Considering a managed service programme (MSP) for the first time? These five questions will help guide your thoughts about which model is right for you.

When organisations are considering whether an MSP solution is the right one for their business there are clear patterns in the questions that procurement and resourcing teams ask us to support. Our conversations in the UK market are increasingly with first generation buyers and so I’m sharing some of the most frequent questions and of course the answers to them.

1. How many workers do I need to make an MSP solution viable?

The programmes I have been involved in have been anything from 150 workers up to 10,000 workers within a single organisation. The smaller programmes tend, and I stress tend, to be ones with an IT or Head Office focus, with highly paid workers deployed on high profile projects. Here clients are looking for pay rate controls or risk mitigation as their priority. Or it may be where an organisation is looking for one supplier to manage their whole supply chain across a range of categories, or to provide a constant supply of high quality workers into their customer services teams.

For a vendor neutral (VN) programme to be viable you will need sufficient volume of workers, and therefore spend to cover the costs of the VMS platform and the MSP team and services. Spend 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 more than achievable for spend of £3 - 5 million per annum or above.

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

Using a panel of suppliers with a developed understanding of the client’s business is always preferable to introducing a new panel of suppliers with whom the client has no track record or confidence. The only exception would be where an organisation is unhappy with the performance of their current supply chain and in those instances we would seek to introduce new suppliers.

In the early days of MSP, when the concept was relatively new to suppliers, having your own panel of suppliers used to working with your teams and systems was a distinct advantage. As the use of MSP services matured across the markets we operate in, and more MSP providers starting providing similar solutions, I have found there is an acceptance in the agency marketplace that MSP plays an integral part in a mature supply chain. Mature agency businesses are open to working with an MSP team as they recognise the many benefits that come with a well delivered solution. Our MSP teams deliver agency briefing calls with the suppliers on the panel, rather than just the chosen few, and so they develop a better understanding of the roles being hired and can make informed decisions on whether they are well placed to support each hiring process. Add to that the fact that most suppliers experience improved credit control and payment terms under a well-run MSP programme and you can understand why most suppliers are willing to continue to supply the client organisation via the MSP programme.

3. What are the advantages/disadvantages of using supplier owned technology versus an independent VMS platform?

In a world where the use of Vendor Management Systems (VMS) is now widespread, having your own proprietary VMS platform brings with it some distinct advantages, namely the speed of implementation and the ability to make changes to the platform to tailor to the needs of a customer. These benefits introduce a commercial advantage to end customers, who don’t need to pay for a third party VMS platform, and enable the ROI from a programme to be achieved faster than would otherwise be the case. That does not mean however that proprietary platforms are the only option to be considered.

Hays acquired 3 Story Software, 3SS for short, in 2010. This now operates in over 40 of our programmes globally, in more than 23 countries, managing over £2.5 billion of spend via the platform last year.

We also use a number of globally recognised VMS platforms, including Beeline and Fieldglass, to run other programmes and will always provide clients who ask with a choice of the platforms available in the market for them to consider. When your teams are equally proficient at running programmes on any of the market leading VMS platforms then this tends to become a cost versus functionality decision, which we will support a client to understand. Our expert technology teams inform our clients which platforms are most likely to meet their needs and 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 alongside maintaining a database of previous workers, referrals or profiles of suitable workers who can be contacted before engaging the preferred supplier lists to fill open requisitions. Direct sourcing is suitable for most organisations, especially those who:

• have frequently hired posts, or;
• hire niche, project related roles requiring workers with acquired IP in the client organisation to lead projects or architect solutions, or;
• those who require access to commonly available skills in the marketplace where skills/workers can be engaged in advance and talentpooled.

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 into the organisation directly, in others it has been more appropriate to restrict this to 20%. My advice would be to always consider the benefits it can deliver, whether that be reduced cost per hire, or reduced time to hire, or time to competence within a new project that can be achieved when reassigning proven workers to new projects. Once you’ve analysed your programme spend there will always be some aspects for which direct sourcing is the right solution, so go ahead and give it a try.

One market where I have been surprised at the low adoption for direct sourcing has been the US market. It is not uncommon to have an agency supplier delivering a Master Vendor solution, or a dominant supplier within a category under a Vendor Neutral MSP programme, yet despite the benefits it is still unusual to see stateside. I ran a series of buyer workshops across the East Coast earlier this year and the buyer sentiments towards direct sourcing seemed to be positive so I will watch this closely to see how this develops over time.

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

My experience demonstrates that the closer the delivery team are to the end user the better the service they deliver. Now this doesn’t have to mean that they are in the same office. In a world where remote working is becoming more and more commonplace that will become increasingly difficult over time, but it should extend to having the recruitment partners working in your locations regularly and ideally with access to your email system and internal directory. Why?

Understanding a client’s culture, ways of working, business language and accepted practices is the fastest way to ensure that a new MSP team is quickly accepted into your organisation and can start to understand your needs and what is driving them. In my opinion, an MSP team needs to move beyond the transactional role of filling jobs and into a role where they are providing insight to your end users about the talent marketplace and competitor landscape and doing that remotely can be difficult, at least in the early days. Knowing how to find Bob or Mary via the internal directory speeds up the whole process and having site access means conducting worker town-halls is something quick and easy to do when something needs communicating.

The answers to these five key questions shape the solutions I outline to customers around the world. 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 and 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?

If you have any more questions about MSP please get in touch.

AUTHOR

Jon Mannall
EMEA Managing Director and Global Head of Sales, Solutions and Innovation, Hays Talent Solutions
Jonathan is the EMEA Managing Director and Global Head of Sales, Solution and Innovation for Hays Talent Solutions, having joined Hays in 2011. Previous roles held at Hays included Client Director, Service Delivery Director and Head of Sales for the UK. He is now responsible for leading the approach to engaging and securing new clients and to ensuring that the products and services offered by Hays Talent Solutions continue to meet the changing needs of our global, regional and local customers. For more information about Hays Talent Solutions, visit our website. 

Prior to joining Hays, and after completing his Masters in Philosophy and Management, Jon worked in the RPO and MSP sector for 10 years with a range of Financial Services, Public Sector, IT & Telecommunications, and Insurance clients in Sales and Operations Director roles.