Subadhra Sriram's Blog

MSP Usage Trending Down

There has been so much hoopla around MSP usage. I, among many others, have recently blogged about the insource/outsource debate. And here’s more fuel to add to the fireworks. Recent Staffing Industry Analysts research indicated that MSP usage has trended down. Additionally, the majority of our 2012 Buyer Survey respondents -- contingent workforce managers in companies with 1000 plus employees — indicated that that MSP implementation is not a priority.  Only 14 percent said it was significant.

What does this statistic mean? There are two schools of thought on this. Jon Osborne, SIA’s VP of research and editorial, opines that “We know from our surveys that as spending goes up, there is a sweet spot for MSPs in the mid-range, which is followed by a decline in penetration among the largest-spend buyers.”  But he believes that as programs increase their CW spend, it may make better sense to manage it in-house with the help of a VMS. If the CW program involves huge sums, companies want control and don’t want to have to deal with an intermediary — the MSP. The VMS helps get the company the required visibility into the spend. There are managers who buy into Osborne’s observation.

The other perspective is that these large CW programs have been managed by an MSP that deals with a program office. The program office (maybe just 1 to 2 people) has gained in expertise over the years and feels it can handle the management in-house.  Why continue to outsource when you can take over the management of it yourself and maybe save money?

Do you think MSP usage is trending down? Tell us your views in the comments below.

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ShiftWise

Jeff Niles 10/30/2012 10:52 am

I can only comment on the hospital and healthcare space where MSP usage is certainly trending down. As the demand for contingent resources shifts away from hospitals to a more dispersed model of delivery, the need for a program office diminishes greatly. A competent recruitment department, working with field managers can accomplish all of the tasks of an MSP but without a third party intervening. In addition large providers are recognizing that corporate control over compliance and costs is mission critical and MSP programs typically are driven to maximize temp utilization to increase profits. VMS direct provides more opportunity to achieve outcomes of lower costs in overall compliance.


Monument Consulting

Brad Cummings 10/29/2012 02:34 pm

We appreciate the coverage on the MSP industry - thanks. There are sorta two topics above - 1) is total spend handled by MSPs decreasing, or 2) is the percentage of companies using an external MSP decreasing? I believe SIA is saying the latter, but from comments here & in the earlier post it is a tad unclear. If the latter, the surveyed population is the 2012 Buyer respondents. I would love a clear definition of that population - if that is largely big consumers of contingent labor and largely early adopters of MSPs/VMSs, I guess I'm not totally surprised. However, let's not throw the MSP baby out with the bathwater - if this is 'large companies,' then let's instead say externally run MSPs market share is decreasing among 'large companies.' That's a different message than 'MSP Usage is trending down'...

Thanks for your extensive coverage around MSPs...keep up the great work!


Total 2 comments


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