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Working with an MSP provider to manage your contingent workforce can help you significantly reduce your workforce costs, improve governance and compliance and even enhance your workers’ experience with your company. But there are also several challenges involved — we’ll discuss some of the main ones in this article.
What is an MSP in staffing?
A managed service provider (MSP) is an organisation that provides outsourced services to other companies. Traditionally, MSPs provided IT services to companies without the internal infrastructure and resources to manage this function in-house.
In the context of the contingent workforce, an MSP handles the sourcing, engaging, onboarding, payment and management of non-permanent workers. This might include independent contractors, freelance and gig workers, temporary staff and other types of flexible talent.
MSP vs. VMS: difference explained
Managed service providers (MSP) and vendor management systems (VMS) are both tools for managing a contingent workforce. However, they are not the same thing. A VMS is essentially a software system that’s used to facilitate the procurement and management of contingent workers. These systems typically include features such as:
- Supplier management
- Headcount tracking
- Reporting and analytics
- Order distribution
- Billing
- Compliance tools
An MSP, on the other hand, is an outsourced provider that takes on either all or part of a company’s contingent workforce management function. They’re responsible for engaging and managing suppliers and sourcing contingent talent. The best MSP providers also offer strategic services such as workforce planning. MSPs may use VMS software to enhance and streamline their operations.
Key challenges of using an MSP in staffing in the EMEA region
Working with an external MSP to manage your contingent workforce can have significant benefits to your organisation, especially if you’re hiring workers across multiple countries within the EMEA region. But there are also some key challenges to overcome.
Overcoming cultural and language barriers
The EMEA region is a vast area spanning three continents and over 100 countries. If your contingent workforce programme includes workers from several different regions, you’re likely to face significant challenges with language barriers and cultural differences.
Working with an MSP can help you to bridge this gap and overcome some of these barriers. However, many providers don’t have the necessary local knowledge to effectively collaborate with workers across different geographical areas.
Ensuring compliance with diverse labour laws and regulations
Labour laws and regulations differ widely from one country to another within the EMEA region. That means that hiring workers across borders requires an in-depth and up-to-date understanding of the various rules that apply.
Working with the right MSP provider can help you to ensure compliance. However, it also inevitably means a certain loss of control over your operations. It’s essential to find an MSP partner that you trust to compliantly manage your contingent workforce across the EMEA region.
Selecting the right MSP model to meet staffing needs
Some MSPs have one primary supplier that they prioritise when sourcing workers. This is almost always the MSP itself or an affiliated staffing agency. Under this model, the MSP will only turn to other vendors when they’re unable to fulfil a company’s staffing requirements through their primary supplier.
This approach can cause several problems for a business. First, the MSPs may prioritise candidates from their associated staffing firm even if they’re not the best fit for the client. They may also push certain sourcing strategies or hiring models that favour their own staffing firm, rather than what’s best for your business. Working with a master-vendor MSP can also strain relationships with other vendors, who have to compete with the MSP’s affiliated agency for placements.
Maintaining workforce visibility and controlling costs
Companies that use external MSP providers to handle their contingent workforce often face challenges with visibility. Without a clear understanding of the MSP’s operations, it can be difficult to understand where your budget is going. Unexpected changes and hidden costs can also lead to overspending.
If an MSP lacks the right operational and technical systems to effectively manage your workforce, inaccuracies, errors and inefficiencies are likely to occur. Choosing an MSP provider that prioritises transparency and visibility can help you maintain control and avoid spiralling costs.
Accessing talent across fragmented markets
The level of talent availability varies significantly across different countries within the EMEA region. And sourcing methods that work well in one country won’t necessarily translate to another. If you need to source and engage talent in more than one country, you might find that the staffing solutions your MSP can provide are inefficient.
This is a particular problem when MSPs don’t have a lot of experience in a particular country or region. Before committing to working with an MSP, you’ll need to find out as much as you can about their knowledge and experience in the markets you want to operate in.
Ensuring effective communication and coordination
An MSP programme involves a lot of different stakeholders. And inadequate communication between those parties is one key reason why many programmes fail. An effective MSP provider should have robust systems for communicating with:
- Internal stakeholders (e.g. HR, procurement, finance)
- Suppliers and vendors
- Programme users (i.e. hiring managers)
- Workers
Balancing the needs of these different groups can be a struggle for an MSP provider without the right resources in place. And of course, this can be even more challenging if your operations span several countries within the EMEA region.
Overcoming challenges with the right MSP provider
There’s no denying that working with an MSP involves a few challenges. And, things get even more complicated if your operations span several countries, because you need to ensure the provider you choose has the compliance expertise, cultural knowledge and communication skills to handle workers and suppliers in all relevant locations.
The good news is that many of the problems we’ve described above aren’t inherent to working with a managed service provider. Instead, they’re really signs that the provider you’ve chosen may not be the right one for your business. Here are a few things to look out for when you’re searching for an MSP partner:
- Presence in your desired markets: When searching for an MSP provider, one of the first things to check is that they’ll be able to meet your staffing needs. That means ensuring that the provider has coverage and experience in the countries you need to hire in, both now and in the future.
- Industry knowledge and experience: A provider that’s familiar with the specific challenges, skill profiles and job requirements in your industry will be much better placed to meet your staffing needs. You should look for an MSP with experience working with other companies in your sector.
- Flexibility and customisation: Becauseyour company’s staffing needs will likely change over time, it’s important to select an MSP provider that will be able to adjust their solution to match your shifting requirements. Ensuring the provider you choose is able to react quickly to market changes can also be a key competitive advantage.
- Clear communication systems: Poor communication can result in the failure of an MSP programme. Ensure any MSP provider you’re considering working with has robust systems in place for communicating with key stakeholders including hiring managers, vendors and workers.
- Comprehensive compliance expertise: Hiring contingent workers across the EMEA region comes with a lot of risk. It’s important to ensure the MSP provider you choose has the necessary compliance knowledge and expertise to protect your business.
- Vendor-neutrality: When you work with an MSP, you need to be sure their priority is finding you the right person for each placement — not promoting their affiliated staffing firm. For this reason, it’s best to choose an independent MSP that works with a wide network of staffing providers.
Introducing your MSP partner for the EMEA region: CXC
At CXC, we understand that every business is different. That’s why we’ve designed our MSP solution as a flexible, modular package that allows our clients to get the support they need, without paying for services they won’t use.
With our solution, you can choose the level of support you need in four key areas: sourcing, engagement and payment, supply chain management and compliance. It’s a flexible and scalable solution that’s designed to meet your requirements, even as your business evolves. And, since our solution is 100% vendor-neutral, our priority will always be finding you the best person for the job.
Want to learn more? Get in touch with our team to get started.
