With around a third of the current total contingent worker spend in the UK managed via MSP programmes, this supply model has grown significantly in importance over the last 10 years.
However, while organisations have recognised the benefits of the MSP model (which include costs savings, efficiency, control, and visibility), the benefits of transition to a single supply MSP model may not be fully understood by all decision makers.
To sell the benefits of an MSP model to your organisation you need to start by building a solid business case that you can put before your key stakeholders.
Those key stakeholders will predominantly include your Board of Directors, your Finance, Operations and HR teams, and potentially several smaller subsets within your organisation.
This guide provides an overview of how to build a business case to sell a single supplier model (MSP) to your top management and what six key areas of sell to focus on in that document, including:
- Improved efficiencies
- Job fulfilment
- Creating visibility
- Experience of service.
What cost savings can be delivered because of the MSP?
Find out what you’re currently spending and what your current agency fees are. Then, speak to one or two MSP providers to get an understanding of what sort of fees you could be paying if you go down the MSP route. This will allow to you to determine what you could save in terms of reduced agency fees. If you’ve got a big spend, and you’re using a series of ad hoc suppliers, you could reduce your agency fees by as much as 25%-50%.
Having an MSP model in place will allow you to bring in some established rate control in how you engage agency workers. This can be a big saving when you compare it to having a Preferred Supplier List (PSL) supplier arrangement, where you may have little control over what gets paid to workers and there is often significant variance between what one supplier pays workers over another.
Highlight the benefit of reduced transactional costs by using an MSP model. If you are using 20-30 different suppliers at any one time, the sheer volume of transactions and invoices coming in, and the time taken to process those invoices, deal with any related queries, is significant. By having an MSP in place, you can move to a single monthly invoice. This becomes easier for you to audit, and you know you are paying the right amount and have fewer errors.
How does an MSP make things easier and get work done better for your organisation?
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.
How does having an MSP improve and ensure compliance?
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.
Given there are several compliance issues that you need to consider when you’re engaging with contingent workers that can pose a potential risk to your business, when you’re building a business case for an MSP, this is a compelling point of focus.
How are you going to ensure that all jobs get filled?
Operations biggest fear is around fulfilment. That’s why collating case studies of how MSPs are working in similar industries or with your competitors is a great selling point as part of your business case. Gather examples of where the actual speed and quality of supply improved because of an MSP, onboarding was made more efficient, talent pools increased, and where there was more proactivity in terms of building those talent pools.
If your hiring managers like a particular supplier, consider nominating that supplier to be part of your second tier so that they can continue to work with the 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.
How does having an MSP model create improved visibility over your contingent workforce?
Having greater visibility over your contingent workforce at the push of a button is a big sell for your HR and Finance teams and for the Board, and an MSP can give you that.
Those stakeholders all want to know: “What are our people costs within the business?”
Unless you can give them real numbers, based on accurate data, then that’s a problem for your business.
What you want is to get visibility of, in real time:
- 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?
You can then use this data to benefit your business as it allows you to more accurately budget for future projects and tendering processes, and to manage your internal costs better.
Until you’ve got this data and visibility, it’s hard to make informed strategic decisions for your business. The ability to get all that information is critical.
Experience of service
What is the experience of using an MSP model going to be like?
Assess the experience of the service that your current model of supply delivers into your business. Spend some time talking to the business and pull a survey together asking them to rate the experience of working with those agencies, the quality of workers they supply, how they rate their turnaround time, and how they rate their issue resolution. You might be surprised by the results.
You might find high levels of apathy or even discontent amongst the hiring community around the service they receive.
This provides you with an opportunity to illustrate to your hiring community that an MSP model 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.
As you build your business case, you want to focus on these six key areas and to demonstrate that they are a real benefit to your organisation. Try to include as much data as you can to support your case, particularly around the cost savings element.
Before you start putting the document together, start having conversations in the business to get the feeling for what hiring managers experience from your current service, the difficulties they face and the challenges they have. Have a conversation with HR about any compliance concerns they have and the vulnerability to the business of not being compliant to those things.
Examine your current process from every user’s viewpoint (hiring manager, finance, IT, HR) and ask yourself how difficult is it? How many points of opportunity are there, within your current process, for things to go wrong?
As you engage in this process you need to understand that if you only have 15-20 contingent workers, you can still go down a single supplier route, but that the model will look different. Although they’re probably not going deploy a VMS for you, or a dedicated account team, they can still offer several service improvements and cost savings. For example, they can still give you a single point of invoicing and use tech to give you data on a regular basis around contingent worker headcount, tenure etc.
If you do have high numbers of contingent workers and that’s forecasted to either continue or increase, then the above are the six areas that you need to hit to be able to make a compelling business case.
Don’t forget who your key stakeholders are when writing your business case.
Your Board wants to know what strategic benefits an MSP model offers your organisation.
Your Finance department wants to see the numbers, so ensure you’ve articulated your current spend levels and potential cost savings accurately.
Operations want assurances that a single partner can deliver the talent they need. If they aren’t convinced by your business case, they have the power to put the brakes on it.
Illustrating the compliance benefits of having an MSP model in place is a win for your HR department.
Other departments in your business might also have some questions that are specific to them. For example, if part of your MSP sell involves the introduction of a Vendor Management System (VMS), a cloud-based software platform to manage your contingent workforce and service providers, your IT team might have queries surrounding what their input needs to be to put that VMS in place.
Although questions like these are not central to the main arguments supporting your business case, adding a FAQ piece at the end of the document, which other departments/teams can reference, gets their buy-in and support.
Rullion manages over £250 million of contingent worker spend annually on behalf of our MSP clients. Exploring using an MSP model for your contingent workforce? Talk to one of our team today by filling in the contact form below.