How to Ensure Your Managed Service Providers Bring Value to Your Contingent Workforce Program
Contingent workers or external labor is a strategic necessity for businesses that need to scale to meet demand or to bridge skills on their current teams. However, sourcing and managing contingent workers can be challenging. Managed service providers (MSPs) can step in to supply a contingent workforce, but how do you ensure they’re also supplying value?
Nearly half of workforce spending is on contingent labor, and the proportion is still growing. These workers were once brought in to help on a short-term or project-by-project basis if your team was overloaded. But today, your contingent workforce is no longer a contingency plan. Rather, it’s a fundamentally different approach to staffing that requires a new outlook.
You must understand the performance of contingent workers to ensure a good return on investment (ROI). Managed service providers act as the facilitator who manages all or part of their client’s contingent workforce program.
An analytics platform will make certain you receive value from your contingent workforce program. For example, Sapience trasparenSEE tracks key metrics to give insight into a contingent worker’s workday. It serves as a powerful insurance policy to maximize the value you achieve from your workforce investment. Who doesn’t want to protect their contingent workforce investment?
The Cost of Partnering with a Managed Service Provider
Given the difficulties of handling a contingent workforce, more and more companies are turning to an MSP. Managed service providers have the skills and experience to organize contingent labor and navigate any complexities.
Rather than your Human Resources (HR) department having to manage multiple independent contractors, an MSP streamlines the process. Its comprehensive solution includes both hiring and supporting contingent workers. As such, an MSP brings economies of scale and greater efficiency. The question is how much is that costing the company?
Visibility ranks among the biggest challenges of working with an MSP. You’ll have some information on spending and output, but it can be difficult to see what’s happening in between. That’s where analytics will come in. There are two distinct cost models:
Supplier (Vendor)-Funded Program
This approach presents no direct costs to the client. A percentage of invoices billed by the resource supplier is reserved to cover the management cost of the MSP program. This ensures that the supplier can maintain a predictable payment structure to the MSP. Keep in mind, the supplier-funded program means that the MSP is paid based on the supplier invoice. The supplier invoice is based on self-reported work time. There is minimal motivation to improve timecard data quality
Unlike the Supplier-Funded program, the client pays a fee to their MSP. Depending on the agreement, the charge can be fixed or variable. Some companies prefer the client-funded model because ultimately it could be more beneficial because it ensures suppliers deliver a higher quality of talent more quickly.
With either model, there are advantages and disadvantages. What is a common theme is the lack of visibility you as the client may have to actual work being done, which impacts your costs.
Steps to Drive Value with Your Managed Service Providers
When you work with an MSP, one of the hurdles is to align expectations. The MSP won’t necessarily hold itself accountable to confirm the time invoiced matches with the time worked. So, you must find a way to measure performance. Sapience offers a solution that allows you to understand work effort and confirm timecards before approving for payment. The right metrics and the right analytics platform can help ensure the MSP works for your needs.
1. Establish Metrics Measuring the Success of the Contingent Workforce Program
You can only manage what you can measure. Using smart metrics is crucial to keeping track of your contingent workers. Then, you can assess the success or failure of various parts of the program.
Regardless of which metrics you use, it’s smart to measure results with analytics technology. Sapience transparenSEE automates data collection for faster and more accurate measurements of your contingent workforce.
2. Leverage an Advanced Analytics Platform to Ensure Value from Your MSP
Sapience’s platform offers straightforward, customizable dashboards to show you what’s really happening with your MSP investment, integrate with your vendor management system (VMS), and connect to other systems through an application programming interface (API).
The actionable data will tell you how many hours of work are getting done. As a result, you’ll have the evidence you need to make more efficient decisions about personnel matters. This objective understanding enables more accurate and fair reporting that will save you money.
Evaluate Managed Service Providers with Sapience
What makes you think companies supplying your external labor can control and govern the timecards your business receives? Their economic models are dependent upon highly billable resources.
Working with an MSP has numerous advantages. It takes care of the logistics while providing qualified experts to supplement your staff. While managed service providers specialize in contingent workforce management, that may be insufficient to ensure you derive maximum value from the relationship.
You can track managed service providers with analytics from Sapience. The data-driven insights will increase efficiency and ROI while ensuring both accountability and transparency.
Contact Sapience for a free demo today. By optimizing your contingent workforce, you’ll see improved costs.
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