The pitfalls of DIY MSP: in-house vs outsourced workforce management

When it comes to in-house vs outsourced workforce management, each approach has its merits. Technically, smaller Managed Service Provider (MSP) programmes can be managed internally, particularly if the organisation has a sizable talent acquisition team – and many decision makers feel like they retain a greater sense of control over a programme by keeping things in-house. However, there are challenges that come with homemade MSP. These are some of the most common pitfalls associated with ‘do-it-yourself’ managed service programmes.

Programme stagnation

Many of the clients we speak to admit that programmes can get stagnant when MSP is managed internally. This is inevitable when you consider that the team is focusing heavily on tactical and operational tasks, and prioritising getting the urgent needs filled. They reach a status quo, and it’s easy to get stuck in a rut. 

In my experience, levels of innovation are also usually lower when MSP is managed in-house. This is presumably because the view of the wider workforce that internal practitioners have, through no fault of their own, is limited to the current challenges they face. An external provider, on the other hand stays abreast of emerging trends – and can consequently move quickly to disseminate fresh ideas across their client base.

You’re sitting on your own island

Internal talent management professionals have limited visibility over the wider market, and this doesn’t just impact levels of innovation, it also means that stand-alone programmes don’t benefit from the wider advantages that the networks of an external MSP bring.

If you are running a ‘DIY MSP’ you have autonomy and a level of control which you may feel comfortable with – but you are also sitting on your own island.

With a DIY MSP programme, it’s likely that you won’t have the extensive support network or power needed to keep ahead of the curve and react accordingly when it comes to issues such as incoming legislation and other external factors that may influence your programme positively or negatively. You’re unlikely to have the bandwidth to focus on factors outside of your peripheral vision that will impact your business until much too late – resulting in a rushed, reactive approach that is exposed to a number of risks.

A large MSP provider, managing billions in spend for a multitude of clients, on the other hand, has its own experts with specialist skills as well as a tight network of staffing suppliers, industry partners and tech providers. At Guidant Global, managing over 130 programmes globally and have 20 years of experience – the level of reach we have in the market is unrivalled. What’s more, no two clients or programmes are the same: we’re working across neutral vendor, master vendor, statement of work and tiered supplier networks and, as a result, are perfectly placed to advise on the best way to structure your programme.

Furthermore, MSP design, implementation and management is also more detailed and dynamic than many decision makers imagine. It touches every part of an enterprise that uses contingent labour – and if you make even the smallest of mistakes, it creates ripples. Managing contingent workforce in this way is comparable to enterprise resource planning (ERP). It involves change management, coordination, and communication.

It’s complex: a project plan is typically 400 line items when you build an MSP from scratch – it can be unfair to burden one or two people with such a challenge. And that is before you even consider who’s available and qualified to step up to the plate when your ‘DIY MSP’ team is impacted by annual leave, unexpected absence or a key player handing in their notice.

Questions around funding

When managing MSP in-house, it’s crucial that you consider – and agree, whose budget the DIY programme will fall under, not only at implementation stage, but also into the future. If you’re setting up a DIY MSP programme, ask yourself, how will it be funded? What is the budget? And how will ongoing costs associated with the programme be covered?

Bear in mind that every time you make a change or expand the programme, the cost of updating your VMS technology could be significant.

Most MSPs in the US and UK are supplier-funded with very little to no out-of-pocket cost to the client. An MSP also has resources to make changes to your programme as need dictates - where no extra budget is needed.

Access to technology – and data

When running an MSP programme in-house, it can be expensive to licence the technology you need to compete for talent. There are some great commercially available tools which can help map the market and benchmark salaries – but they come at a cost.

Partnering with an external MSP, on the other hand, gives you instant access to valuable data which can be harnessed to power your own programmes. Here at Guidant Global, for example, we work with over 2,600 suppliers – and each of our clients has a subset of partners which is curated just for them based on need. We laser-target the suppliers that are doing a good job and recommend others that specialise in sourcing a specific type of worker or resources within a specific geography as your business grows and develops.

We place everyone from rocket scientists to picker/packers – and depending on your needs, we recommend the best staffing suppliers based on hard data.

VISION is Guidant Global’s interactive platform for assessing supplier performance. Using Microsoft Power BI and data from the clients VMS technology, VISION takes programme visibility to the next level - giving our customers the insight they need to make better, data-driven decisions about their workforce suppliers. It pulls real-time information on thousands of recruitment suppliers across hundreds of workforce programmes - past and present, and from all over the world - in a way that can be sliced and diced however you please.

This means our customers have a wealth of information at their fingertips, which we can use to make informed decisions about who should supply the talent they need. This technology is also useful for firms looking to boost diversity. Our technology, for example, can be used to identify LGBTQ+ owned suppliers, suppliers which specialise in placing military veterans, or those which successfully fill flexible shifts.

Compliance challenges

There are always risks where talent management is concerned, however this is something that is not given enough attention by those implementing their own internal MSP programmes. 

A specialist, external, MSP provider has a team of lawyers and compliance experts who are continually monitoring legislation – and the insight of these experts can pay dividends, especially if you’ve a large programme, a global programme, or you’re managing lots of different labour categories. Your MSP’s legal team offers an extra layer of protection and are always on hand to review policies –even job descriptions - to make sure that everything is as it should be. Of course, some DIY MSPs may benefit from the help of great in-house legal teams.

However, some corporate layers might not have the same level of watchfulness or deep expertise to offer the support which is required in this area.

Addressing common MSP myths

When it comes to working with an external MSP, there are several common misconceptions that can crop up:

You lose control with an MSP – Some organisations think they lose control if they outsource to an MSP – that’s not the case. Think of the MSP as the ‘operators’ – we do the day-to-day work, but the client always makes the final decision. Thanks to advanced technology, today’s MSP solutions enable your business to retain real-time visibility and full control of the recruitment process, while still enjoying all the benefits that working with an external specialist brings.

MSPs can be expensive – Staffing suppliers enjoy many efficiencies that an MSP provides, and their cost of doing business decreases when working with an MSP. As a result, few clients experience rate increases during implementation. As a matter of fact, the vast majority of first-generation MSP clients enjoy cost savings once an MSP is implemented.

An external MSP will dilute EVP, culture, or brand – The best MSP providers will help your business to define its value to potential candidates. With experts solely devoted to creating employer value proposition (EVP) creation and employer brand strategists within their ranks, MSPs can effectively market your business to candidates – even in difficult, traditionally challenging industries.

In-house vs outsourced workforce management: what’s the verdict?

It’s worth noting that many successful internal programmes started as external programmes – which is something that needs to be considered if you’re looking at MSP for the first time. 

When choosing whether to develop your own ‘DIY MSP’ or engage an outsourced provider, there are lots of things to consider. An external MSP leverages unrivalled staffing experts who have the knowledge, experience and the tools to manage best-in-class, strategic workforce programs that drive true business value. 

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