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Where is Your Staffing Managed Service Program Letting You Down?

Contractor Management
CXC Global7 min read
CXC GlobalMarch 28, 2024
CXC Global

A managed service provider (MSP) is a specialised organisation that provides, oversees, and enhances essential services for another business. Historically, MSPs offered outsourced IT services to companies lacking internal infrastructure or resources for self-management.

But an MSP is also an effective way for organisations to better manage their contingent workforce, by cutting costs, and enhancing productivity.

An MSP supports all categories of an organisation’s contingent workforce, as well as all vendors and suppliers associated with them. The MSP provider typically assumes all or some of the organisation’s procurement and HR functions pertaining to the contingent staffing lifecycle; from requisition to payment. Importantly, MSPs are also frequently workforce consultants, who provide insights to the organisation of the ever-changing talent landscape and the workforce needs of the individual client.

In today’s business environment, an MSP provider has become a critical business solution. As contingent labour becomes a crucial lever in successfully managing fluctuating markets and economic stressors, an MSP not only takes the risk out of engaging contingent workers, but they also have the potential to ensure optimum output and ROI from workers and vendors.

Core Challenges in Managed Service Programs

Limited Expertise and Industry Knowledge

If the MSP provider is lacking expertise and knowledge of the client’s industry, the overall efficacy of the program can come under threat. A provider with limited industry experience may struggle to grasp the nuances and historical job requirements, reflective of the industry. This can lead to challenges in understanding the skill sets needed for various roles; the likely result being a mismatch between the talent sourced and the actual job requirements.

Without a deep understanding of the client’s industry, the MSP provider, in struggling to identify and attract the right talent, may rely on generic job boards or hiring methods that are not tailored to the unique needs of the industry. The outcome will be a talent pool that is incapable of meeting the client’s project requirements.

Limited industry knowledge can also make it challenging for the MSP to accurately assess the qualifications of potential contingent talent. If the MSP lacks the requisite industry insight to evaluate whether candidates possess the necessary technical skills, experience, qualifications or certifications required for the job, a disconnect between the talent provided and the job requirements will occur.

Ineffective Communication and Relationship Management

Poor communication and relationship management between the client’s business and the MSP provider can significantly impact the success of a contingent workforce program.

When communication channels are ineffective, there’s a higher likelihood of unclear or ambiguous requirements being conveyed between the client and the MSP. This lack of clarity can lead to misunderstandings relating to contingent worker skills, project timelines and outcomes.

Misalignment of expectations between client and the MSP are a common outcome of ineffective communications, which pose another layer of threat to the program. Project delays, missed milestones, client dissatisfaction and even project failures are all very real risks.

Say for example, the client expects a certain level of responsiveness or flexibility from the MSP that they’re not able to deliver due to misunderstanding the client’s needs. Invariably, this will result in a stalemate, and a potential derailing of the contingent workforce program.

Establishing clear, robust and consistent communications across agreed channels and at agreed frequencies, will ensure your MSP relationship remains healthy and your project on track.

Lack of Flexibility and Agility

Adapting to the changing needs and demands of the contingent workforce presents several challenges for MSPs.

This is a workforce landscape that is perpetually shifting. MSPs that lack agility in their operations find it challenging to adapt to these changes efficiently, which can result in missed opportunities and workforce misalignments. If MSPs rely on outdated processes or lack the flexibility to quickly adjust their staffing strategies, they will be failing the client’s contingent workforce program.

Technology plays an important role here. The effectiveness of an MSP’s response to changing talent demands heavily relies on the technology infrastructure supporting their operations. Outdated or inefficient technology systems may impede their ability to quickly identify available talent, match them to the client’s needs, and facilitate rapid onboarding processes.

MSPs that are flexible and agile in their operations not only need to stay abreast of the changing workforce landscape, but also, they need to be able to meet the urgent staffing needs of their clients. And this is where speed can’t outplay efficacy.

Rapidly fulfilling urgent staffing requirements without thorough vetting and compliance checks can expose both the MSP and the client to risks such as legal liabilities, regulatory violations, or reputational damage. Balancing speed with compliance and risk management adds a layer of complexity to the process and is a vital gauge of a high-performing MSP.

Most importantly, an MSP slow to respond to client needs for new contingent workers, presents the potential for missed opportunities and operational delays.  Clients may lose out on lucrative projects or face setbacks in project timelines and deliverables due to staffing shortages, ultimately impacting their bottom line and market competitiveness.

Limited Transparency and Control

When it comes to transparency and project oversight, clients can face multiple challenges with their MSP provider.

Without clear visibility into their MSP’s operations, the client can have little understanding of the expenses associated with their contingent workforce and may struggle to understand where their budget is being allocated. Hidden costs or unexpected charges can lead to budget overruns and financial strain. This in turn can disrupt financial planning and potentially affect other areas of the organisation.

If the MSP lacks robust operational and technology systems for tracking and managing expenses related to the client’s contingent workforce, there’s an added risk of inaccuracies and inefficiencies. Manual or outdated processes can lead to errors in billing, duplicate payments, or unauthorised expenditures, further contributing to budget overruns.

Clients can also face difficulties in monitoring the performance of their contingent workforce where limited visibility into the MSP’s operations exists. Without access to relevant performance metrics and key performance indicators (KPIs), clients may struggle to assess the effectiveness of the MSP’s recruitment, onboarding, and management processes.

To solve the issue poor transparency and limited control for the client, it’s essential for MSPs to prioritise transparency and establish clear communication channels with clients. This includes providing detailed reporting on expenses, performance metrics, and compliance status, as well as fostering an open dialogue to promptly address any concerns or issues. Clients should also actively engage with their MSP partners, calling for regular updates and conducting performance reviews to ensure alignment with their expectations and business goals. Additionally, investing in technology solutions that facilitate real-time visibility and data analytics can help enhance transparency and enable more informed decision-making for both parties.

Concerns Over Vendor Neutrality

Certainly, a lack of vendor neutrality in a contingent workforce MSP can present significant challenges for clients, particularly in accessing a diverse and qualified talent pool.

When MSPs lack vendor neutrality, they typically have preferred suppliers or vendors with whom they have established relationships. As a result, clients may have limited access to a wider talent pool, as the MSP may prioritise candidates from these preferred vendors over others. This can restrict the client’s ability to source the best-suited candidates for their needs, potentially compromising the quality of hires.

Vendor bias or favouritism can also have detrimental effects on workforce diversity. If the MSP consistently partners with a select group of vendors, it may inadvertently exclude diverse suppliers or minority-owned businesses from the supply chain. As a result, the candidate pool may lack representation from diverse backgrounds, leading to a less inclusive workforce and limited perspectives within the organisation.

Relying heavily on a few preferred vendors can also expose clients to the risk of talent shortages, especially in competitive or niche talent markets. If the MSP’s preferred vendors are unable to meet the client’s staffing needs or if they experience disruptions in their own talent pipelines, the client may struggle to fill critical roles, leading to project delays or operational inefficiencies. To mitigate these challenges, clients should prioritise vendor neutrality when selecting an MSP and establish clear guidelines and expectations regarding vendor relationships. It’s essential to work with MSPs that demonstrate a commitment to fairness, transparency, and diversity in their supplier partnerships. Clients can also advocate for inclusive procurement practices and actively seek out diverse suppliers to ensure a more comprehensive and diverse talent pool.

Enhancing Your MSP Engagement

Reflecting on the challenges clients face with MSP relationships, it’s evident that MSP engagements can sometimes fall short of user expectations, be it due to expertise gaps, technological shortcomings, or a lack of flexibility and transparency. Mitigating these challenges requires a concerted effort from both parties.

Businesses must not shy away from initiating open dialogues with their MSP providers to address these issues head-on. Regular performance reviews and a willingness to adapt strategies in tandem with MSPs can pave the way for optimised engagements. After all, the goal is to harness the full potential of your contingent workforce, ensuring it acts as a propeller for success rather than a drag on performance. Remember, the strength of an MSP engagement lies in its mutual understanding, cooperation, and continuous improvement.

You can learn about CXC’s MSP services, right here. With over 30 years expertise managing contingent workers across most industries, you’ll be hard pressed to find a better MSP partner.

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About CXC

At CXC, we want to help you grow your business with flexible, contingent talent. But we also understand that managing a contingent workforce can be complicated, costly and time-consuming. Through our MSP solution, we can help you to fulfil all of your contingent hiring needs, including temp employees, independent contractors and SOW workers. And if your needs change? No problem. Our flexible solution is designed to scale up and down to match our clients’ requirements.

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