MSPs are helping to introduce and drive the of new and innovative sourcing solutions in the market
An increasingly holistic approach to talent management is leading to adoption of a blended (contingent + permanent) talent acquisition model
Although MSP currently has the lowest offshoring levels in the global Business Process Services (BPS) space, offshoring of MSP FTEs is slowly rising, and we expect to see an increase in offshoring in similarly transaction-intensive process that are offshored in other BPS areas
Contingent workforce management is a US$300 billion market in terms of managed spend, growing steadily, but MSPs face challenges in broadening their scope to include services procurement.
The Managed Services Provider (MSP) market, occupied by companies that provide contingent workforce management, is flourishing, logging a robust growth rate of 12 percent in 2016 to reach US$300 billion in managed spend. According to research recently published by Everest Group—a consulting and research firm focused on strategic IT, business services, and sourcing—the growth rate for the MSP industry has exceeded 10 percent since 2014.
Everest Group also reports that fundamental changes are altering the dynamics of the global MSP market. A key example is how Business Process Outsourcing (BPO) providers are increasingly encroaching on traditional MSP turf by offering temporary labor management in their broader procurement deals. Although temporary labor management is the core strength of MSPs, BPO providers are witnessing much faster growth in this area (30-40 percent compared to 9-13 percent growth for MSPs).
Conversely, as the temporary labor management market matures, most MSP providers are looking at service procurement (also know Statement of Work or SoW) as the next area of growth. This segment is currently dominated by BPO and purchasing outsourcing (PO) providers, but MSPs are witnessing faster growth (40-50 percent as compared to 4-6 percent for BPO/PO providers).
“Going forward, enterprises will have greater luxury of choice for labor management services due to a wider universe of providers including MSPs and BPOs,” said Arkadev Basak, practice director at Everest Group. “This is both a risk and an opportunity for MSPs. The increased competition is a threat, but MSPs can also turn the tables and find new clients in the untapped market of current BPO clients.”
These findings are discussed in more detail in “Managed Service Provider (MSP) – Annual Report 2016: Embracing the New Talent Landscape.” The report includes a market overview and an analysis of the evolving market situation, buyer adoption characteristics, solution dynamics and service provider capabilities.
The following service providers were analyzed as a part of this report: Agile•1, Allegis Global Solutions, Alexander Mann Solutions, AMN Healthcare, Capita Resourcing, Geometric Results Inc., Hays, HCMWorks, KellyOCG, nextSource, Pontoon, PRO Unlimited, Randstad Sourceright, Superior Group, Tapfin, Yoh, and ZeroChaos.
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Other Key Findings
Trends in the adoption of blended RPO and MSP
Managed Service Provider (MSP) – Service Provider Landscape with PEAK Matrix™ Assessment 2016 – Europe
Managed Service Provider (MSP) – Service Provider Landscape with PEAK Matrix™ Assessment 2016
Three distinct categories of MSP providers have emerged, each with a unique value proposition