As we I like to say at KellyMitchell, there is no status quo in contingent workforce procurement, each of us got ahead in this business by building relationships, listening up, and rolling with the punches. It’s our job to understand agile in the context of our client’s business, so we are pretty much required to live and breathe it ourselves, right? Flexibility and agility have always been our mantra, so this fits right in! So, when MSPs entered the market place, we were ready to take on the next big opportunity in our industry in order to improve our partnership skills, and we have been reaping the benefits ever since.
With Staffing Industry Analysts reporting that vendor management systems (VMS) and managed service providers (MSPs) adoption rates north of 65%, it is clear that we’re not alone in our “buy in” to this approach to the talent supply chain. In our experience, participation in a collaborative talent supply community offers benefits, not only for the talent buyer, but for the talent suppliers as well. While most of the industry is sipping the MSP Kool-Aid, some are still a little lukewarm on the idea.
Just in case I am ringing a few familiar territory bells here, let me take you down our golden path of MSP opportunity and you can see just how MSPs have been beneficial us, rather than a detriment. Let’s start by jotting down a few of the concerns that come up when MSPs are brought into the mix:
- Does an MSP stifle competition or encourage it?
- Does an MSP force bill rates down and make it virtually impossible for staffing vendors to remain profitable?
- Does an MSP establish lots of rules and regulations that interfere with talent delivery?
- Does an MSP build walls around clients, cutting off visibility and leaving staffing suppliers in the dark?
While some companies see MSPs as a bump in the road, KellyMitchell has learned first-hand that it is quite the contrary. So, without further ado, here are a few ways MSPs are our friend, and they should be yours too:
MSPs Level the Playing Field
While staffing agencies working on contract or temp jobs driven through a vendor management system (VMS) face intense competition and extremely short timelines to fill requisitions, the first candidate submitted is often the candidate hired. This means small firms may be as likely to fill the need as much larger competitors if they can engineer their sourcing engine for speed. An MSP rewards suppliers for excellence and makes it easy to demonstrate a vendor’s strategic value to the buyer. That opens the door for greater opportunities to deepen client account penetration. The MSP promotes transparency, ensuring that suppliers are evaluated strictly on their ability to perform, rather than on relationships established with individual hiring managers.
MSPs Provide Growth Opportunities
When an IT staffing firm is approved by an MSP as a preferred vendor for a major employer, the transparency of the requisition process creates equal opportunity for suppliers. It can lead to higher volumes of business with that buyer and an avenue of growth that would otherwise be closed. While it is true that bill rates must fit into pre-negotiated guidelines, any squeeze on gross margin is more than made up through higher volume.
MSPs Encourage Operational Efficiency
Procure-to-pay talent sourcing systems are highly structured and metrics-driven, with key performance indicators and strict service level agreements. When an IT staffing provider aligns its own operational protocols to match the pace and timing established by the MSP in order to meet performance expectations, productivity is the result. When we can deliver high-quality IT talent with less friction in the process, our own operating costs go down and profitability goes up.
MSPs Provide Predictability
One of the biggest challenges, especially for small staffing firms, is maintaining strong cash flow. Getting paid should be an automatic process, but that is not always the case. When a staffing supplier works within a contingent workforce program, the MSP and VMS provide transparency into the payment process. It has standardized procedures for timekeeping, a disciplined process for approvals of both time and billing, and a dependable system for payments. With detailed financial data, controls and automated processes, staffing suppliers gain a predictable and reliable source of revenue, promoting growth for the staffing firm.
MSPs Offer a Strong Talent Supply Network
In a client-focused sourcing community, the goal is to deliver talent to clients with quality, speed and efficiency. From the perspective of the MSP, its ability to satisfy client needs is due to strong, collaborative relationships with staffing partners, based on transparency and fairness. MSPs work with staffing vendors that value clear communication of client requirements, efficient processes, timely payments and more predictable cash flow. Participation creates value, offering advantages that can lower the cost of doing business and drive higher revenues. In addition to greater visibility into their contingent workforce program, clients get quicker time to fill, improved quality of hire, a stronger talent pipeline and more consistent supplier performance. The supply and demand equation is balanced in a way that delivers value to all parties working collaboratively to achieve success in the sourcing community: client, suppliers and the MSP.