Earlier this year, my colleague, Jason Krumwiede wrote about several of the most common myths about recruitment process outsourcing (RPO).  As a follow-up, I wanted to share several of the biggest misconceptions about managed service programs (MSP). An MSP effectively manages an organization’s entire contingent or temp labor processes from the beginning (facilitating a requisition, coordinating interview efforts, and overseeing the hiring and onboarding of the resource) to end (sending invoices, processing payments, and examining program trends through data and analytics). Let’s dive right in to some of these misconceptions.

Misconception #1: An MSP provider is a staffing agency

An MSP is an outsourced provider that manages an organization’s contingent workforce processes by contracting with a network of preferred staffing agencies—or suppliers. The MSP will contractually align and manage the right combination of staffing agencies to provide an assortment of high-quality candidates that compete for each of your organization’s contingent hiring needs.

Misconception #2: An MSP’s primary purpose is cost savings

While it’s true that one of the benefits of an MSP is cost savings, it is not the only value driver. MSPs are designed to organize all the steps in the temp labor process to help your company consolidate suppliers, reduce risk, streamline processes, and provide advanced workforce analytics to provide greater visibility and insights across the enterprise. By partnering with an MSP, organizations will benefit from a robust candidate pipeline and an influx of high-quality talent. Once you have passed on the tedious administrative responsibilities to the MSP, managers can turn their attention to more strategic initiatives such as talent management activities that will improve your full-time workforce.

Misconception #3: An MSP will complicate and impede the hiring process

One of the biggest myths is that an MSP will complicate or delay the hiring process by adding more rigorous operating procedures. Most of the time more rigor is desperately needed and will streamline the process by overseeing your supplier relationships and other portions of the hiring cycle such as onboarding. By managing job requisitions, the MSP is creating process efficiencies, assuming the administrative work previously done by your organization, and decreasing the amount of time it takes to fill positions. Temp jobs will be filled faster with quality workers because an MSP can implement out-of-the-box hiring strategies and solutions without monopolizing your hiring team’s time and resources.

Misconception #4: My company doesn’t need an MSP. I only need a VMS.

While your VMS platform will be instrumental in running reports and offering overall transparency into program activity, this isn’t a standalone solution. Ultimately, you need an MSP provider to facilitate staffing functions and oversee operations. Much of what goes into maintaining a contingent workforce involves manual labor—tasks that a technology tool cannot automate. Aligning with the right MSP partner will help to recruit better talent, evaluate current workers, examine the compensation market, and ensure temporary labor spend remains within the MSP program.

Misconception #5: My MSP program needs as many staffing firms as possible to be successful.

Rather than superfluously adding suppliers to your program, your MSP provider should examine your talent needs and advocate for a right-fit quantity. Aligning with too many suppliers will drive the value down for these parties, leading to less participation and lower candidate quality. But engaging with too few suppliers could leave your hard-to-fill jobs vacant. It’s important to strike a balance by aligning with suppliers that can confidently bring value and results to your program.

Misconception #6: Organizations can’t talk to suppliers once the MSP is in place.

Some MSPs may strategically restrict communication between suppliers and your hiring managers out of convenience for your organization, as handling relationships with countless suppliers can be time-consuming and tiresome. However, this approach does not apply to all MSP programs. An effective structure will make all interactions between suppliers and hiring managers as targeted and intentional as possible so as not to waste either party’s time. To create a trusted relationship between suppliers and hiring managers, MSP providers should allow conversations to center around the requirements of a particular role, best-in-class recruiting strategies to enhance candidate quality, and actively monitoring current workers’ performance.

Misconception #7: MSP fees are too expensive for my company.

Supplier-funded MSP programs—in which suppliers bear 100% of the program cost—are the most commonly deployed program models. In this industry-accepted pricing model, the management costs of the program are absorbed by the suppliers as a percentage of their invoices at no extra cost to your organization. The MSP provider offers the participating staffing suppliers cost savings through the multiple efficiencies gained—as well as additional business opportunities available to the supplier—that offset the MSP fee.

A smarter way to manage your contingent workforce

Working with an MSP provider offers an efficient means of managing and maintaining a large population of contingent workers. Companies are often ill-prepared to oversee hundreds of temp employees—and a multitude of staffing suppliers—much less deal with the administrative tasks of onboarding, tracking, and paying them. The dozens of responsibilities that come with managing a temporary workforce can be overwhelming, which is why global Fortune 500 organizations prefer to outsource these tasks by aligning with a proven MSP provider.

Looking to increase the value of your MSP and generate cost savings in the process? Check out these five steps to strategic MSP cost reduction.

Interested in deploying an MSP program of your own? Learn about what your organization can do to prepare for the implementation of a contingent workforce program.

Contact us to learn more!