Internal MSP

An internally managed contingent workforce program, also known as an internal MSP, is when a company builds and runs its own internal team to manage all aspects of its contingent workforce, which includes freelancers and independent contractors.

Instead of relying on an external Managed Service Provider, the organisation takes ownership of sourcing, onboarding, compliance, vendor coordination, rate negotiation, and performance tracking. Often supported by tools like a Vendor Management System (VMS), this setup gives companies more control, visibility, and the ability to tailor the program to their specific business needs and culture.

Gain direct control

With an internal MSP, your company stays in the driver’s seat. You’re not relying on an outside provider to make decisions or manage processes on your behalf. This gives you full oversight of how your contingent workforce is sourced, onboarded, and managed. It also ensures that everything stays closely aligned with your company’s goals, priorities, and compliance standards. Whether it’s adjusting quickly to business changes or making data-driven decisions, having this kind of control keeps things efficient and responsive.

Obtain customised solutions

An in-house team understands your company inside and out. That means they can create workflows, policies, and strategies that truly fit your organisation, rather than trying to adapt generic solutions from an external provider. Whether it’s handling niche talent needs, navigating internal systems, or aligning with specific departmental goals, an internal MSP can tailor its approach to suit your unique environment. This flexibility makes it easier to evolve the program over time as your business grows or shifts direction.

Have stronger company culture

When contingent workers are managed internally, there’s a much greater opportunity to bring them into the fold and make them feel part of the team. The internal MSP can help ensure contractors are included in onboarding experiences, team meetings, and company updates—just like full-time employees. This level of inclusion not only boosts engagement but also helps build loyalty and a sense of ownership. Contingent workers who feel connected to the company tend to deliver better work, stay longer, and contribute more meaningfully to their teams.

Cost savings

Running the program in-house also opens the door to cost savings. Without third-party MSP fees, companies can put more budget toward talent and tools that add value. Internal teams can negotiate directly with vendors, monitor rates more closely, and make smarter decisions about spend. It also reduces the overhead that comes with managing external relationships, which can sometimes slow down processes or add unnecessary complexity. Over time, these efficiencies can make a noticeable impact on your bottom line.

When it comes to managing your contingent workforce, there’s no one-size-fits-all approach. Some companies choose to build an internal MSP while others prefer to partner with an external MSP. Choosing which is best depends on your company’s size, goals, resources, and how much control you want to maintain. Here are some important factors to consider when choosing between internal and external MSP.

Cost considerations

Cost is often one of the biggest factors in the decision. An internal MSP usually requires a larger upfront investment, from hiring staff, setting up systems, to developing processes from scratch. Over time, though, it can lead to savings by eliminating third-party management fees. 

On the other hand, external MSPs operate on a more predictable, subscription-based pricing model. You pay a set fee for their services, which can help with budgeting and forecasting. For companies that don’t have the internal resources to build a team from the ground up, this model can be more manageable and less risky financially in the short term.

Expertise and tools

External MSPs typically work with a wide range of clients across different industries. This gives them access to the latest tools, insights, and best practices in workforce management. Their teams are often already trained in compliance, sourcing strategies, and vendor negotiations. For companies that want to hit the ground running, this can be a huge advantage. 

In contrast, an internal MSP may take longer to build that level of expertise, but it offers the benefit of deep company knowledge and the ability to tailor solutions precisely to your needs. Over time, your in-house team can become just as skilled, especially if you’re investing in training and technology.

Focus on core business

Another major consideration is where you want your internal teams to spend their time and energy. Managing a contingent workforce can be complex and time-consuming. By outsourcing to an external MSP, your HR, procurement, and legal teams are free to focus on strategic work related to the company’s core operations, such as product development, customer experience, or internal culture. 

If internal bandwidth is already stretched thin, partnering with an external provider can help reduce the load and bring in specialized support. On the flip side, if your company prefers to keep workforce strategy closer to home, an internal MSP gives you more ownership and flexibility.

A hybrid approach: The best of both worlds

For many organisations, the answer isn’t strictly between internal or external MSP. Sometimes, it’s a mix of both or what we call a hybrid approach. A hybrid model allows companies to build internal capabilities where it makes the most sense, while still leveraging the scale, tools, and expertise of an external MSP partner like CXC in areas that are harder to manage in-house. 

For example, the internal team might focus on strategic oversight, stakeholder alignment, and cultural integration, while the external MSP handles high-volume sourcing, compliance checks, or vendor management. This blended approach offers flexibility, helps control costs, and gives companies the ability to scale the program up or down depending on business needs—all without sacrificing quality or control.

Setting up an internal Managed Service Provider (MSP) model is a big step toward taking control of your contingent workforce program. It allows your organisation to own the strategy, processes, and relationships involved in managing temporary and contract workers. But making it successful takes more than just shifting responsibilities in-house. It requires a thoughtful, structured approach that balances people, processes, and technology. Here are some important elements to consider when implementing an internal MSP:

Develop clear policies and procedures

Start with a solid framework. Clear policies and procedures are the backbone of any internal MSP. These should outline everything from how contingent workers are sourced and onboarded, to payment terms, compliance requirements, and performance reviews. 

Having standardised processes helps ensure consistency across teams and regions, reduces risk, and keeps everyone aligned. It’s also important to define roles and responsibilities who approves what, who manages vendors, and who handles day-to-day oversight.

Build a dedicated team

Build a cross-functional team that includes expertise in HR, procurement, legal, and operations. This group should be responsible for managing contingent workforce strategy, working with internal stakeholders, and ensuring all processes run smoothly. Hiring or upskilling team members with vendor management or workforce planning experience can give your internal MSP a strong start and set it up for long-term success.

Leverage technology

Implement tools like a VMS to help streamline tasks such as requisition tracking, rate benchmarking, timesheet approvals, and reporting. Workforce analytics platforms can also provide real-time insights into contractor usage, costs, and performance. The right tech stack reduces manual work, increases transparency, and supports data-driven decision-making. This way, your internal team can operate at scale without being overwhelmed.

Enhance communication and engagement

One advantage of managing contingent workers internally is the ability to build stronger relationships. Use that to your benefit by improving communication and engagement. This could mean including contingent workers in company updates, giving them access to collaboration tools, or offering structured onboarding experiences. The more connected contractors feel to the company, the better they perform, and the more likely they are to return for future work. Internal MSP teams should work closely with managers to promote consistency and create a positive experience across the board.

Monitor and continuously improve

Your internal MSP should evolve along with the business. Set up regular reviews to monitor what’s working and where things need to improve. Track key metrics like time-to-fill, contractor satisfaction, cost savings, and compliance rates. Gather feedback from hiring managers, vendors, and contingent workers to understand what can be refined. Continuous improvement is key to keeping the program agile and effective, especially in fast-changing industries or labour markets.

Balance internal and external resources

Even with a strong internal team, there may still be areas where it makes sense to bring in external support, especially during peak hiring periods or for specialised roles. The goal isn’t to do everything in-house, but to manage the program strategically. 

Consider maintaining partnerships with select agencies or MSP providers for specific functions like sourcing hard-to-find talent or managing compliance in unfamiliar markets. This blended approach allows your internal MSP to stay focused on high-value work, while still ensuring coverage and flexibility.

Even if you’re managing your contingent workforce program internally, that doesn’t mean you have to do everything on your own. Bringing in external experts can be a smart way to fill gaps and take your program to the next level, all without having to build every capability in-house.

These partners offer specialised knowledge, tools, and experience that can complement your internal team’s efforts and help you run a more effective and compliant program.

Support with complex regulations

Labour laws and contractor classification rules can vary widely depending on the country, state, or even city. External providers who specialize in workforce management are often well-versed in these regulations and can help ensure your program stays compliant. This reduces the risk of costly fines, audits, or legal issues down the line. Instead of trying to navigate complex legal requirements on your own, you get guidance from people who deal with this every day.

Efficient payroll management

Processing payments for contractors, particularly for those working in different locations or currencies can get complicated quickly. External experts can manage this side of the program for you, making sure that workers are paid accurately and on time, with the correct taxes and deductions. This helps you avoid payroll errors and frees up your internal team to focus on more strategic work instead of administrative tasks.

Strategic consulting

Sometimes, you need a fresh set of eyes or outside advice to improve how your program runs. External partners can offer insights based on industry benchmarks, hiring trends, or lessons learned from other companies. They can help you design smarter workflows, refine your vendor strategy, or identify opportunities for cost savings. Having access to this kind of strategic support can be especially valuable when you’re scaling up or going through major changes.

Access to advanced technology and market intelligence

External providers often have cutting-edge tools that might be too costly or complex for a company to implement on its own. This includes vendor management platforms, AI-powered sourcing tools, or real-time market data dashboards. By partnering with them, you get access to this technology without having to purchase or manage it directly. It also gives you visibility into market trends—like average rates for certain roles or shifts in talent availability—which helps you stay competitive.

Reliable compliance guidance

External experts can act as an extra layer of protection, keeping you updated on what’s changing and advising you on how to adapt. This ongoing support makes it easier to stay ahead of issues and avoid risks that might otherwise go unnoticed.

Managing your contingent workforce internally has multitude of benefits. You’ll have full visibility and control over costs, and your workers will experience a consistent company culture, improving your employer brand. However, unless you have unlimited resources, your internal team may have some limitations in what they can handle on their own. 

When you partner with CXC, you can enhance your contingent workforce management program without adding pressure to your internal teams. You maintain full control over your strategy, while gaining access to our 30+ years of experience in legal, compliance, and workforce solutions. Whether you need support with payroll, sourcing, or navigating complex regulations, we provide flexible services to help your business scale with confidence. Speak to our team today.