Over the past decade, the significance of Managed Service Provider (MSP) programs in the UK has skyrocketed, with approximately one-third of the total contingent worker spend now being managed through this supply model.
The exponential growth of MSP programs underscores the undeniable importance of such a partnership in today’s workforce landscape, whereby the management of one’s contingent workforce can be both complex and time-consuming.
Although businesses have increasingly acknowledged the numerous benefits associated with transitioning from a multi supplier to a single supplier model – from cost savings and operational efficiencies to enhanced control and improved visibility – not all decision-makers have grasped its full potential.
This hesitancy stems from a variety of factors, including concerns about relinquishing control, cultural barriers, and the need for deeper understanding of the transformative power of these solutions.
Nevertheless, adopting a single supply model to manage your contingent workforce can yield crucial advantages that may not be immediately apparent, from streamlining your recruitment process and improving time to fill to an improved service experience and better management information to enable you to make data-driven decisions.
8 Benefits of an MSP
- Streamlined recruitment process
An MSP can provide the end-to-end management of your temporary worker / contractor population by handling tasks such as onboarding, time and attendance tracking, payroll management, and contract management. By efficiently managing these administrative aspects, it allows your hiring managers to focus on their core responsibilities and ensures smooth operations for your contingent workforce.
An MSP often has an extensive network and access to a diverse pool of qualified, pre-vetted contractors. By leveraging their extensive talent pool and expertise, MSPs can significantly reduce the time it takes to find and onboard contractors. This agility helps meet business demands promptly, keeping projects on track, and saves your hiring managers time and effort, as they can rely on the MSP to identify and present top-quality candidates quickly.
Moreover, if your hiring managers like a particular supplier, you have the option to nominate that supplier to be part of your second tier so that they can continue to work with your MSP and your hiring managers can continue to get that supply. This gives your hiring manager community that assurance that they can engage with your second tier if the MSP supplier cannot fill all your requirements.
- Improved Talent Quality
An MSP can help you to attract and retain quality talent by providing a positive candidate experience. They can also provide performance feedback to other suppliers, ensuring that they are providing high-quality candidates, which results in your business and hiring managers having access to the best talent on the market to meet their needs.
- Improved efficiencies
An MSP gives you a single point of contact which means your policy around hiring contingent workers can become as simple as “log onto this system or phone this one supplier for any contingent requirements you have”. This makes the hiring process much simpler and easier to be compliant with your internal processes.
An MSP model means you have a dedicated account team that knows and understands your business, which makes the hiring process easier.
Invoicing also becomes more efficient and simpler. Instead of multiple invoices from multiple suppliers, you can have one monthly invoice, supported by an electronic file, that can upload straight into your finance system. Invoices will no longer need to be manually uploaded to your payment systems and nor will you need dedicated staff to deal with queries on those invoices.
An MSP gives you a single point of contract for the supply of agency workers to your business, instead of having multiple contracts with different suppliers.
It also gives you one set of standard pricing for contingent workers. The simplicity of this introduces efficiencies to everything related to contingent workers, from how much you are charged for their national insurance and holiday pay to whether you were charged the correct agency margin.
This cost control and efficiency not only benefits your business but also enables your hiring managers to allocate their budget effectively and to achieve a better return on investment (ROI) for contingent labour.
- Better visibility, and enhanced reporting and analytics
An MSP can give you greater visibility over your contingent workforce at the push of a button in real time, as well as detailed reporting and analytics, giving you insights into your workforce’s performance and trends.
Information like:
- How much contingent workers are costing you?
- How many contingent workers you have on site right now?
- How long do your contingent workers stay with you?
- What projects are your contingent workers aligned to?
- How many extensions do you give your contingent workers?
This level of reporting and analytics ensures that your business and hiring managers have access to actionable insights that can help them to make data-driven decisions, including accurately budgeting for future projects and managing internal costs better.
Until you’ve got this data and visibility, it’s hard to make informed strategic decisions for your business.
What is the experience of the service that your current model of supply delivers into your business? What is the experience of working with those agencies and the quality of workers they supply? What is their turnaround time and issue resolution like?
You might be surprised to find high levels of apathy or even discontent amongst your hiring community around the service they receive.
An MSP partner can improve that level of service through a committed, dedicated account team. An account team that will have knowledge of your business, be able to build talent pools, and will respond more quickly to your hiring managers. An account team that can also help educate your hiring managers on market payrates and to help with budgeting.
- Legislative compliance and Risk Management
When you have multiple suppliers and multiple hiring managers, ensuring you’re compliant with internal processes can become challenging, from following process guidelines and finding an updated version of your PSL to getting roles and rates approved.
Having an MSP in place not only makes the process more straightforward but by having a Vendor Management System (VMS), a cloud-based software platform to manage your contingent workforce and service providers, in place to automate everything, you can more easily control and manage it.
Don’t forget compliance with external legislation. How are you ensuring you stay IR35 compliant? How do you know that your agency workers are getting paid the right comparator in line with Agency Worker Regulations? Not only are you at risk of non-compliance with the legislation but the way that you are complying could be costing you more money than it needs to.
Having an MSP also introduces contractual compliance. Firstly, you only have one set of contractual terms with a single supplier instead of different contractual agreements with multiple suppliers. Secondly, if your MSP provider wants to engage with second tiers because they want to augment their supply capability and to ensure they fill all your jobs, no matter how niche or the volume you require, it’s up to your MSP provider to engage with those other agencies in a compliant contractual manner.
An MSP can make your auditing process more compliant. For example, if your supply partners are using umbrella companies to bring workers into your business and your current PSL, how do you know that those umbrella companies are paying workers correctly and compliantly? Under the Criminal Finances Act, there is a requirement for you to ensure that all your suppliers are engaging and doing things in a way that is appropriate, and that they’re paying the right tax.
An MSP provider will audit its suppliers and have rules in place to ensure that any umbrella company that their second tier is using are FCSA approved and share that information with them. It can also request those suppliers send them remittance advices to show that they’re paying that umbrella company.
Having an MSP in place means the rest of the business and your hiring managers can focus on their core responsibilities without worrying about compliance issues.
- Scalability and Flexibility
If your organisation has fluctuating demands, an MSP can accommodate those by quickly scaling contingent headcount up or down as needed. This flexibility enables you to respond to changing market conditions, project requirements, or business priorities without the administrative complexities of managing a large contingent workforce.
To find out more how an MSP can help your hiring managers focus on strategic initiatives, enhance workforce productivity, and meet the evolving needs of your business effectively, fill out our contact form below.