To Manage or Not to Manage, That is the Question: How to Decide Whether to Internally Manage Your MSP Program


If you feel challenged by the need to select a Managed Service Provider (MSP) along with your vendor management system (VMS), you’re not alone. The whole lengthy exercise of vetting various vendors to assess their capabilities, watching their presentations and demos and checking out the references they provided could all prove worthwhile when you need to have an external MSP.

Here’s a thought: Have you verified whether you can internally manage your MSP program?

Of course an internally managed program brings with it a different set of challenges. But in either case, driving adoption should be an important consideration. Though few share the details of the travails of what they faced when making such a decision, we’ve put together a consolidated set of points that should help you narrow down your decision.

To manage or not to manage…

In both internal and external management, some preliminary steps are required:

  • Develop a shared internal view of the strategic importance of the program and the results expected, in an initiative involving all the stakeholders.
  • Evaluate the levels of your current spend and check if you have any issues such as co-employment and misclassification.
  • Have at least three shared goals which are important to everyone. Decide the metrics that would qualify the program as a success, then decide on a timeframe that you want to see these results achieved.
  • Choose the program’s sponsor, whose involvement in the program will be essential to identify any concerns, smooth out the processes, remove any obstructions, engage everyone and keep all parties focused on the importance of the program and the benefits expected of it.
  • Ensure that your supply base is incentivized to participate in the program and that their interests are protected.

Remember that the program could still falter if the roles and responsibilities of the participants are not well-articulated, if there is resistance to the program that’s not identified and handled appropriately or if there is the unavailability of critical business data or incomplete data.

Internal MSP

Here are a few reasons and contexts in which you should use an internal Managed Service Provider:

  • All you need to run your contingent workforce program is some assistance in administering the processes, a little help with processing requirements and the automation of your workflows.
  • Your team is familiar with the total use of temporary workers, aka blended workforce, in the organization.
  • You want to minimize the dominance of a single supplier and have a number of suppliers in the mix.
  • You do not want the efficient management of your existing relations with your suppliers disrupted by the inclusion of an external MSP in the mix.
  • Contingent workers are not a strategically important component of your workforce.
  • Your program administrators are highly capable and understand the nuances of utilizing a blended workforce. They’re aware of labor legislation, labor market conditions and the dynamic changes in the technological offerings of vendor management systems and can operate the VMS without much support. They have the capabilities required to arrive at strategic insights encompassing the program and its environment.
  • You can commit internal resources to manage the program and can easily scale up. This may require further hiring, involving more costs and delay in productivity until the right resource is found, while any attrition could temporarily derail the processes.

External MSP

  • You need a vendor to come in and ensure that the program is implemented across the enterprise to meet your objectives, while freeing up your internal resources to attend to other pressing work while increasing program participation and reducing rogue spend.
  • Your contingent workers are strategically important to your overall workforce deployment, and an MSP would prove essential to help you manage your talent supply chain, bring in strategic inputs, establish risk mitigation measures and provide you with access to a network of staffing vendors with whom they negotiate better rates on your behalf.
  • Your MSP trains the suppliers and monitors their performance to derive a high quality performance.
  • They have expertise to ensure your regulatory compliance, ability to navigate the labor market conditions and is knowledgeable about advances in the VMS technology space.
  • Their industry knowledge and strategic inputs come to you at a range of pricing options, and can come at no direct cost to you if the program is supplier-funded, and a management fee will be linked to spend under management.
  • They offer highly scalable services which do not involve any additional costs, even if you scale up your requirements. There will be no time lag in increasing the resources attending to your program.

After all these considerations, there is one non-negotiable requirement before you even consider the option of running your MSP program: You must have a high level of confidence in the ability of your internal resources to manage an impeccable program that is religiously compliant with regulatory requirements to avoid misclassification charges and co-employment claims.

This post was provided by Ozzie Myers, EVP, business development, originally published on DCR’s blog on February 17, 2017.

Ozzie has more than 30 years of experience in human capital management as an expert in Managed Service Providers and vendor management systems for the non-employee workforce. With a focus on strategic solutions by analyzing client pain points and issues, he has achieved results-oriented first-in-class programs.

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