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Five Steps to Strategic MSP Cost Reduction

How to Drive MSP Program Value Through Cost Savings

I’m sure you’ve heard of the age-old adage: “Do you want good, cheap, or fast? You can only pick two!” Not only does this sentiment ring true in the restaurant industry, but it is also commonly found in the business world. By engaging with a knowledgeable and collaborative Managed Service Program (MSP) partner, you will often find yourself positioned to receive all three kinds of services within your workforce program.

In today’s day and age, organizations around the world are hyper-focused on the mantra of “better, faster, cheaper.” Ideally, this mindset centers around maximizing cost savings—especially regarding contingent labor initiatives. And while there are dozens of ways to drive direct and indirect savings within an MSP program, companies should leverage these five strategies to ensure excellence in the quality of service provided.

What is MSP? Managed Service Programs: Explained

1. Lean on your MSP partner

Utilizing competitive yet realistic pay and markup rates is critically important when attracting reputable suppliers—and their candidates—to support your organization under an MSP. Markup rates are considered almost like a balance sheet of sorts: going too low on a markup will generate significant on-paper savings, but may cause delivery and retention of talent to suffer. Going too high on markup rates will cause your bottom-line to be deflated. To further improve the quality of your candidate pipeline, seek guidance from your MSP provider around maintaining proper wage rates and incentive offerings for staffing suppliers and their contractors. In the current labor market, recruitment strategies are changing almost by the minute. Leaning on your workforce solutions partner will be critical in designing an effective yet cost-conscious solution to your labor needs.

2. Be transparent

In every contingent workforce program, there will always be objectives to be achieved and challenges to overcome. From the start of your relationship with your MSP partner, be transparent with these expectations. If you have a budget or timeline that must be adhered to, be honest about it. This will allow your MSP partner to develop an understanding of the importance and priority of your needs. Even if the MSP provider confirms that these goals may be a bit too ambitious or unrealistic, this honesty will foster accountability within the program and help to maintain a strong partnership

3. Don’t forget about soft savings

Hard cost savings are generally easier to identify and quantify. Although they are often considered the “low-hanging fruit” in workforce management programs, substantial value can be generated by exploring soft cost savings, as well. These strategies should be explored to gain and maintain visibility over your entire contingent workforce approach. In many MSP programs—particularly those that are more tenured—cost savings can be uncovered throughout the life of the program, but these may require more creativity and collaboration with your MSP partner. Ensure that your contingent workforce partner leaves no stone unturned when seeking cost-saving strategies. In addition, be sure to confirm with your MSP partner that all cost strategies will be captured through robust data and analytics systems or platforms.

4. You have to spend money to save money

To enhance the efficacy of your contingent labor program, subtle changes—such as increasing your hourly pay rates for a particular skillset or market—can provide a huge boost to the long-term success of your MSP initiative. Although these adjustments may cost more in the short term, they could ultimately pay huge dividends in the grand scheme of your program. As stated above, attracting and retaining talent while maintaining cost-effectiveness is a balancing act—one that your MSP partner should provide guidance to you on an ongoing basis.

5. Talent retention = savings

Above all else, the most effective way to control your overall workforce costs is by retaining your talent. Decreased employee satisfaction and productivity paired with increased turnover will adversely impact your organization with staff replacement costs, increased overtime costs, and general disruption to your key business deliverables. Keeping your team staffed and satisfied will allow you to spend less effort worrying about finding their replacements and more time focusing on generating exceptional business results.


While many factors contribute to the success of a contingent labor program, organizations need to be cognizant of potential cost savings, both hard and soft alike. By aligning with a proven workforce solutions partner—one with a prudent and strategic approach to recruiting and talent acquisition—companies will realize significant improvements when effectively attaining their various workforce objectives.

Is your organization interested in generating cost savings within your workforce? Learn how the Broadleaf difference can enable you to do just that.

This blog was written by Broadleaf’s Director of Client Delivery Ryan Schaal.