- Contingent Workforce Strategies 3.0 - https://cwstrategies.staffingindustry.com -

Evolving from the supplier-funded model

An unmanaged contingent program often is referred to as the “Wild West” — an apt description of a lawless environment. There are hundreds — sometimes even thousands — of suppliers, each with a unique contract, service delivery model and pricing scheme. Each sending unique invoices and timecards that require manual processing, collectively costing enterprise companies thousands of man hours and boundless frustration.

Then in the ’90s came the managed service programs and vendor management systems, which yielded tremendous soft savings in the form of increased efficiencies: automating previously manual processes and speeding up time to fill. This increased program efficiency was often complemented with significant hard-dollar savings through margin compression, more accurate and aggressive discounts and right skilling.

By 2010, programs that didn’t have an MSP or a VMS were considered dinosaurs. The MSP/VMS industry flourished under a supplier-funded model — the company assesses a small fee on the supplier’s volume. There was a spirited debate among industry insiders as to whether these programs should be considered “free” or not. No matter where you land on this is debate, one thing is clear to me: The supplier funding structure will be the death of the managed service program as we know it. I’ll go out on a limb here: In 10 years, if we were to look back to see what was the root cause of the industry woes, we will see it will have been the supplier-funded model. A simple look at the model’s pros and cons will bear this out.



People do not appreciate what does not come with a cost. “Free” may be nice, but in the end, such things tend to be devalued regardless of their circumstances. This devaluation by many organizations hides the true value of the MSP from the C-level scrutiny usually given to such strategic programs. This can limit the strategic opportunities MSPs need to innovate and move the industry forward.

Every situation is unique and while sometimes a supplier-funded solution is better than the multitude of other funding options available to today’s program manager, by asking the right questions you can arrive at a solution that can last.