Should you self-manage your contingent workforce or use a partner?
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SHOULD YOU SELF-MANAGE YOUR CONTINGENT WORKFORCE OR USE A PARTNER?
To outsource or not to outsource? It’s a common question asked by buyers of professional services across almost every industry. Scarcity in the talent pool makes outsourcing a common topic, and the data shows that many organisations are currently in the market for effective contingent workforce management services.
The decision to manage in-house or to outsource most often comes down to a fundamental question: What are the merits of managing a contingent workforce programme?
In the blog below, we’ll explore whether you should handle the process internally or outsource it to a Managed Service Programme (MSP) provider.
Why is contingent workforce management such a challenge today?
The world of work is rapidly evolving. Many organisations are struggling to attract and retain the talent they need. And at a more basic level, many organisations simply haven’t been well-served by their existing contingent workforce programme.
Managing contingent workers: The basics of an MSP
What is a Managed Service Programme (MSP)?
In our business, MSP means Managed Service Programme, which entails the sourcing, engagement and administration of temporary workers, gig workers and other ‘non-permanent’ or ‘non-employee’ resources.
A contingent workforce management programme provides oversight of a company’s contingent workforce and associated suppliers. Most traditional programmes have a primary focus around three dimensions: efficiency, cost and risk.
Company employees or a third-party provider can manage contingent workforce programmes, but the primary programme deliverables will include:
- Management of the requisition, evaluation and selection (recruitment) process.
- Oversight of all operational processes, including: onboarding, timekeeping, invoice management, change management and offboarding.
- Monitoring of staffing supplier rate competitiveness and compliance with client rate ranges (if applicable).
- Configuration and front-line support of vendor management system (VMS) technology.
- Consolidated invoicing & payment to staffing suppliers.
- Issue management and resolution.
- Supplier performance and compliance management.
- Policy enforcement.
- Worker quality management.
- Programme reporting & planning.
- Ongoing end-user training (both suppliers and internal users).
Who uses MSPs?
Rather than focusing solely on risk and cost savings, MSP services are becoming much more strategic. MSPs often deliver talent sourcing strategies and solutions on a global scale.
MSPs are increasingly popular with:
- Better informed buyers looking to deliver more strategic value to their organisations.
- Human Resources (HR) and Talent Acquisition teams, who recognise the strategic value of the contingent workforce.
- Organisations looking to improve their employer value proposition.
- Procurement professionals seeking to manage spend.
Outsourcing the MSP to a third-party workforce solutions provider is increasingly common, across all industries and organisation sizes. Expert MSP providers can offer many potential benefits.
So why would an organisation consider taking on this complex, specialist work by themselves?
Reasons why you might self-manage your contingent workforce programme
Many organisations will find the support of an MSP service provider to be critical to their success. An experienced and capable MSP brings strategic guidance and delivers tactical processes and procedure.
But in spite of the significant value-add, some programmes (and their MSP providers) begin to lose their lustre over time. In turn, client stakeholders reconsider.
Many organisations consider self-management of their contingent workforce programme because they find the current approach disappointing. The MSP service provider is failing to deliver the level of service and the talent that client stakeholders expect.
Reasons why stakeholders might contemplate self-managing their contingent workforce program follow common themes:
- Programme performance is underwhelming, failing to reach the right talent at the right time.
- A lack of partnership, with MSPs focused solely on cost reductions.
- A lack of innovation, maintaining status quo instead of introducing new strategies.
- A generic approach, lacking in agility or tailored services.
- A lack of expertise, leaving junior executives to handle programme management processes.
- A perceived lack of value.
Our view on underperforming MSPs
We refer to these inefficient and ineffective programs as ‘MSP v1.0’. We use this term because such programmes are often the first generation of a basic provision.
MSP 1.0 is usually a command-and-control management structure. The MSP service provider acts as a gatekeeper between staffing agencies and the business. The focus is on driving compliance, process and cost savings. These are all valuable benefits for organisations that had no programme before.
But it is worth noting that these are also benefits that yield diminishing returns over time. Many hiring managers are finding their organisation's current approach to contingent workforce management frustrating. To find a solution to their complaints, these hiring managers are choosing to go around the programme to get the talent they need.
It is clearly time for a change.
Delivering next generation programmes
At Hays, we recognise that effective management of a contingent workforce is a collaborative endeavour.
Our approach to designing, implementing and operating MSPs which achieve high adoption rates is built on a foundation of engaging key stakeholders who are integral to their success into the design of the services. By adopting a design thinking led approach to solving the myriad of issues that are exposed by high adoption of a contingent workforce, we ensure the ultimate solution addresses the most critical challenges and secures sustainable benefit to all.
There are six core value areas, all designed to work together and crate additional value for all stakeholders involved in contingent workforce management.
1. Process Optimisation
The increased use of contingent labour can create challenges within even the most advanced organisations. Central to these challenges is often a lack of process optimisation, which can manifest in operational inefficiencies such as delays in onboarding or difficulties in tracking performance.
2. Visibility and control
Whether you’re looking for a sustainable approach to reduce costs, cut onboarding time for new resources, or minimise or reduce risks linked to your use of a large contingent workforce, it is critical that you design processes in a way that delivers immediate visibility on these key metrics.
3. Governance and compliance
The depth, complexity and frequency of change linked to legislation surrounding non-permanent workers demands a robust approach to compliance to avoid both reputational and financial risk through fines for non-compliance.
4. Access to talent
As the volume of available talent sourcing platforms and channels expands, identifying and engaging with contingent workers becomes a difficult balancing act. To truly unlock contingent talent, having a strong supplier management process and a tailored sourcing strategy are non-negotiable.
5. Cost reductions and savings
The costs associated with contingent workers are often overlooked or inadequately managed, leading to poor utilisation of budgets within the organisation. An MSP offers a data-driven approach to enable companies to pinpoint cost-saving opportunities.
6. Data and insights
Companies operating without an MSP often find themselves dealing with a multitude of processes and systems. This complexity can lead to a significant gap in the data and insights necessary for effective management of contingent workers.
Should you consider outsourcing the management of your contingent workforce?
You may be wondering if self-managing your contingent workforce programme is a smart move for your organisation, or if it’s a better idea to outsource the function to a specialised MSP partner.
Here’s a high-level analysis to help you decide if it is worth exploring further. As you think about your contingent work programme, ask yourself the following questions and provide a ‘yes’ or ‘no’ answer:
1. Is this function core to what we do as a business?
2. Are we experts at delivering it? Do we know how to find, manage, and retain the talent it requires to operate?
3. Are we willing and able to climb the learning curve? Do we know who will help us?
4. How will we stay up to date? What technology will we need to be successful?
5. Does managing this function fit within our organisation structure? Who will ‘own’ it?
6. Can we justify taking on the additional fixed overhead cost?
In-house contingent workforce management vs outsourcing
The question of self-managing versus outsourcing the management of your contingent workforce programme is complex. The decision requires careful consideration.
If you answered ‘yes’ to all of our questions: Your contingent workforce programme might very well be a candidate for self-management.
If you answered ‘no’ to all of our questions: It is clear you should consider outsourcing your contingent workforce management programme. Check out our blog on implementing an MSP to dive deeper into the next steps, or get in touch to explore your options.
If you answered a mixture of ‘yes’ and ‘no’: You should think about how good a fit outsourcing is for the talent and time you have available on your team:
- Could an outsourced specialist do it better and deliver more value?
- If you handle it internally, is the potential benefit worth the cost?