Once a contingent workforce program matures, it’s natural for program managers to re-evaluate their vendors and programs to see if changes should be made to make them more effective. One option is whether it would be better to bring the managed service program back in house.
Some companies are eager to take this step, believing they have learned enough that managing the program internally will be a natural next step. Here are some of the many things that need to be considered before taking such a step:
- You have to consider the talent to run your program. If you think you can get by with a few coordinators to facilitate the transactions you are in for a rude awakening. It may be some months down the path but this will ultimately come back to haunt you. You have to employ professionals with expertise in this industry. You need a program lead who has done this sort of thing before. (Hint: A strong consideration for the existing team if they are good and you negotiate an exit package with their employer).
- Will this program sit in HR or procurement? Chances are the procurement team is driving the internal move, so if you happen to work in HR, you had better slide up to the table on this one because guess who gets busy when the lesser qualified coordinators take over — not to mention your internal clients you have talent management responsibilities for.
- Assuming you use or will be using a VMS tool, who will provide first-level help desk support? Who will be responsible for the training and writing user guides? These are critical elements, so you need to iron out this strategy early on. If you have a tool already, striking a deal with the VMS provider directly makes good sense. If you don’t have a tool but are looking to implement one, there is a lot more to consider. You will need to involve an implementation team, but you will likely not retain them after things are up and running. You will also need to decide if you host the technology internally or externally — again, on-going support will be required.
- What’s the goal of bringing this program in house? Is it cost savings? Is it to have control of the program? Is it just so you can say you run your MSP in-house? You need a plan and a strategy that includes something other than cost savings and you need to communicate that to all your stakeholders. If you are just looking at this in a transactional fashion, then move to the next bullet, but if talent strategy comes into question, this better be part of your strategy.
- Will your program remain competitive? Where will your benchmarking and best practices data come from? How will you know you are paying the best rates? IF you proceed, you should hire a team that has done this before (see bullet one) and align yourselves with a professional body of experts like Staffing Industry Analysts. You should consider having a periodic independent audit and evaluation of your program (your stakeholders won’t just take your word that you are doing a fine job).
- Involve internal resources. IT, legal, finance, accounting, HR (if you sit in procurement and procurement if you sit in HR) will need to be apprised of what you are planning to do. Having done this before, I can say first-hand this takes more bodies than just the program team. You will need to engage them and make sure they have a good appetite for this transition because you will need them on a regular basis.
- You need to make sure you have a solid vendor management plan. Moving your MSP in-house means you have more than one vendor to manage now — you have all of them. You are now responsible for their compliance, proper IC management, employment-related legal matters that might crop up, not to mention the overall performance of that vendor. You also will need to manage your internal compliance so you can keep good tabs on your managers staying within program guidelines.
- Employment issues that arise from the contingent population will challenge you at some point. Before, the MSP handled these issues, involving you as needed perhaps if nothing more than for informational purposes. When you bring your program in-house, you’ll need someone on your staff who understands employment law or work closely with your HR business partner for direction. You simply can’t put this back on the vendors for them to handle. You must be able to recognize these risks even before the vendor does, and there are many risks pertaining to the use of contingent labor.
- If your program is not global but you intend it to be once you bring it in house, I would say leave yourself open to a hybrid model (in-house locally and outsourced in new geographies). Different countries have their own challenges when it comes to the use of contingent labor, and using an external MSP that is already familiar with your target location will ease the transition.
As I said, there is so much to consider when pondering an in-house MSP solution. There are good players in the field and good reasons to keep your programs with them. However, where it makes sense, I fully support the internal model. I have moved a program in house, so it’s not rocket science but it is a heck of a lot of work.
Gary Campbell is COO of Johnson Health Center.