What Is an MSP in Staffing & What Does It Mean?

Graphic with man standing in background selecting from a hologram menu with MSP written across

From advancing your company culture to enhancing productivity, creativity, and customer relations, your workforce is integral to your success story. However, building a winning team requires a purposeful recruitment strategy. You should also adapt to the changing talent landscape as your business evolves. That includes tasking your workforce administration to a managed service provider (MSP). So, what is an MSP in staffing and why is it worth your while?

Cracking the Code: What Is An MSP In Staffing? 

A managed service provider is an external organization that supervises a client company’s recruitment efforts. MSPs comprise dedicated program managers who collaborate with your company to source and manage temporary workers through your preferred staffing agencies.

When researching what is an MSP in staffing, you’ll probably come across the term Vendor Management System (VMS). This is a software that facilitates seamless data exchange between MSPs, recruiters, and your company. A VMS can help with:

  • Temporary requirements distribution
  • Collection of candidate submissions
  • Scheduling interviews
  • Billing
  • Processing job offers
  • Assigning timecards

The Problem with Traditional Hiring

Companies prefer traditional recruitment for several reasons. For starters, in-house talent management leverages your organizational skillsets to provide direct control over hiring costs.

Moreover, internal teams understand your company’s culture and talent needs to ensure that shortlisted candidates are a perfect fit. It’s also easier to make decisions and maintain confidentiality for sensitive roles.   

However, traditional recruitment has its setbacks:

  • Limited specialized knowledge: Recruitment requires a deep understanding of the industry and market trends. Traditional staffing involves rigid processes, making it hard to adapt to the changing technologies and job market expectations.
  • Inconsistent processes: Personal biases may cause inconsistent candidate evaluations, affecting the quality of hires. Additionally, traditional recruitment relies on interviews, references, and resumes, which provide shallow information about an applicant. This approach is also prone to miscommunication, causing misunderstandings between interviewers, candidates, and hiring managers.
  • Reduced cost control: Employers might have to engage different staffing agencies to fill various positions. Although you enjoy a wider talent pool, this decentralized approach makes it difficult to consolidate recruitment costs. Dealing with multiple staffing providers also reduces your bargaining power for cost-effective terms, as each agency has its own pricing model.

The Role of MSP in Staffing 

Savvy organizations realized they could address the aforementioned challenges by outsourcing the staffing process to agencies. A third-party recruiter can help with the following roles:

  • Obtaining client requirements and delivering them to recruitment agencies
  • Streamlining candidate selection and onboarding
  • Timesheet collection, approval clearing, and paying recruitment agencies
  • Using periodical scorecards to manage supplier performance

MSPs originated from staffing agencies, explaining the similarities in their operations. But although these entities help with talent placement, they are not the same. The first difference is in the scope of their services. While staffing agencies only match candidates with specific roles, MSPs manage your entire contingent workforce, including independent contractors and candidates from different staffing agencies.

Additionally, MSPs provide a holistic staffing approach, from supplying talent to workforce planning and providing analytics. This is unlike staffing agencies that only focus on staffing needs for specific roles and projects. Furthermore, managed service providers maintain long-term relationships with organizations for ongoing talent needs while staffing agencies focus on project-specific needs and filling immediate roles.    

How Can an MSP Improve Your Staffing?

Employers with in-house hiring managers may wonder what is an MSP in staffing and why they need one. Even if your recruitment system is running smoothly, ask yourself, “Is my contingent labor quality worth the investment?”

Here’s how your organization will benefit from a managed service provider:

Cost Savings

MSPs use advanced tools to screen resumes, conduct assessments, and organize candidate information, saving the time and cost of repetitive tasks. Additionally, they can recommend candidates from their pre-qualified talent pools instead of incurring the expense of hiring from scratch. Managed service providers also support scalability—rather than maintaining a redundant in-house team, MSPs supply talent on demand to keep up with the seasonal labor demands.

Improved Governance and Compliance

The provider will assess your current recruitment strategy and its risk potential. They will then assign compliance experts to implement staffing best practices to avoid the legal consequences and reputational damage associated with violating employment laws.

Greater Access to Talent

Vendor management systems have an extensive pool of contract workers with detailed information about their past roles and skills. This way, you access the desired talent within the stipulated timeframes without sifting through multiple job sites or undergoing tedious vetting processes.

Does Your Organization Need an MSP Staffing Solution?

Now that you have an idea of what an MSP in staffing is and the value it brings to your organization, let’s discuss whether you need this workforce solution.

Because a self-sufficient program requires a volume threshold, MSPs often ask for a minimum contingent labor spend from employers.

The following questions will help you determine whether an MSP staffing solution works for your company:

  • Is our in-house program for managing temporary staff expenses effectively maintaining cost control and minimizing potential risks?
  • Do we possess a thorough procedure for evaluating and assessing providers of talent services?
  • In what ways are we, or are we not, guaranteeing adherence to expenditure policies?
  • Has our company implemented a strong vendor management system (VMS) to attain reporting functionalities and clarity on expenditure?

If your company’s internal workforce program lacks any of these, you’ll likely benefit from partnering with a managed service provider. You can establish your needs by evaluating your company’s objectives and whether your in-house staffing program can achieve these goals on time and within budget.

Speak to an MSP Expert

An MSP guarantees access to efficient, consistent recruitment processes that can stand the test of time.  nextSource understands your unique staffing challenges, from administrative burden to the need for specialized skills. Rather than offering a “one size fits all” solution, our efficient strategies land you the right talent while cutting costs and ensuring compliance. If you still have questions about what an MSP in staffing is or want to leverage the power of this recruitment strategy, don’t hesitate to connect with us today.

More Articles