For traditional Managed Service Providers, change has never been high on the agenda. But the truth could finally be catching up with those providers who refuse to accept that the status quo in contingent workforce management is being overturned. The days of letting the supply chain take the strain while the MSP takes the profit are gone.
The days of visibility, transparency and personalised, client-centric program management with a relentless emphasis on continuous improvement are most definitely here – and here to stay.
So, if you’re an MSP who can’t handle the truth, maybe you should look away now.
Time for change
Contingent Workforce Programs are ripe for disruption. As the labour market continues to evolve, organisations are finding that traditional models no longer meet their needs. There are several reasons behind this:
The contingent workforce is changing
From fractional leaders to casual gig-workers, there is a bigger proportion of the workforce off-payroll than ever before. According to McKinsey, 36% of the workforce self-identifies as independent workers. This figure is forecast to continue growing through 2030 and beyond. In fact, in some large organisations, the contingent workforce is now larger than the permanent workforce.
Talent Acquisition teams face different kinds of challenges
In 2024, many Talent Acquisition teams are being asked to deliver the same standards of service to the business, even though they have reduced resources, smaller budgets and skills shortages to contend with. Those teams need an MSP that can operate as a strategic partner, not purely as a supplier.
New opportunities and sourcing strategies are available
It is not just the market that has changed. The tools that organisations and their managed service providers can utilise are changing too. Direct-to-talent strategies and talent community platforms offer the potential to engage with contingent workers in new ways.
Key innovations in contingent workforce management
In the current labour market, organisations can no longer sit back and expect the right talent to be readily available. Forward-thinking MSPs are therefore working with their clients to build more agile solutions that are more resilient and less one-paced. They need to be able to respond proactively to changes in business needs, adapt quickly when costs begin to escalate and find new ways to reach talent when traditional routes into the market fail to provide the best results.
The fact is that not every MSP can evolve and deliver a more innovative service to their clients. Entrenched ways of working, legacy systems and long-term contracts are holding many of the bigger organisations back when they should be driving real change through the sector.
What does significant change in the contingent workforce sector look like? To stay ahead, organisations must embrace several key innovations:
1. Direct Sourcing and Talent Communities
Building a direct-to-talent channel helps organisations reduce the cost of using agencies and potentially reduce the time-to-hire. There are also additional benefits in building closer relationships with contingent workers, such as building a bespoke talent community, strengthening an employer brand and enhancing loyalty amongst the contingent workforce.
2. Advanced Analytics and Marketing
Changes in technology have made it easier for organisations to run recruitment campaigns across different media channels. Running campaigns across LinkedIn, Instagram, Facebook, Tiktok and other sites such as Spotify can help to break the reliance on agencies and job boards and generate access to more diverse talent groups. Campaigns are easily trackable and adaptable, so organisations can manage recruitment spend effectively, build their employer brand visibility and have real-time analytics to hand to ensure that they are getting the right response.
3. Technology-Driven Solutions
Getting the right Vendor Management System in place is an essential component in a contingent workforce program. These technologies enable efficient talent matching, compliance management, and overall workforce optimisation. A VMS can revolutionise how organisations engage with contingent workers, by providing compliance checks, ensuring the correct classification of workers, driving process management and delivering a high-quality onboarding experience. Increasingly, the latest versions are using AI to help talent-match candidates with openings or to help drive a skills-based hire approach.
Conclusion
As competition for contingent workers rises, organisations must prepare, equip, and adapt quickly to stay ahead. It is all too often the case that current contingent workforce programs are not ticking these boxes.
At the heart of the issue is whether the bigger, more established MSPs can change their mentality and adapt to meet the challenge of a new generation of more agile partners. This shift in mentality is a move from seeing themselves purely as a supplier, to seeing themselves as a strategic partner and problem solver.
Are the big MSPs prepared to do more than passively manage the talent supply chain and hope that good quality candidates come through the system? Will they think strategically about how to reach the best candidates, build employer brand awareness and find ways to reduce costs?
In too many cases, and for too long, the answer has been ‘no’. But as a new type of service provider emerges, with a stronger, clearer strategic vision for how to help organisations build, manage and maintain their extended workforce, the truth is that change may now be inevitable.
