Why the MSP for External Workforce Management Has Become a Standard Business Practice


A full 65% of executives responding to a survey by SAP Fieldglass say that the external workforce is essential to their organizations’ ability to operate at full capacity. Nearly half of respondents reported they’d be unable to conduct business as usual without it! If nothing else, these results underscore the extent to which the contingent workforce has become standard operating procedure for all modern businesses.

Whether it is in pursuit of new product development, increasing speed to market, accommodating rigorous market demand, increasing organizational agility, managing costs or reducing risks, between half and two thirds of the more than 800 executives polled confirmed that the external workforce is integral to success.

While the larger organizations may have sufficient resources to effectively manage the myriad of tasks and processes associated with external workforce management, many small to mid-sized concerns simply do not. Attempting to field and manage an external workforce without sufficient in-house expertise and support can be almost impossible to achieve without running into serious challenges. Whether this means incomplete compliance protocols risking costly penalties, poorly negotiated rates leading to budget overruns, errors in tax reporting and benefits administration or a host of other negative outcomes, the fact remains, external workforce management is complex and fraught with challenges. For all but the largest organizations, effectively managing an external workforce in tandem with the full-time workforce can easily bog down and overwhelm limited internal HR resources.

Enter the contemporary Managed Service Provider (MSP) solution provider. The MSP solution provider brings to its customers, all the personnel, expertise, experience and infrastructure needed to source, field, manage and monitor today’s complex external workforce. MSP providers are practiced at working in partnership with internal HR departments to provide all the benefits of an external workforce while ensuring none of the common difficulties drag down the overall performance of the organization.

Today’s leading MSP providers offer an outsourced solution delivering everything a mid-sized organization needs to succeed in managing an external workforce. With deep expertise in the services supply chain, MSPs are celebrated for their ability to effectively negotiate rates with staffing suppliers to ensure costs stay under tight control. They’re also invaluable for protecting their customers from every changing regulatory mandates like proper worker/independent contractor classification, co-employment rules, healthcare and benefits administration/reporting, and tax laws. Some MSPs even offer employer of record (EOR) services which some customers engage to further protect themselves against labor law infractions.

The cost of outsourcing of external workforce management to an MSP is offset largely by the cost of staffing the organization’s own HR and workforce management departments. Because many MSPs are vendor funded (at least partially), the costs of outsourcing can be less than the cost of hiring extra personnel in the internal HR department to manage the process.

So sum it up, engaging an MSP for external workforce management increases the probability of success, avoids costs through strong risk mitigation and supply chain management processes, saves money on rates and internal HR staffing costs and enables the small to mid-sized organization to compete more equitably against its much larger competitors.

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