Are you considering a managed service programme (MSP) for the first time? We’ll help you to understand what a managed service provider is, exploring common MSP FAQs.

This article will help to guide your decisions about which model is right for you.

What is a managed service programme? 

A managed service programme (MSP) is a third-party company that provides end-to-end management for contingent workforces. MSPs manage contingent and contract workers on behalf of an organisation. These service providers can perform a number of activities, including supplier management and strategic workforce planning.

Choosing the right MSP provider can ensure an efficient and cost-effective way to manage your non-permanent population. 

How to choose the right MSP provider: Questions to ask your provider

When considering whether an MSP solution is right for your business goals, ask your potential provider the following questions. Defining clear answers to these MSP FAQs will help to match you with the right partner.

1. What size project can you support? How many workers do I need to make an MSP solution viable? 

MSP programmes can range from 150 to over 10,000 workers within a single organisation.

The smaller programmes tend to focus on IT or Head Office, with highly paid workers deployed on high-profile projects. Here, clients are looking for pay rate controls or risk mitigation as their priority. Or an organisation is looking for one supplier to manage their whole supply chain across a range of categories. They may also be looking for a constant supply of high-quality workers into their customer services teams.

For a vendor-neutral (VN) programme to be viable, you will need a sufficient number of workers. Accordingly, you’ll need to allocate funds to cover the costs of the VMS platform, the MSP team, and services.

Spending under £5 - 10 million would be difficult to manage under a VN programme. However, with high levels of direct sourcing or a Master Vendor supplier operating the MSP programme, services are achievable for spending between £3 million and £5 million per year, or more.

2. Will you replace existing suppliers for your own panel of suppliers?

Using a panel of suppliers with a developed understanding of the client’s business is always preferable. The only exception is where an organisation is unhappy with the performance of their current supply chain. In this case we would seek to introduce new suppliers.

In the early days of MSP, having your own panel of suppliers used to offer a distinct advantage. Familiarity with teams, processes and systems helped to expedite integration. As MSP services have matured across the markets we operate in, more MSP providers have started providing similar solutions. I’ve found a growing acceptance in the agency marketplace that MSP is an integral part of a mature supply chain. Mature agencies embrace MSP teams, recognising the benefits of effective solutions.

Our MSP teams deliver briefing calls with all suppliers on the panel, not just a select few. This approach helps them better understand the roles being hired and decide whether they are well-placed to support each hiring process. Additionally, most suppliers experience improved credit control and payment terms under a well-run MSP programme. This explains why most suppliers are willing to continue to supply the client organisation via the MSP programme.

3. What are the pros and cons of using supplier-owned technology vs an independent VMS platform? 

In a world where many use Vendor Management Systems (VMS), MSPs with their own VMS platform offer clear benefits. Pros include how quickly we can implement changes and how we can adjust the platform to meet a customer's needs. This flexibility provides commercial advantages to end customers. Eliminating the cost of third-party platforms can enable quicker return on investment.

Hays acquired 3 Story Software (3SS), in 2010. This now operates in over 40 of our programmes across 23 countries. In one year alone, our VMS managed over £2.5 billion in spend globally. We also use several globally recognised VMS platforms, including Beeline and Fieldglass, to run other programmes. We always give clients a choice of platforms, helping them to weigh cost versus functionality.

Our expert technology teams inform our clients which platforms are most likely to meet their needs. We then help them implement and run their chosen platforms to deliver on the programme benefits.

4. What is direct sourcing and when should we use it within a programme? 

Direct sourcing is when your MSP team uses your brand to engage with new workers for open assignments. This approach also includes maintaining a database of previous workers, referrals or suitable profiles to engage with directly. Direct sourcing is suitable for most organisations, especially those who:

• Frequently hire for the same roles.
• Need niche, project-related workers with acquired IP in the client organisation to lead projects or architect solutions.
• Require access to commonly available skills, where workers can be engaged in advance through talent pooling.

I’ve been involved in a number of programmes where direct sourcing is an integral and successful part of the supply chain. In some instances, my teams have delivered over 95% of all hires directly to the organisation. In others, it has been more appropriate to restrict this to 20%.

My advice would be to consider the potential benefits of direct sourcing before diving in. Benefits include: reduced cost per hire, reduced time to hire and quicker project ramp-ups by reassigning proven workers. Once you’ve analysed your programme spend, there will always be some aspects for which direct sourcing is the right solution. It’s worth giving it a try.

5. What is the benefit of having your team based onsite with us? 

My experience demonstrates that the closer the MSP delivery team is to the end user, the better the service they deliver. This doesn’t necessarily mean being in the same office, especially as remote and hybrid work is more common. However, it’s beneficial for recruitment partners to regularly work on-site and have access to your email system and internal directory. Why?

Understanding a client’s culture, ways of working and business language is the fastest way for a new MSP team to match your business model.

In my opinion, an MSP team needs to move beyond the transactional role of filling jobs. They should provide quality insights to your end users about the talent marketplace and competitor landscape. Achieving this level of partnership remotely can be difficult, at least in the early days.

When choosing the right MSP provider, look for someone who can integrate into your business operations long term. For example, having access to your internal directory will streamline communication, and site access makes it easier to conduct worker town halls when needed.

The key questions to ask yourself before committing to an MSP

To choose the right MSP provider, you must ask them the core questions discussed above. However, you must also ask a set of important questions of yourself and your team. Once you have found an MSP who aligns with your business, it’s time to confirm the services you need from them.

The answers to these internal-facing MSP FAQs shape the solutions you need to outsource. I urge you to consider them carefully yourself when contemplating what form of MSP is right for you:

1. Is your spend profile at least £5 - 10 million per annum? Do you have strong internal buy-in to an MSP solution to managing your non-permanent workforce?

2. Can you accommodate a team onsite with you or at least provide access to your sites for the MSP team?

3. What are the skills where direct sourcing could deliver a reduction in your overall costs and improve time to hire?

4. How might a proprietary VMS platform meet your needs, or do you need to consider an independent VMS platform?

5. Are you happy with the performance of your current suppliers, and which ones would you want to retain?

Once you’ve resolved these questions, it’s time to finalise your service level agreement (SLAs) with your provider of choice.

Learn how to choose the right MSP provider with Hays

• Read our latest MSP guide
• Implementing a Managed Service Programme: Common MSP challenges and solutions
• Securing business engagement and ROI during HR procurement

Or get in touch if you have any questions, get in touch.