In our post-pandemic predictions report, our second prediction was the rise of the gig economy. Prior to COVID-19, the market for temporary and contractor employees was already growing faster than the market for permanent staff. Post-pandemic, permanent headcounts will be considered a risk factor, and a gig-style or contingent workforce will offer organisations more flexibility and cost benefits while saving jobs. With future uncertainty, effectively managing and growing the contingent workforce will be a top priority, and more organisations will consider an MSP (managed service provider) solution.
The gig economy is an economy in which the market will be characterised by a contingent, or temporary, short-term contract workforce. The contingent workforce includes freelancers, independent professionals, temporary contract workers or consultants. An MSP solution, or managed service provider, can help an organisation manage this contingent workforce. MSP solutions are often looked for when a business requires temporary workers or freelancers, needs to ensure legal compliance, or wants to control hiring costs and mitigate talent risks.
MSP solutions offer various benefits. They can lower workforce costs, mitigate talent risks, but they can also help capture management information data and intelligence, manage efficient on- and offboarding processes, and ensure compliance with fast-changing labour laws and regulations.
There are different MSP models to suit different organisations and goals. An MSP solution can be adapted and set up in many different ways, but the three most common models are the Sole Service Program, the Hybrid Solution, and the Vendor Neutral Model.
In the Sole (or Master) Service Program solution, the company engages a single MSP to oversee the end-to-end contingent workforce process. The solution is reliant on a single provider to manage contract labour, but also offers the most cost savings.
In the Hybrid Solution, an MSP is engaged to manage contingent workforces for a particular job family, business unit or geography. Risk is spread among other suppliers or processes, but the method still drives significant cost savings.
The Vendor Neutral Model is a model in which the MSP does not source contractors, but services only as a governance entity, managing the end-to-end process and overseeing performance. Whilst it does not deliver quite as many cost savings as the prior models, it does provide the most objective and optimised contingent workforce process.
If you are wondering if an MSP model could be right for your organisation, we listed 10 questions to ask yourself to see if your contingent workforce programme is operating effectively:
If not, now is time to revisit your contingent workforce strategy. If you are interested in learning more about MSP solutions, please get in touch.