To remain productive and competitive during the Covid-19 pandemic, companies must be willing to adapt, be agile and move quickly. Hence, managed service providers have had to evolve their go-live strategies with a focus on efficiency, speed, agility and value.

Companies with second- and third-generation MSP programs, in particular, are seeking more from their providers during these challenging times.

Contingent workforce programs want their MSPs to bring a strategy, explains Dawn McCartney, VP of Contingent Workforce Strategies Council at SIA. “They want data and analytics, they want educated and skilled support to bring statement-of-work into the program scope, and of course help with direct sourcing and increasing the diversity within their workforce. That sure is a long laundry list for providers to support and a completely different business model from what MSPs originally were created to provide.”

Today’s managed service programs now enable faster adoption of new processes, new sourcing strategies and new technologies. Several key factors attributed to this evolution — such as the availability of technology solutions and better-informed buyers — and it was accelerated by the global shift to remote work amid the pandemic.

The pandemic has prompted MSPs to develop business models and offerings for the small- and middle-tier companies as well. This enables these organizations — which once would be disregarded due to the size of their programs and spend — to get much-needed visibility of their contingent labor, identify and mitigate risks, and has provided a new market for the MSPs to deliver their services.

Managed Service Provider (MSP) — A company that takes on primary responsibility for managing an organization’s contingent workforce program. Typical responsibilities of an MSP include overall program management, reporting and tracking, supplier selection and management, order distribution and often consolidated billing. Many MSPs also provide their clients with a vendor management system (VMS). An MSP can also be responsible for the client’s direct sourcing, and may or may not be independent of a staffing supplier.

For larger firms. The adoption of MSPs by companies with more than 1,000 employees has grown to 62% in 2020 from slightly more than 40% in 2009, according to SIA’s MSP Global Landscape and Differentiators 2020 report. While the percentage has plateaued between 2014 and 2020, spend through MSPs continues to grow, and MSP providers report 46% of new client contracts are with companies that had no prior MSP in place.

For newbies. Programs considering engaging an MSP for the first time, or looking for a new supplier, can use this report to benchmark their own programs as well as gauge the services available in the market.

In addition to identifying the trends and the benefits of adopting an MSP, the report notes key innovations and investments:

Analytics, benchmarking and data solutions. Intelligent use of data in an MSP program has shifted from a point of differentiation to a standard expectation.

Direct sourcing, client talent pooling and alternative sourcing channels. The Covid-19 pandemic has amplified the already growing buyer interest in direct sourcing, as organizations have both needed to get closer to their contingent talent and identify opportunities to reduce their overall program cost. The capability to support client-branded direct sourcing through talent curation, AI-enabled talent matching and purpose-built technology platforms continues to be an area of development and investment for MSP providers.

Statement-of-work and services procurement solutions. Last year saw more significant growth in SOW spend under management, with SOW spend representing an estimated 25% of global spend. This service area remains a focus for MSP providers, with about half of survey participants reporting either new wins or strong pipelines of opportunity which incorporate varying degrees of SOW management.

Adoption of artificial intelligence, machine learning and robotic process automation. The most common use case for robotic process automation is to increase efficiency in repeatable service center operations with the goal of either re-focusing staff on higher-value activity or improving candidate experience by improving speed or consistency. Artificial intelligence is more likely to be deployed in the sourcing, matching and ranking of candidates, and is therefore more likely to be actively deployed in programs featuring an element of direct sourcing.

Total talent developments and investments. Since SIA’s first major study into the then-emerging phenomenon of total talent management in 2015, it has seen limited evidence of widespread adoption of this approach to workforce engagement and management. In this study, more than half of the providers report total talent solutions as a specific service line within their portfolio and that an increasing number of awarded contracts and reported pipeline opportunities include integrated permanent, contingent RPO and SOW components.

Geographic expansions and localizations. As in previous years, geographical expansion during 2019/20 has predominantly been driven by program expansions with existing clients, although some providers are pursuing a growth strategy to target new business in new locations. As expected, Covid-19 has had an impact on timelines, causing delays to some providers’ 2020 expansion plans.

The full report is available online to CWS Council members.

The market disruption caused by Covid-19 is not reflected in this report; however, program managers can find insights related to the pandemic in SIA’s research report Covid-19: Workforce Manager Responses and Intentions Survey 2020 published in June 2020.