What is an MSP?

In modern business, agility is everything. Organisations need to access and deploy the talent they need, when they need it.

However, many in-house HR and talent acquisition functions struggle to manage large contingent workforces of freelancers, contract workers, seasonal staff, and other temporary talent.

A Managed Services Programme, or MSP solution, is a service offered by a recruitment outsourcing business to address this need. In a typical MSP, the service provider assumes responsibility for recruiting and managing the client’s contingent workforce.

Other common challenges that MSPs aim to solve include:

Lack of compliance
Inadequate insight into holistic spend and contingent headcount
Lack of standardisation among processes, such as supplier contracting and rates
Difficulty scaling the workforce up or down to meet fluctuating business needs
Inability to drive hiring goals around priorities like diversity, skills and projects
Co-employment risk
Too many points of contact for business stakeholders
Poor perspective of the contingent labour landscape around supply, demand and rates

What are some typical MSP services?

Managed Services Provider staffing goes beyond talent acquisition and recruitment. Typically, an MSP is an all-encompassing solution for the recruitment and management of all contingent workers.

Functions like onboarding, payroll and offboarding are all within the scope of an MSP program. While with an organisation, a Managed Service Provider will also advise on compliance with local regulations in areas such as tax and worker safety.

MSP solutions can be delivered via cloud-based software applications known as Vendor Management Systems or VMS. These systems allow the client and Managed Services Provider to execute all transactions and exchange data and analytics in a fast and frictionless way. A VMS gives the client complete visibility over their contingent workforce functions and current levels of spend.

Other advantages of this enhanced visibility and control include capturing and managing SoW spend, centralised payrolling of contingent workers and consolidated vendor invoicing.

What are the benefits of an MSP?

These days, many organisations have a significant spend on contingent workers, who are often hired across multiple locations and jurisdictions. This creates a complex landscape for hiring managers and recruiters, who often have insufficient oversight over their contingent workforces. With insufficient data on the speed or quality of temporary hires, organisations will struggle to control their recruitment costs (assuming they know what those costs are) and create a positive recruitment and onboarding experience.

An MSP program moves the responsibility for managing contingent workers from a company’s HR and talent acquisition functions to a Managed Services Provider. The benefits of moving to an MSP solution include:

A consistent experience for both hiring managers and candidates
Reduction of risk for the client, who is relieved from having to track regulatory compliance across multiple jurisdictions
Control and standardization over hiring processes that have traditionally been less rigorous than permanent hiring
SOW management to ensure best possible value and results when procuring external services
Visibility of headcount and contingent labour spend
Faster onboarding and speed to market
Ability to access more diverse talent pools
Centrally controlled brand messaging
Access to legal counsel who can advise on employment legislative changes
Continuous improvement initiatives

MSP fees can be calculated in various ways. Some Managed Services Providers charge a fixed fee or monthly retainer, while others agree on a percentage rate per hire or transaction In some cases, the fee may include services such as onboarding, training and HR support.

It is typically the client, or the company outsourcing its recruitment activities to an external provider, that funds the MSP. However, it is possible for a supplier to offer an MSP on a no-fee or discounted fee basis as part of a broader business relationship with the client. For example, a supplier may offer an MSP as a value-added service to a client that is already purchasing a significant volume of services from the supplier.