Asia-Pacific is the most economically dynamic region in the world; however the lack of maturity of the contingent workforce market often inhibits an organisation’s ability to design and implement a one-size-fits-all managed service provider model. Contingent workforce programs must be adapted for specific countries, with different types of services performed by an MSP (e.g., payment agent vs. a billing agent) and altogether different support models (on-site vs. off-site, vendor-neutral MSP vs. master vendor or hybrid).
My experience indicates that most clients and some MSPs do not fully understand the challenges and costs associated with designing, implementing and managing a multi-country contingent workforce program and the importance of program localization. The challenges become even greater when APAC comes into the picture. As a result, many programs lose momentum and by default, stakeholder buy-in, because they take too long to implement.
- Strong resistance from local suppliers. A common refrain from suppliers in the region is they would rather not work with a client at all than work via an MSP.
- Lack of internal support. A lack of understanding of the MSP model among local engagement managers leads to a lack of support, so do not underestimate how much stakeholder education is required.
- Cultural differences. Cultural differences tend to pose the greatest challenges to success, so careful coordination and alignment of various stakeholders situated in different parts of the world is a must.
- Low ROI. Low headcount and pay rates in APAC, compared with U.S. and Europe, may not present a viable cost-benefit equation as far as an MSP is concerned.
- Higher MSP engagement cost. The lack of maturity in the market will require bespoke solutions to be developed for a number of countries; thereby the cost of engaging an MSP may be higher than in a more mature market.
- Legalities. Labor leasing laws, in some countries referred to as Dispatch Law, require different engagement/contract models. Staffing suppliers are generally required to be licensed and to hold a contract directly with the end-user as opposed to an MSP.
- Classification management. The management of different classification of workers by an MSP and the local methods of engaging CWs varies greatly from country to country.
- Small supplier pool. A limited number of MSPs have experience in the region.
The key to the successful implementation of a contingent workforce program in APAC is planning, planning and then more planning, which must be carried out before you start the process of selecting an MSP.
A few years ago, my prior employer was engaged to provide MSP services in India for a U.S. corporation in partnership with its domestic MSP, which did not have experience of working in the region. To say it was not a rewarding experience is a major understatement. The lack of pre-engagement planning resulted in the design phase — perhaps better termed the blind leading the blind phase —that lasted 18 months. In the end, it was determined the amount of in-scope spend on contingent labor was so low, it was not financially viable for us to provide MSP services in the country.
That was an expensive lesson for all involved and one I sincerely hope other organizations will learn from. Doing your due diligence and educating yourself as well as your stakeholders up front will go a long way in ensuring you do avoid that mistake.
Meanwhile, don't miss Staffing Industry Analysts' complimentary webinar, "Tailoring Your Program to Global Realities," which focuses on issues specific to India and Argentina. Led by Editorial Director Subadhra Sriram, this Dec. 15 webinar takes a look at some practical guidelines these managers use when administering these locales.
Martin Glick is senior associate of global compliance with Brightfield Strategies LLC, which helps Fortune 500 companies with contingent workforce strategy initiatives such as program design, VMS/MSP sourcing and selection, and global program compliance. He can be reached at email@example.com.