Unlikely Valentine: Staffing Firms Learn to Love the MSP

Some suppliers are in the midst of a red-hot love affair with their MSPs. And it’s been great all the way around.  Why is the courtship such a happy one?

These suppliers know how to talk to their MSP. Don’t get me wrong. The MSP calls the shots. There is very little wiggle room for negotiation. Staffing suppliers may not be able to negotiate in the strict sense of the term, but what they can do is get their point of view across. Here are six tips from experts who see the MSP as the client they have to please.

1. Do your due diligence. In this case it is important for staffing suppliers to understand both the MSP as well as the customer.  Know who your clients are and how they work. Don’t argue on standard contract clauses where you know the MSP is going to come back and say: “It’s what the customer has asked for so take it or leave it.” To put up a fight leaves you and the MSP in an awkward position. They can’t give you concessions that they don’t have any control over.  And some customers have certain requirements that are non-negotiable, like MSP fees, which could be anywhere from 1.5 percent to 2 percent of program spend under management.

2. Study before signing. That said, don’t hurry and sign on the dotted line just because you are eager to seal the deal. Contracts still should be scrutinized before signing, especially for clauses that can put your company at risk, such as overbroad indemnification agreements. Often, customers don’t realize what they are asking for -- they really don’t want to see you bankrupt -- but if these clauses are pointed out by the MSP, they will rethink the clause.  Of course, you need to have a dialogue and bring up these points in a methodical manner with the MSP first.

3. Get market intelligence.  Keep on top of contingent workforce management trends. “Talk to your peers, other MSPs, customers that you work with and industry analysts,” says Ben Thakur, CEO of eTeam Inc., a staffing firm that works with different MSPs.  If a customer or MSP is asking for something novel, an analyst could confirm whether this is the start of a trend.

Let’s take this scenario: a biotech customer is asking for $20 million insurance requirements as opposed to $5 million. “Maybe this is the beginning of where the industry is heading and it may be worthwhile to make the investment upfront,” says Thakur. 

4. Benchmark the competition. It’s vital to know what the market rates are for the labor categories that your firm specializes in. Suppliers should be able to sit down with the MSP and explain that theirs is a competitive rate card that helps bring in quality talent. Lowering rates could not just affect your business but could turn off quality talent leaving the MSP and customer with a mediocre pool of candidates.

5. Be transparent.   Raja Narayana, who works with a number of MSPs as vice president of Aditi Staffing, advocates being open with numbers and disclosing one’s overhead, margins and revenue.  He likes to involve the end user as well as the MSP. “If they are asking for volume discounts that are going to eat into your numbers, bring it up,” he claims.  “Ask them, ‘How this is lucrative for me? If you’re going to [shave] another 2 percent, give me something you can commit to [read: more business] so that I can have more of a share in your savings,” he says.  MSPs do understand that they succeed when the staffing suppliers does.

6. Ongoing education.  At the end of the day, for the customer to run a successful program, they rely on the MSP, which in turn relies on the pool of suppliers servicing the account. No party can be happy at the other’s expense. It is the staffing supplier’s responsibility to keep the MSP informed and up to date on the competitive landscape. Clarifying your staffing firm’s expectations on an ongoing basis also helps the MSP understand and set the stage appropriately.

MORE on MSPs: Are Vendor-Neutral MSPs Making it Easier or Harder for Clients?


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