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Today’s MSP: Ruling the buoyant small, midsize market

According to the SIA report, MSP Global Landscape & Differentiators [1], 68% of reported contracts were awarded by clients with no previous MSP model in place, suggesting the small to mid-market remains buoyant and buyers continue to choose MSP as a solution to contingent workforce challenges.

Today’s managed service programs have evolved from localized programs designed to consolidate supply, reduce risk and leverage purchasing power to providing more strategic talent sourcing strategies and solutions on a global scale.

Several factors contribute to this evolution, including better-informed buyers seeking to provide more strategic value to their internal stakeholders, HR’s growing interest in the strategic value of the contingent workforce, the availability of evolving technology solutions to improve both efficiency and access to talent, and — with continuing skills shortages — the need to offer a positive experience at scale for staffing suppliers and contingent workers to drive program adoption.

The report notes the following developments:

Analytics and benchmarking: Reporting, benchmarks and analytics are fundamental for any MSP to support the visibility and control of costs and to manage supplier engagements. Providers that are investing in growing capability are typically moving from reporting to data analytics leveraging both internal and external data.

Alternative sourcing channels and talent pooling solutions: Direct-sourcing capability remains an area of development and investment for MSP providers as buyers begin to realize the benefits of formalizing previously ad-hoc methods to leverage multiple talent sources including alumni, referrals and applicants to permanent posts. To support direct sourcing, providers have invested in partnerships and solutions to build external and internal talent pool capability. Providers with RPO solutions are leveraging their RPO expertise within MSP programs.

Artificial intelligence and robotic process automation: The most common use case for RPA 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. AI 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.

Upskilling, training and investment in MSP employees: One challenge faced by buyers when engaging with MSP partners is consistency of service quality and capability across MSP employees, particularly in global programs. A buyer’s perception of the MSP can vary greatly depending on their experience with front-line staff and management. Additionally, attrition within the MSP business can be problematic, leading to loss of client knowledge and reduction in service quality. Investment in development and training for MSP employees is therefore critical to client retention and satisfaction.

Statement-of-work and services procurement solutions: Despite somewhat sluggish growth in SOW spend under management, this service area remains a focus for MSP providers, with more than 50% reporting either new wins or strong pipelines of opportunity which incorporate varying degrees of SOW management. For some providers, SOW management and services procurement remains a development area in which they are investing; for others it is a mature offer with significant global spend under management.

Advancing towards total talent solutions: Half of MSP providers report total talent solutions as a specific service line within their portfolio and an increasing number of awarded contracts and reported pipeline opportunities include integrated permanent, contingent RPO and SOW components.

Additional and complementary services and consulting capability: As buyers seek to derive greater value from their MSP partnerships and providers look for alternative ways to drive growth and client retention, providers are increasingly offering a suite of complementary services which, in most cases, can either be deployed to enhance an existing program, or offered as a discrete solution. The ability to select individual services is of particular use to buyers who may be contemplating an internally managed program, or small to mid-sized buyers for whom a full MSP may not be the optimum solution.

Geographical service expansions and localizations: Geographical expansion during 2018/2019 has predominantly been driven by program expansions with existing clients although some providers who have historically serviced only one region are investing in new locations from which to develop a local footprint.

SIA’s Global Lexicon provides a definition of the MSP [2].

The full report [1] is available online to CWS Council members. It is based on the results of a 2019 survey of 26 MSPs that provided detailed information regarding their company profile, geographic footprint, customer segments, service breadth and sourcing models.

For information on CWS Council membership, click here [3].

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