According to the “MSP Landscape & Differentiators” report, MSP funding varies by region. In North America, the supplier typically funds the MSP, though this model is noticeably less prevalent in many European and Asian markets.
The advantage of supplier funding is that from day one of the program, the project is a zero sum and clients do not need to find a budget for a costly implementation or fight for allocation on an annual basis. The downside in supplier funding comes from supplier pushback, and the perception of a “free” service which may lead to poor program adoption and, often, poor executive support. Client-funded models often cost less overall than supplier-funded programs, and supplier adoption is usually better.
Supplier funding is easier to manage in a single country implementation or where the buyer has significant volumes to incentivize suppliers. In multi-country implementations, or where there are lower volumes by country, many programs require client-funding to avoid losing suppliers in the process. Notably, Europe has a higher adoption of client-funded programs than North America due to a number of factors including the fact that European staffing suppliers often have lower gross margins than in North America, making any fee absorption difficult.
Source: MSP Landscape & Differentiators – Full Report 2019, available to CWS Council members