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MSP Explained

The role of Managed Service Providers in an era of contingent labour

Markets were very clearly competitive before Covid-19 came into our lives, but the dramatic escalation in these matters is now clearly visible and it’s here to stay. Organisations across various industries are now faced with the urgent need to control costs, increase efficiencies and deliver relevant solutions to their customers within a workplace that has never been more varied. Today, large businesses are typically made up of full-time and part-time employees and contingent, freelance, gig, and crowdsourced workers.


How can organisations ensure that these changing workforces are engaged, productive, and working together for the company’s benefit while also keeping costs down and ensuring that the business is compliant with complex labour regulations?


More and more in South Africa, we see that contingent labour is becoming a significant part of workforce strategies as businesses seek to enhance their workforce outcomes. A contingent workforce is a labour pool whose members are hired on an on-demand basis, allowing organisations to match their labour force with current output demand without carrying unnecessary overheads.

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The challenges of contingent workforces

There are multiple benefits to contingent workforces, but that doesn’t mean that they don’t come with their challenges. For example, when a business begins to bolster its contingent workforce, it also opens itself to increased liability and compliance risks associated with non-permanent employees. These commonly include worker misclassification, worker credentialing, co-employment issues, unemployment claims and workers’ compensation claims. The complexity of these matters serves as a fertile bed for an increase in collusion and fraud within our corporate supply chains. Failure to adequately address these risks can result in fines, tax penalties, problems with trade unions, and other consequences that can set your organisation back.


How Managed Service Providers can help

With a Managed Service Provider (MSP) model, businesses with contingent labour forces benefit from insights on local and global regulations and processes that adhere to relevant laws and external expertise on compliance best practices. An MSP also helps organisations vet, onboard and control the charges of contingent resources workers to mitigate risk.


In South Africa, contingent workers have come under increased scrutiny in recent years, so having a trusted partner to advise you on implementing best practices and risk-reducing strategies is essential.


Unpacking the value MSPs bring to large organisations

An MSP can give you better access to contingent workers while simultaneously boosting your talent supply chain and helping your organisation to improve contingent staffing process efficiency. MSPs also introduce better cost controls to your business.


MSP programmes alleviate the pressures placed on both your HR talent acquisition and procurement functions by managing your contingent staffing programme in a way that is both cost-effective and compliant. This allows your HR and procurement teams to focus on what matters: meeting both day-to-day and strategic business goals.


Similar to recruitment process outsourcing (RPO) programmes, an MSP programme can be planned, managed, customised, and implemented in a manner that accurately reflects your business’s needs and your position in the market.


MSPs leverage the influence of your Employer Value Proposition (EVP) and reputation in the market to reduce your agency spend and source contingent workers through the management of preferred suppliers. Your MSP should also ensure that you don’t only secure the most readily available talent in the market but the best talent at competitive rates.


Common MSP programme services include building pools of high-quality candidates, reviewing current supplier and vendor contracts, reporting and analysing the contingent workforce programme, and managing the supplier base.


Making Rands and sense

When you partner with an MSP, they take over the responsibility of the engagement and management of your current staffing agency vendors. Often, they will negotiate new rates with existing vendors based on volume of work and introduce new vendors to your organisation. Ultimately, working with an MSP should open up the competitive playing field, ensuring you get the right talent for the right price.


Additionally, MSP providers save the amount of time spent managing and reconciling individual invoices by consolidating invoicing, allowing you to make one payment to the MSP provider, who then pays vendors and suppliers on your behalf.


Finally, the expertise and experience of an MSP proactively ensure that your organisation gets the contingent talent you need, when and where you need it, through a centralised and cost-effective staffing programme.

By: Michael Patterson : Managing Executive at talentCRU

He is a commercially astute outsourcing professional with a demonstrated track record of winning new business. Michael’s expertise lies in leading new business teams, designing and implementing sales strategies, developing business growth and new product strategies; developing marketing campaigns and associated collateral; and designing, costing, pricing, contracting and implementing bespoke managed services solutions.

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