Vendor Neutrality of an MSP | DCR Workforce Blog

Vendor Neutrality of an MSP

As companies are acquiring VMS solutions to manage their Contingent Workforce, the use of MSPs to manage these operations is becoming an imperative, to achieve optimum performance as well as clear cost savings. In fact, the norm today is to choose the MSP before deciding on the VMS. There are experts who insist that an MSP should not be allowed to bring in their own VMS. But this leads to having two separate and higher charges from both the VMS and MSP, pushing the overall costs northwards. It may also lead to issues with the VMS and MSP getting into tussles over the performance – where the VMS blames it on the MSPs service levels, the MSP turns around to blame the inefficiencies of the system provided by the VMS.

MSPs manage the whole gamut of contingent workers – from temporary workers to independent contractors, and start providing MSP services also. Some of the VMS/MSPs offer a vendor neutral model for managing the company’s order distribution/candidate selection tasks. They claim to follow client defined policies on the selection criteria and provide equal opportunity to all vendors to bid for work – guided by a neutral approach and ‘May the best one win’ motto.

The MSPs say they would operate on a vendor-neutral basis and contracts shall be awarded to the Vendors strictly based upon the merit-based parameters laid down like prior record and quality of hires and rates offered. They claim that they would not try to interfere in the selection process in any manner, and would leave it entirely to the software, in spite of having operational control over it. It is important to remember here that by virtue of operating and managing tasks of order distribution and candidate selection, the MSP has total access to all the pay and bill rate information and can easily know what bill rate the clients are willing to accept. While it may prima facie appear not to deliberately exercise an option to award the contract to itself (or someone of its choice); it will have a clear opportunity to manipulate the entire process from behind the scenes. For all those claims of neutrality, there is a question that needs to be posed. Does it make intuitive sense to keep an obviously ‘interested party’ in charge of the operations and if yes, what is to keep the interested party from tweaking the system around to suit its convenience, while covering up its tracks and staying above suspicion?

A large staffing company will naturally have an openly avowed need to improve the number tasks which increase the amount of its billable work. This need will make it imperative for them to gain over the other suppliers and being an MSP will provide it with immense advantage to outperform the other suppliers with supreme ease and convenience. This will be true of the small operators as well as the big operators, in spite of their different subsidiaries, departments and cost centers etc.

Real vendor neutrality is possible with not allowing the MSP to recruit at all but it is hard to restrict recruiters and account managers as their compensations are linked to the revenue they bring in. It would be better to set a 10% to 15% limit on the amount of recruitment they can be allowed to do out of the total and most small MSPs do not have an issue with it. MSP implementations should also not be with large staffing companies, and their subsidiaries.

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.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.