June 17, 2013
Companies are using more contingent workers, and becoming adept at balancing their talent needs with the use of contingent workers. Many of them are using vendor management systems and outsourcing their contingent workforce programs to Managed Services Providers (MSPs) to achieve greater operational efficiency and control.
The million (or multi-million) dollar question being asked here is, should you employ program coordinators to run the program internally instead of outsourcing the job to an MSP? The answer depends on your expectations and priorities. If you simply need assistance in administering the process, processing requirements and automating workflows, you may be better off getting it done in-house. You may also choose the in-house approach if you want to minimize the dominance of a single supplier.
When does it make more sense to choose a third party to manage your program? If contingent workers are viewed as an increasingly strategic component of your overall workforce, you should consider the value that an MSP can bring. An MSP is dedicated to provide customized services to clients to manage their talent supply chain, bringing strategic insights and innovative risk mitigation measures.. Their access to a network of staffing vendors would give them wider options to negotiate better rates. They provide expert consulting on temporary labor legislation, labor market conditions affecting supply and demand, and technological advancements in the VMS space. Managing the program in house would require the development of such capabilities which transcend mere administrative oversight.
Companies must also compare and contrast the program costs of each model. MSPs offer expertise, industry knowledge, strategic insights and scalability in the services offered. They provide a range of pricing options, including supplier-funded models that require no direct investment on the part of the company. MSPs can also immediately apply trained resources to your program as your needs expand. When a management fee is based on spend under management, there is no incremental cost associated with the addition of new members to the MSP team.
What is more, the possible legal ramifications of non-compliance with worker classification and co-employment requirements in an internally managed program could prove far more expensive than any highly negotiated fee paid to an MSP, recurring or otherwise.
One final thought: many companies are concerned about being dependent on a large company that manages their overall program, supervising all staffing agencies while also providing staffing services. Questions arise as to whether this inherent conflict of interest will inflate the cost or deteriorate the quality of submitted candidates. Seek out a truly vendor neutral MSP that does not provide, and is not affiliated with, any staffing agencies. A truly vendor neutral MSP works to build strong, objective relationships that span multiple clients. This gives the MSP maximum flexibility in negotiating great rates and incenting all suppliers to focus on your needs.
The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.