around contingent workforce management in more detail, please get in touch!

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