HRO Today September 2019 - 70

HR Tech
An Alternative to
Vendor-Neutral MSP
Pairing a VMS with a traditional MSP-and its many benefi ts-is now
possible for organizations with lower spend.
By Brandon Vogel
Consider this scenario: An organization and a handful
of other vendors are sharing a client with an established
budget. Each vendor gets a small piece of the pie-
enough for them to stay interested, but not enough to be
truly invested.
This type of scenario is happening in the world of
contingent workforce management when companies
with less than $30 million in annual spend engage in midmarket,
vendor-neutral managed service programs (MSPs).
Financial modeling indicates that this type of approach is
not sustainable.
For example:
Low-volume, vendor-neutral MSP budget = $20 million
Average MSP fee = 3 percent
Typical MSP provider earnings (after costs) = 1 percent
The very nature of the program prevents MSP providers
from helping organizations make the most of their
resources from an overarching strategic perspective.
[70]
HRO TODAY MAGAZINE
| SEPTEMBER 2019
Instead, what results is a barely profi table program,
yielding under $200,000 annually. These kinds of programs
are transactional in nature and offer the most basic levels
of support and engagement, providing little value to the
talent function and overall organization.
The unfortunate impact of this on an organization is a lack
of MSP provider service, investment, dedicated resources,
and innovation. In this situation, the organization and
talent experience are compromised and the overall
adoption and success of the program are in jeopardy.
An Alternative Approach
In recent years, companies with smaller contingent labor
spend have begun to see the value of capturing and
managing this spend using a vendor management system
(VMS) combined with an MSP. There are many benefi ts to
be realized from this trend, including:
* process control through defi ned workfl ows;

HRO Today September 2019

Table of Contents for the Digital Edition of HRO Today September 2019

HRO Today September 2019 - 1
HRO Today September 2019 - 2
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