How Do MSP Workforce Solutions Cut Costs and Promote Cost Savings?
Managing contingent labor is very different from managing HR for full-time workers for several critical reasons. Your organization may be leaning on contingent resources to address cyclical or seasonal peaks and valleys, have a periodic need for talent in specialized areas, or you have frequent short-term staffing needs that would not be appropriate to fill with full-time workers.
Whatever the case, it can be complicated to manage multiple specialized staffing vendors and the budgeting process that goes with it. In any of these cases, a Managed Service Provider (MSP) can be the solution you need to capture cost-savings when managing contingent workforce resources.
Managing contingent staffing suppliers is typically not a core competency for many organizations and can significantly drain HR departments’ time and resources. This leads to inefficient use of labor and man-hours dedicated to this parallel HR process.
This inefficient use of labor is why so many contingent workforce programs leverage the power of MSP services. MSP workforce solutions have proven effective at delivering the needed expertise while keeping associated costs in check. Here are the two main ways MSP workforce solutions drive savings:
MSPs typically deliver hard cost-savings of up to 15 percent by increasing hiring efficiency and reducing fill times for open positions. The spend visibility enabled by an MSP service helps ensure you’ll pay suitable market rates for talent sourced by the program. These days, many companies engage contingent labor to fill a quarter of their workforce needs. So hard cost-savings can represent a significant number.
Using an MSP for contingent labor management also has many soft cost-savings benefits. Not least of which is an estimated 10 percent in overall workforce management administrative spend derived from the reduction in procurement, HR, and management activity experienced by organizations leaning on MSP workforce solutions. An MSP also helps reduce employment-related costs by lowering turnover rates and overtime expenses through more experienced management of contingent resources.
Greater visibility captures other notable soft cost-savings benefits and control that an MSP delivers to its customers. Typically, an MSP helps clarify staffing vendor usage and performance while improving hiring and management processes and workflows, improving overall workforce management operations.
At the same time, the MSP for contingent labor ensures consistency in quality, service, performance, pricing, and terms while providing one consolidated invoice for all the services provided.
See Other Benefits of MSP Workforce Solutions
SIA research suggests deploying an MSP for contingent workforce management can save a client company as much as 20 percent overall on contingent staffing and placement fees when compared year-over-year to operations without an MSP solution.
If you’re ready to discover how to capture all the savings mentioned above and more by implementing MSP workforce solutions for your organization, we can help. Set an appointment today to discuss options with a nextSource MSP expert.