The Future of MSP: Next-generation Workforce Management
The Managed Service Provider (MSP) market is growing and evolving quickly. Related markets, such as Recruitment Process Outsourcing (RPO), and Indirect Procurement Outsourcing (PO) are influencing and shaping the MSP market, leading to the emergence of a futuristic MSP model through next-generation workforce management. This influence is causing both enterprises and MSP providers to view MSP differently. The traditional form of MSP, which was essentially using a vendor for contingent labor management, is now evolving to the status of an “outsourcing partner” as a part of next-generation MSP.
Consequently, the value proposition of MSP is changing. Buyers now want benefits beyond the obvious low hanging fruits and are looking at MSP with a new set of expectations. As such, four key themes are emerging as game-changers in the new MSP model:
- Full Statement-of-Work (SoW) lifecycle management
- Alternate sourcing solutions
- Total talent management
- Advanced engagement models
SoW spend management is increasingly getting included in MSP. However in the current scenario of the traditional MSP, there is piecemeal involvement of the MSP in the SoW lifecycle – primarily in transactional processes leading to limited benefits. The full value is unlocked in the next-generation MSP when the provider manages the full SoW lifecycle, including the critical Source-to-Contract (S2C) areas. End-to-end SoW lifecycle management can yield savings to the tune of 8-11% of the SoW spend.
Alternate sourcing solutions aim to increase direct sourcing by the MSP on behalf of the buyer and restrict staffing vendor involvement to roles that cannot be filled internally on time. This can help realize additional savings that are to the tune of 17-30%. Other benefits of alternate sourcing include better time-to-productivity and creation of a buyer-owned talent pipeline.
Total talent management including contingent workers and permanent hires can yield savings over and above two independent RPO and MSP arrangements. There are additional benefits such as improved ability to do better strategic workforce planning and greater flexibility to scale up and down. Advanced engagement models such as gainsharing and offshoring are being pioneered, and can well top off other next-generation MSP initiatives.
Buyers need to keep key considerations in mind when embarking on a futuristic MSP journey. Since it involves a more collaborative relationship between the buyer and MSP, internal and external due diligence is crucial. Additionally a phased approach, well-defined metrics, and a formal governance structure enhances the chances of success.
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