7 ways an MSP delivers contingent workforce cost savings
Joel Forrester

5 minutes

7 ways an MSP delivers contingent workforce cost savings

Sourcing, securing, and retaining contingent talent is a specialist job at the best of times, never mind in today’s talent-scarce market. That’s why many organisations choose to work with an experienced Managed Service Provider (MSP), who can ensure access to the quality and volume of workers you need in a more cost-effective way.

But how exactly is working with an MSP more cost-effective than traditional or in-house recruitment strategies?

Here are seven ways an MSP delivers contingent workforce cost savings.

1) Unmasking maverick spend

By implementing proven bill rate management methodology, maverick spend – where managers engage suppliers outside of your pre-established procurement policies – can be all but eliminated. A great managed service provider will ensure that the rate cards for particular roles, which sit within your VMS, are both stringently adhered to and based on up-to-date market research and benchmarking. 

This ensures your offering is competitive and compelling in the current marketplace, without being unnecessarily inflated by suppliers who may be more focused on securing their margins.

2) Eliminating invoicing inaccuracies

With traditional recruitment, invoicing inaccuracies can occur when different agencies and suppliers use different formats and fields. An experienced MSP will implement a best practice invoicing template and approval benchmark to make the payment process as streamlined and consistent as possible.

An MSP will also implement and oversee a simple yet robust process to ensure all invoices are managed in a consistent and compliant way with identical sign off and approval procedures at different pay rates and thresholds. This, in turn, ensures that every invoice has the same level of scrutiny and includes the same information. 

Without this solid framework in place, potentially costly errors can easily slip through the net. A company that has agreed a recruitment fee cap of 17% could quite easily be billed a little over that occasionally and not pick it up. Your MSP, and the technology they bring to the table, will identify these anomalies and resolve them.

3) Bringing precision to job classification

With the help of a cutting edge vendor management system (VMS), an MSP ensures that job classifications are accurately and consistently aligned to market rates to eliminate overspend in this area.

By making sure job descriptions and classifications are accurately benchmarked within the VMS – and that all roles are aligned to the correct job category and the right rate is aligned to each category – there is almost zero room for error.

This allows you to maintain consistency in reporting, management information and people data: you can see exactly where your spend is allocated, by date, job category or role. This transparency allows you to make more informed – and cost effective – hiring decisions.

4) Implementing process improvements

Every day that you don’t have the right talent in situ is costing you money. An MSP is measured against relevant SLAs and KPIs, designed to ensure that your hiring processes operate at maximum efficiency.

For example, without an MSP in place a hiring manager may say, ‘We have a role, I need to hire’ – and it may be two or three days before that need is acted upon. An MSP ensures that new requisitions are picked up and actioned immediately.

In addition to speed, getting it right first time is also important. MSPs are experts in delivering effective attraction campaigns, know where to find talent, and know how to advertise in the right places to the right people. This means hiring managers quickly get a shortlist of potential candidates – all of whom should be a good fit for the role.

5) Monitoring supplier profit

The technology an MSP uses allows them to keep a watchful eye over supplier profit and avoid unnecessary overspend. This includes keeping tabs on bill rates and contractor overtime hours so that any big spend with third party suppliers is eliminated or offset elsewhere.

High levels of overtime within a contingent workforce, for example, may indicate that the business needs extra resources to manage workload. Failing to recognise this in good time could be extremely costly – especially if overtime is charged at double, or even triple, time (as is often the case).

Supplier profit can also be managed through regular internal benchmarking to align fees charged by the same supplier and identify where discounts could be negotiated. Ideally, all workers from the same supplier should be charged at a standard rate, and margins should reflect the overall volume of workers provided.

6) Overseeing supplier usage

MSPs also provide superior supplier oversight so that operations can be streamlined, and the supplier headcount can be reduced. An experienced MSP will aim to minimise the use of the supplier population to improve processes and cut costs.

Ultimately, MSPs exist to make your resourcing operations faster, cheaper, and better. If they can offset any of your supplier workforce without detriment to the programme, that’s typically what they’ll do. In some instances, an MSP will identify a number of roles to take away from the supply chain and source ‘in house’.

Success here depends on the MSP’s ability to really get under the skin of a contingent workforce programme to see why decisions have been made, and understand how structures can be improved to increase efficiencies and reduce spend.

7) Running an efficient programme management office

An MSP takes on the burden of those time-consuming workforce management duties that your internal teams have been struggling with. By bringing this work in-house into a programme management office (PMO), your MSP can drive both cost-effectiveness and efficiency throughout the duration of any given project.

A PMO will also aid retention by ensuring your workers get paid the latest rates - helping to avoid the costs of replacing staff who leave for higher-paying competitors. Your dedicated PMO team will also continually respond to changes in your business and the wider market so that you always get the best value for your investment in contingent workforces.

Realising the value of contingent workforce cost savings

As we have outlined above, the cost savings that can be achieved by managing contingent workforces through an MSP come from a variety of areas – and each works together to ensure that your business gets the top talent at a great price.

Contact us to discuss your needs, and to hear some of the other ways that we can get you better value for money from your contingent workforce spend.

Workforce insights in your inbox

Sign up for our newsletter with the latest workforce management news, insights, analysis and more.


Suite 1403, Level 14
309 Kent Street
NSW 2000

United Kingdom

First Floor
Mulberry House
Parkland Square
750 Capability Green
Luton, LU1 3LU

United States

27777 Franklin Road
Suite 600
Michigan 48034

Part Of