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What are the advantages & disadvantages of a Managed Services Provider?

A Managed Services Provider  will help employers gain visibility into their contingent workforce program, mitigate compliance risks associated with engaging contingent workers, while also providing greater access to qualified and highly skilled talent. A Managed Services Provider allows employers to focus on driving business forward with the right talent at the right time.

With an uncertain and ever-changing workforce continuing to drive business strategies, employers around the globe are challenged with augmenting their workforces to adapt to an uncertain world of work. For many business leaders, the solution is to operate a more flexible workforce with contingent workers who can be engaged on contract basis with the ebb and flow of business and service demands. However, managing a contingent workforce comes with its own set of unique challenges – many, of which, can be solved by partnering with a trusted Managed Services Provider.

Why do organizations partner with a Managed Services Provider (MSP)?

A Managed Services Provider will have the IT infrastructure, expertise and remote monitoring and management solutions in place to provide employers with complete visibility into their contingent workforce.

At its most basic delivery level, a Managed Services Provider will help an organization to streamline and manage its entire contingent workforce by improving efficiency, controlling costs and mitigating the fines, penalties and reputational damages associated with certain contingent workforce risks. This service is critical to ensuring compliance.

How do you choose an MSP? While early Managed Services models focused on process improvements and cost savings, more mature Managed Services Providers, however, are now seeking ways to increase access and service delivery of high caliber talent while reducing time to hire.

Is a Managed Services Provider right for me?

A Managed Services Provider will require organizations to have a minimum amount of contingent worker spend in order for the relationship to be successful and self-sufficient. When deciding whether or not a Managed Services Provider is the right solution for your organization’s needs, there are first some basic and more complex factors to consider.

First, it’s critical to understand how much contingent workers are currently costing your organization. It’s a unique number to a core business, yet can be difficult to account for, as nearly 60 per cent of contingent worker costs is unaccounted for in the average business.

What does an MSP provide? Advantages of engaging a Managed Services Provider

Many Managed Services are leveraging Direct Sourcing solutions for greater access to talent pools and niche skills, using alternative acquisition resources and technology like Artificial Intelligence (AI) and other initiatives that increase savings while ensuring quality talent engagement and retention. 

A Managed Services Provider can help your business save time and money along with other advantages:

Greater visibility

Managed Services will help employers gain visibility into enterprise-wide contingent workforce spend. Technology used by Managed Services organizations provide insights into important metrics like spend, time to fill, candidate quality, placement turnover and more. Managed Services allows employers to measure their contingent worker program against their business goals.

Stronger compliance

A contingent workforce will come with many benefits, but it also brings increased risk to both small businesses and enterprise organizations. The most common risks include worker misclassification, co-employment issues and unemployment and workers’ compensation claims.

Organizations that partner with a Managed Services Provider for their contingent worker needs will shift the hiring compliance burden to that Managed Services organization. This puts the onus on the Managed Services to mitigate the risks associated with a contingent workforce and ensure compliance. Managed Services providers will provide external expertise on local, regional and global compliance regulations. Business owners will also benefit from the external expertise provided by a Managed Services partner on local, regional and compliance best practices.

Quicker access to larger talent pool

Managed Services will provide Employers with access to a greater talent pool by building more strategic relationships with vendors directly sourced or through other hiring vehicles. Experienced contingent workers can often be engaged at short notice, and will bring an immediate, expert solution to an urgent project need.

Increased flexibility

Managed Services organizations work with an extensive supplier base, and your trusted Managed Services partner will have relationships in place that can find the skills required when the need for resources has been identified.

Improved operations

Managed Services Providers have the expertise to make more informed hiring decisions at the time of need, and have the processes and systems are in place to manage and mitigate the risk of contingent worker onboarding and administration across the entire worker lifecycle. Employer branding strategies Managed Services organizations can work with both small businesses and enterprise organizations to develop a unique employer branding strategy that will maintain consistency throughout the entire recruitment lifecycle.

Better data management and predictive analytics

Managed Services Providers invest in sophisticated and powerful information technology that provides business leaders with the ability to identify issues occurring around things like skills needs, spend, vendor performance and more. This technology provides Recruiters and Hiring Managers with the technological infrastructure to make better data-driven decisions. This critical technology and predictive analytics gives insights into how your organization is engaging and managing contingent talent. Access to the best technology Managed Service Providers also invest in the use of cutting-edge technology that allows employers to automate many of the major business processes of contingent workforce management, giving real time performance data and actionable insights.

Managed Services Providers continuously invest in their technology stacks, ensuring their client organizations have access to the most innovative tools and processes to engage and manage contingent talent.

Managed IT services and break-fix maintenance

As technology continues to evolve, the means to support Information Technology (IT) must also evolve along with it. However, many business owners don’t have the systems in place to effectively manage their ever-growing networks and platforms – leading IT teams to become overwhelmed with technology issues and break fix maintenance relating to issues surrounding backups, patches, updates and security. Managed IT Services presents a solution to these challenges.

In today’s current workforce, employers can’t risk the uncertainty that comes with relying on maintenance. A Managed IT Services Provider focuses on prevention rather than reaction, and will monitor issues before employees or customers experience any disruption to services. As the world continues to adopt to the new world of work, it’s critical for business owners to have reliable technology in order to achieve their workforce and overall business objectives. Outsourcing Managed IT Services will ensure business owners have reliable access to technology that sources the right talent at the right time.

Disadvantages of a Managed Services Program

While there are many advantages to a partnership with an experienced Managed Services Provider, organizations may also experience disadvantages with their program if proper communication and expectations are not set from the beginning of the relationship. These may include:

Lack of a Total Workforce Management strategy

The relationship between a Managed Services Provider and the client organization is typically handled by the company’s Procurement Department, as such Human Resources functions may not have insight or control over the workers managed within an MSP program. If organizations continue to operate their internal workforce programs in such silos, it may prevent a cohesive total workforce management strategy.

Minimal industry-specific expertise

Some Managed Services Providers, specifically vendor-neutral MSPs that are independent of any staffing affiliation, may lack insight into your industry-specific staffing needs. To ensure quality candidates, it’s important to make sure your organization partners with a Managed Services Provider that is able to develop a deep understanding of your workforce needs.

Lack of talent risk

Some Managed Services models, such as a Master MSP model where a company engages only one supplier, can result in a lack of competition. If a company cannot competitively acquire the talent it needs, it’s critical that the company have a solid direct sourcing strategy in place. Added complexities Some Managed Services models, such as a hybrid program that blends vendor-neutral and master supplier models, can add complexity to your program as it offers both recruiting and managed services which will require multiple teams to work with your company. For this reason, it’s important to ensure all internal and third party business functions have a clear and concise management program in place.

The Role of a trusted Managed Services Provider

Organizations that require the services of a Managed Services Provider should ensure to engage a provider that offers transparency and visibility across their entire workforce to drive better nada-driven business decisions. A forward thinking MSP should deliver the best-in-class technologies that provide the transparency and visibility that’s needed to drive better data-driven business decisions. A trusted third party Managed Services partner should be committed to advising on the best solutions available to meet an organization’s business goals and to delivering innovative services that transform how they acquire and manage talent. This is done by listening to an organization’s unique service needs and tailoring a solution that delivers both short and long-term value across an entire contingent workforce.

Are you interested in learning more about the advantages of a third party Managed Services Provider?

Download our free case study to learn how Procom’s MSP solution helped one client save on contingent workforce costs and more:


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