“The scope of the MSP has expanded. Customers are looking to the MSP today to manage their independent contractor risk mitigation efforts.”
— Cam Moeser, vice president, Midwest Region, Superior Group, a provider of workforce solutions and outsourcing around the globe.
In the last year, the buzz was about statement of work (SOW) consultants; companies wanted their managed service provider (MSP) provider to oversee SOW consultants. That buzz has not gone away, but it has evolved to include ICs as well.
For instance, prior to an IC being allowed to start an assignment through a vendor management system (web-enabled tools often engaged by customers to streamline the management of their MSPs), customers want their MSP provider to “evaluate that IC to determine that he or she is in fact a true or bona fide resource,” Moeser says, “and, if they are, then the MSP provider establishes the agreement with that IC, typically aligning it under a statement of work agreement.” In the event the MSP provider deems the worker not to be a true contractor, their employment is routed through a staffing firm and overseen by the MSP provider.
There are a number of reasons that customers are moving in this direction. “They would rather have one service provider delivering a broader range of services. Also, the IC is often a one-person company providing a particular service, so it makes sense that it falls within the purview of the MSP,” says Moeser.
And it’s not because it’s more cost-efficient for the MSP provider to manage the compliance program. It makes better sense for the buyer of staffing services to have one point of contact—the MSP provider—for all non-employee activity. After all, the MSP provider guides and is responsible for vendor productivity. This includes engaging new vendors and monitoring certificates of insurance. Because the MSP provider monitors performance, so it’s only natural to have the provider also administer contracts with the ICs. It’s about convenience and leverage.
The fact is that before the MSP, suppliers were often not being most effectively managed. Inefficiencies and increased costs resulted from one companies maintaining numerous supplier relationships for the provision of candidates for the same skill sets at varying rates. Today, a similar situation can be seen with SOW vendors and ICs. So it makes sense to restructure the process and rely on the MSP provider’s expertise, Moeser asserts.
And for those companies that don’t have an IC risk mitigation program as part of their offering, Moeser recommends partnering with companies that do. At the same time, he warns buyers not to abdicate all responsibility. “They should diligently watch over the financial stability of the MSP provider. Always make sure you are receiving best practices/market intelligence and that the program continues to evolve as your needs do,” he says.