Over the past two decades, organizations have worked diligently to build processes, efficiency and value around the contingent workforce. While configuring contingent workforce practices, organizations must consider whether to manage these processes and functions themselves or partner with a managed service provider to take on these responsibilities. Outsourcing this area of support has become commonplace with 62% of the enterprise organizations surveyed in SIA’s North America Workforce Solutions Buyer Survey 2022 utilizing a MSP. While this is the majority of the market, there is a trending movement of organizations reevaluating the best ways to support their contingent workforce programs.
For most program managers, the idea of becoming an expert in the contingent workforce may feel overwhelming. The convenience of having an expert with proven practices take over this function becomes very appealing for many companies quickly adopting an external MSP to support all of the contingent workforce. Some, though, have taken on this challenge and looked to configure their own internal teams and services similar to an MSP. According to our 2022 buyer survey, 39% of organizations have an internal CW program in place, while an additional 19% are considering such a shift in the next two years. With our market maturing, the interesting consideration isn’t whether to start with an internal program but whether to evolve to an internal program.
This evolution has similar considerations to when organizations originally chose whether to outsource or insource, but now the evaluation is fueled by a better understanding by buyers of the complexities of a contingent workforce, a greater need for increased value to the business and the desire to become more strategic in their engagement of contingent workers. Now, as many organizations determine the right approach, the value is placed less on the general tactical process support and more on the ability to get the best talent quickly and the right cost through creative tailored sourcing strategies, vendor partnerships and the use of modern technology. With a better understanding of their needs, many organizations are finding themselves better positioned to deliver this value directly as opposed to through an MSP.
While many are still looking at this being an all-or-nothing approach, there may be a better approach in dividing the critical functions of a contingent workforce program and leveraging a partner in the areas where they can provide the most value as opposed to a full outsourcing of this service. External MSPs have proven to be a great solution solution in areas such as management, invoice and billing support, and resource management to include onboarding and offboarding of workers and still provide incredible value in the areas where their support can be defined, repeatable and commoditized. Areas like supplier management (selection, performance management, process adherence, removal) and technology support are some of the functions in which many buyer organizations see value in reinserting themselves in place of an MSP to create stronger direct relationships with supply chain partners. In a similar reconfiguration, buyers also see value in building stronger relationships with the businesses they support by taking on more strategic conversations around the contingent workforce — such as where to expand support, how to help the business make labor decisions and how to create the most inclusive environment for contingent workers to thrive.
Another approach to naturally dividing responsibilities between your organization and an external MSP is separating categories of labor support. MSPs have proven their ability to effectively manage staff-augmentation type activities but may still be proving capabilities and the value proposition around statement-of-work services. This may give companies comfort in enlisting an MSP for what may be a more established and defined work engagement while focusing their own internal resources on the labor engagements requiring more alignment and integration with the business. Another area of dissemination is around the emerging category of direct sourcing. This may be an area that companies see an MSP being most appropriate to support, while others may see this as an opportunity to directly leverage their company’s brand to attract talent.
Regardless of how your program is configured today, all program owners should consider if re-establishing the model of your contingent workforce program would help increase its value proposition. This exploration should become a regular conversation for programs looking to continue growing their maturity and may spur your organization to evolve to the next level of contingent workforce program optimization.