About 40% of the U.S. workforce is comprised of contingent workers, which consists of temporary contract workers, freelancers, independent professionals, and independent contractors or consultants. This percentage of the workforce is forecasted to expand in the short-term. In fact, 42% of U.S. executives expect to use more contingent workers in the next three to five years.
Corporations are using temporary workers in more significant roles across the enterprise and realize that it's more effective to incorporate contingent workers into their culture similar to full time employees. To turn to the perspective of the worker, these career paths are becoming an increasingly attractive option, particularly for the best workers. No longer are they tied to one position for multiple years. They now have the freedom and flexibility to choose who they work for and for how long. Corporations thus can make themselves attractive to these in-demand individuals - and thus gain a competitive advantage in the war for talent.
But it has challenges, too. These include compliance with federal and state tax laws, federal and state labor laws, sourcing top talent, and managing visibility and cost throughout the enterprise. How do companies adapt and manage the complex compliance landscape as well as transition to the changing profile of this new workforce? A greater percentage of companies now rely on some form of a MSP. A MSP is used by a company to manage its contingent labor processes. They are responsible for handling the talent acquisition process, including on-boarding and off-boarding, and overseeing vendor compliance and effectiveness.
More often than not, organizations will utilize traditional methods of acquiring talent through greater usage of staffing firms. However, many HR and Procurement executives are recognizing a major paradigm shift that is underway. Traditionally, companies would use one staffing firm to manage the contingent workforce. Organizations would tap one firm to source and manage their contingent labor program. That naturally led for the MSP to favor their own staffing services, resulting in missed opportunities to source the best talent. In some cases, using a staffing firm as an MSP meant a lack of enterprise visibility, as well as higher costs. More sophisticated MSPs are involved with total workforce planning and demand management.
A new best practice has emerged: A purely vendor-neutral and integrated MSP and VMS model. A pure vendor-neutrality exists only when the MSP and VMS provider have no staffing capability whatsoever; they possess no financial affiliation with a staffing provider. That results in the best talent being provided at the most market-competitive rates. It requires suppliers to compete for each requisition on a level-playing field, which drives the maximum value for an organization. The results achieved within these programs that adopt this model are often compelling. There is strong evidence that an integrated MSP/VMS model produces a more successful contingent labor program.
When technology and service providers are completely aligned, they can achieve program stabilization sooner; communication challenges between separate providers are non-existent, and critical business decisions can be made faster. This directly results in greater program efficiencies, better cost-control, and a more clearly defined risk mitigation strategy. Buyers concur. Eighty-two percent of companies surveyed by Bain & Company indicated they prefer an integrated, one-vendor approach when managing their contingent workforce.
Ben Rustarian, CEO with The Fountain Group, says this about a purely vendor-neutral model, "The Fountain Group placed a major focus on the vendor neutral VMS/MSP model in 2006. The concept of a having positions distributed/coordinated by an MSP from a client was embraced by leadership as the future of the Staffing Industry. The Fountain Group was met with many obstacles, with the largest issue being the need to decipher between 'true' vendor neutral MSP programs and 'labeled' vendor neutral programs. The Fountain Group experienced working with 'labeled' vendor neutral programs many of which basically had hidden rules that negated the vendor neutrality of the program. We discovered in some instances that the MSP was owned or closely affiliated with a competing staffing firm which is a conflict of interest. The Fountain Group has learned to distinguish a 'true' vendor neutral MSP through years of working with mostly all MSP in the industry. The Fountain Group can honestly state that PRO Unlimited is a 'true' vendor neutral MSP from our participation on multiple clients programs and considers PRO Unlimited to be one of the premier providers in the Staffing Industry to date."
Similarly, executives at Novartis, a global healthcare company, describe their positive experience, "At Novartis, prior to our current vendor-neutral model, we used a staffing agency model in the capacity of a MSP to source and acquire contingent workers across many of our US locations. However, it was difficult to convince our managers that a staffing firm was equipped to address their complex sourcing needs. As a result, we found a significant amount of contingent labor spend circumvented the managed services program, and it was very difficult to control rogue spending.
"We conducted an assessment of our contingent workforce management program due to these concerns. At the end of that process, we determined the best solution for us was a purely vendor-neutral and combined MSP and VMS partner. We realized this approach was critical to secure the best talent possible and satisfy our managers' rigorous contingent labor requirements. This strategic decision has achieved the following:
Secured the best talent to support our different disciplines
Leveraged our top suppliers to source talent
Assigned practitioners on site to help manage and oversee our contingent labor program
Met or exceeded year-over-year savings expectations since deploying a purely vendor-neutral model
Overcame 'the fox running the henhouse' objection
"This dramatic shift in the way we think about and manage contingent labor workers has inspired commitment and belief in the current model. Through this program, Novartis has improved operational efficiencies and mitigated risks while engaging the most highly qualified and cost-effective contingent labor talent. We have been very satisfied with the selection of a purely vendor-neutral program model to address our contingent workforce management needs."
An integrated and purely vendor-neutral model makes a tangible difference both operationally and in terms of business value. When MSP and VMS solutions are consolidated underneath one roof, the vendor-neutral provider can develop a deeper understanding of the business. Synergies develop, and they can optimize cost and quality.
PRO Unlimited, through its purely vendor-neutral MSP and VMS solutions, has helped F1000 organizations address the costs, risks, and quality issues associated with managing a global contingent workforce. PRO recognizes that sourcing the right talent has and will continue to remain a competitive differentiator for many companies. Buyers must ensure they are poised to capitalize on the opportunities the contingent workforce affords them. As companies employ contingent labor solutions to address current needs, considering new and more effective staffing and staffing management approaches such a purely vendor-neutral one is becoming a business imperative.