Fifteen years ago outsourcing buyers wanted to pool their contingent labor needs so they could clearly see their spend, recalls Lisa Fitzgerald, senior director within the contingent workforce practice of Kelly OCG. “We put them on standard rate cards and cut their expenses 20 percent on average the first year,” she recalls. “Moving to a managed service provider (MSP) was all about cost.”
Those beginning outsourcing buyers have matured. Mature buyers today are “better educated than ever before,” says Scott Fraleigh, vice president of managed services for SourceRight Solutions. “Today they want more than someone who can meet SLAs. Today they want a strategic, long-term partner for their talent management.” In addition to desiring access to top talent, mature buyers also want the ability to reduce risk,” Fitzgerald adds.
Matt Rivera, director, customer solutions for Yoh, adds that “improving the quality of the workers” is a key concern from mature MSP buyers. “The hiring manager wants good people who can get the job done. They demand people who will stay for the duration of the project. If they get the right people, they get more value from the use of an MSP,” he explains.
“We constantly have to show value year after year,” says Marc LeClair, senior vice president at Volt Consulting. He adds that mature buyers want annual continual improvement in:
- Cost savings
- Process compliance
- Reduced processing time
The importance of global for mature buyers
Bruce Morton, the chief marketing officer of Allegis Group Services, says global capabilities are now crucial for mature buyers. “Global requirements have always been there. But they have gotten more important over the last three years,” he reports.
Dave Barthel, executive director of human capital solutions for Allegis, adds that the statement of work (SOW), which is deliverable-based services, has become an important component for mature buyers. LeClair adds SOW talent is a “source of great cost saving” because historically “this is the largest source of rogue spending because the clients are buying a deliverable. Do you need five senior people or five junior people? Are you sure you are not paying the junior people at the senior rate?” MSPs and their vendor management systems streamline SOW work and shed light on their true costs.
A challenge mature buyers have is “engaging the non-employee populations,” says Rivera of Yoh. “Too often they are not integrated into the workforce. Mature buyers need to extend their brand to their contingent workers. You can’t ignore 20-30 percent of your workforce,” he observes.
Morton says the work of MSPs is converging with the recruitment processing outsourcers (RPOs). “Today there is a move to total talent management. The buyer knows the talent it needs. But what is the best mix of full-time and contingent labor?” he explains.
Fitzgerald of Kelly OCG adds, “Today mature buyers don’t want to look in the rear view mirror. They need to look out the windshield. They need an MSP to help them manage their talent. Mature buyers want to bring HR, procurement and the business users together to work with talent holistically.”
Advice for newbies
Beginning buyers have different challenges. Rivera of Yoh says newbies need to understand why they are moving to an MSP model. “Are you trying to control cost? Get better quality? Improve compliance? Standardize processes or adopt new technology? Know the answer to this going in,” he offers.
Morton of Allegis says these buyers need to build a cross-functional team to craft a solution. Business users, the legal department, IT, legal, finance and of course HR and procurement all need to play a part. “You need to have all the planets aligned because the MSP will touch every one of them,” Morton explains.
Fitzgerald of Kelly OCG says “you can’t forget the IT department because using an MSP means integrating a pretty hefty IT program,” i.e. the provider’s vendor management technology.
Morton adds the selection process should “focus on overall value not just cost.”
New buyers may need to have a strong change management program since business users who have been hiring contingent labor their way for a long time now have to adapt to a centralized approach and the provider’s vendor management software. “Don’t let up. Keep pushing for change,” Fitzgerald advises. Rivera of Yoh points out that, “many MSP programs fail because management does not mandate use of the program. That way you will end up with the same decentralized mess you started with.” He says without executive buy in, compliance can be as low as 25 percent.
After the team selects an MSP, it has to create a governance program using the same cross-functional players, notes Morton.
Next: Part 5: How buyers use MSP analytics to make business decisions