SI Review: May 2013

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Counterpoint

 Who Runs the MSP?

Penny Queller says outsourcing an partner drives efficiency and continuous improvement in your program. Peggy O'Neill argues that in come situations an internally run contingent worker program is the best option.

ARGUMENT: Outsourced MSP can expand clients’ opportunities

By Penny Queller

MSP 

An external managed service provider provides a vital connection to a constantly shifting market, serving as a valuable source of continuous improvement, lower costs and increased efficiency.

MSP specialists bring clients the benefits of the latest market research, benchmarking and industry best practices. In the trenches of contingent workforce management every day, they serve clients in different industries and geographic regions, continually building their knowledge base. They know what works and what doesn’t, as well as what’s new across the CW management landscape. They have wide exposure to the accumulation of knowledge that comes from working with multiple organizations at different stages of program maturity, each with a different set of vendor interactions and workforce requirements.

Outsourced MSP partners offer the advantages and accountability of a shared services structure. They can spread the fixed costs of program support and performance reporting over multiple clients and have the flexibility to shift resources to meet fluctuating needs. MSP partners have relationships with multiple staffing vendors, giving them greater leverage in negotiating rates on behalf of clients. They are also in a better position to track — and influence — supplier performance across multiple contracts.

Outsourced MSP partners ensure their clients never put the brakes on continuous improvement. They expand clients’ opportunities for savings and efficiency improvements and ensure they can take advantage of industry advances.

Penny Queller is senior vice president, global solutions for Bartech. pqueller@bartechgroup.com.

ARGUMENT: Internal capability almost always trumps external cost

By Peggy O’Neill

In some situations, an internally run CW program is the best option.

There are generally a few key areas that influence an organization’s decision whether to insource or outsource the contingent workforce management (CWM) function. Among them are size, cost and total workforce management.

Size. Outsourcing makes more sense for companies that have a small number of contingent workers because they get the expertise of a professional at a part-time schedule. A significant number of contingents increases the management demands to the point where the company needs greater capability and support development for in-house CWM.

Cost. Development of an internal capability will almost always trump the cost of an external firm over the long term. An external firm has to charge the company cost plus a profit margin. A well-run internal program should and does not exceed the cost of an externally run function.

Total workforce management. In many organizations, CWM has becoming a significant and permanent component of total workforce management (TWM). The value of an internal CWM function becomes more critical over time. Clearly, by creating this function you create the infrastructure and intellectual capital internally, which enables the company to meet current and future demands. Having an internal function provides a company with a better understanding of the nuanced needs of the organization and its hiring managers.

When conditions have been reached that require a company to consider a CWM unit, it is in its long-term interest to establish this internal department.

Peggy O’Neill is director of staffing, contingent workforce at ESPN.

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Soutwest Airlines

Greg Muccio 05/02/2013 10:00 am

Internal all the way!!

An internal has two more main advantges to me:

Brand--contingent workforce represents your company. It is hard to outsource brand protection.
Internal company knowledge and network--while an external MSP might have better industry knowledge (join the council and attend CWS), they are no match for the internal network and knowledge of an internal MSP. We get so much accomplished due to relationships we have and knowing what the Company or a department is trying to accomplish as a whole.


Yoh

Matt Rivera 05/01/2013 02:01 pm

Penny/Peggy,
Great discussion and good points on both sides of this long-standing argument. I think there is also a cost-to-value component that is important to note. As with any outsourced agreement, there have to be elements that add value beyond perhaps what internal resources can provide - things the client sees as valuable. As Penny points out an MSP partner needs to bring that value with experience and best practices, supplier management or program management. When an internal team is setup and can provide the scale, experience and value at that level, then the cost-to-value may fade for the MSP and it may make sense to self manage.

In my experience only very large programs are suited to self-management. These are companies with the infrastructure, experience and internal competencies to efficiently run a program. Also, these companies tend to look at contract labor as an integrated part of their workforce and (perhaps as a result of this) have less fluctuation year over year in their usage. Smaller or mid-sized companies benefit from the valuable expertise they may not have in-house. To stand up an internal program with management, technology, contracts, invoicing, on/off-boarding, etc. for contract labor doesn't make sense for most companies at this level of usage (or most companies in general).

Lastly, one thing that wasn't mentioned is co-employment and risk management. An MSP is an additional barrier and partner to help manage risk. That might also become more important with health care reform looming. But overall I think it comes down to value.


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