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What is an MSP in Staffing?

Amy Bogan | October 27 2023 |

Kees Stroomer

As organizations continue to adjust to the latest labor market and economic conditions and their challenges, 74% report the need to build deeper talent pipelines, according to research by Ardent Partners. But how can they overcome talent supply shortages, remain nimble in times of uncertainty, and stay ahead of competitors?

For organizations that heavily rely on contingent talent, partnering with a Managed Service Provider (MSP) enables them to more effectively adapt, manage and optimize their contingent workforce.

In this blog post we’re going to cover:

  1.  What an MSP is
  2. The role of an MSP in staffing
  3. How an MSP works
  4. Advantages of using an MSP
  5. What a vendor-neutral MSP is and its advantages
  6. Why choose Magnit for MSP services
  7. Frequently Asked Questions about MSPs

What is a Managed Service Provider (MSP)?

In general terms, a Managed Service Provider (MSP) is a specialized organization that provides businesses with outsourced services and support. Partnering with an MSP that manages a company’s contingent workforce can help increase its productivity, decrease risk and improve scalability. MSPs also focus on other aspects of the business, and support human resources, procurement, finance, and other company departments. Additionally, MSPs can oversee, manage and maintain various aspects of their clients' technological requirements where a vendor management system (VMS) is leveraged. 

What is the role of an MSP in staffing?

While the breadth and depth of what an MSP offers will vary widely based on the size and scope of the solution, in short, MSPs act as liaisons between organizations and their contingent workforce. In addition to streamlining talent sourcing with best practices and ensuring regulatory compliance, they also manage vendor relationships, implement technology solutions, manage costs, and optimize staffing workflows to increase productivity.

Industry-leading MSPs also offer incredibly valuable data-driven insights and reporting on the success of the contingent workforce to support organizations with informed decision-making and talent strategy. MSPs ultimately partner with companies to assist them in efficiently managing, utilizing and optimizing their contingent talent to meet business demands while lowering administrative costs and risks.

MSPs can face some challenges in their role. They must adapt to fluctuations in workforce demands quickly while balancing quality talent acquisitions and cost. Additionally, MSPs need to stay on top of the latest changes in compliance and regulations, as well at the latest technology solutions and how they can be leveraged to optimize workforce management.

For more on the topic, check out the Brandon Hall Group white paper, “The New Role for the MSP in Human Capital Management.”

How does an MSP work?         

For companies interested in partnering with an MSP, they need to not only carefully research the right MSP for their organization but understand how to properly engage that MSP to accomplish their goals. This involves a number of different steps and key considerations. 

1. Understand Your Staffing Needs

Begin internally by identifying your organization’s specific contingent workforce needs. This can include determining the types of skills, roles and specializations necessary to achieve your business goals. You should also keep in mind the size and location of your workforce and the length of engagements.

2. Choose an MSP

Research and compare various MSPs and evaluate factors such as their previous experience, their expertise in your industry, their reputation, ability to handle the hiring requests you need, and if your workforce is spread across geographies, which locations and countries the MSP supports.

3. Define Service Requirements

Collaborate with your chosen MSP to define your service requirements, which includes the kinds of positions you need to fill, the necessary qualifications, and any other special criteria. Clearly lay out your expectations on performance indicators and response times.

4. Integration and Onboarding

Work with your chosen MSP to incorporate systems and procedures into the workflow of your business. Make sure they have access to the necessary systems and channels for communication. This can often include setting up a vendor management system (VMS), which enables organizations to streamline contingent workforce management, helps optimize programs, and enhances visibility across the contingent worker lifecycle from a single source of truth. 

5. Workflow Management

Utilize your chosen MSP to manage the entire lifecycle of the contingent worker, from finding and screening candidates, to setting up interviews, onboarding new hires, and handling contracts and monitoring performance. Be sure to clearly communicate your expectations related to the entire lifecycle stated above to the MSP as well. 

6. Maintain the MSP Partnership

Continue maintaining a solid and transparent relationship with the MSP as the partnership develops. Review performance indicators, compliance, and market bill rates regularly to make sure the MSP is effectively fulfilling your workforce needs. Provide ongoing feedback and quickly address any concerns that come up to encourage open communication and maintain a positive partnership. 

Advantages of Using an MSP    

Leading-edge MSPs drive numerous benefits for organizations, including faster time to fill, mitigated risk, enhanced workforce visibility and improved worker experience. Let’s take a closer look at how an MSP can help you achieve two of these benefits, namely cost savings and obtaining higher-quality talent.

Cost Savings

MSPs help organizations achieve cost savings in several different ways. For example, they negotiate contracts with staffing suppliers and support competitive bidding which lowers the cost for each worker placement. MSPs also help improve efficiencies and productivity as they automate processes and streamline workflows, helping to lower administrative overhead.

MSPs also assist businesses in paying competitive rates and avoiding overstaffing by conducting rate benchmarking and improving resource allocation. For improved cost control, they use technological solutions like a VMS to automate processes, centralize billing, and improve reporting. MSPs help enable scalability, which empowers businesses to remain nimble and change the size of their workforce as necessary, avoiding unnecessary labor costs during lean times.

See how global healthcare company Novartis optimized its contingent workforce program and saved on costs with Magnit MSP in our case study

Higher Quality Contingent Talent

MSPs help provide higher caliber talent to organizations through several means. They work with and manage staffing agencies with a proven track record of providing top talent, which ensures reliability in quality. Additionally, MSPs utilize consistent screening methods and processes to help identify the best candidate for the role. (Discover how MSPs help solve talent mobility challenges in our blog.)

MSPs establish performance standards and KPIs for vendors, which promotes the provision of qualified candidates. Placements are improved over time through feedback from the organization and initiatives for continual improvement. MSPs also provide programs for onboarding, training, and support to improve the successful completion of assignments for contingent workers. MSPs bolster the quality of contingent talent by streamlining processes and managing compliance, mitigating risk, and leveraging technology.


What is a Vendor-Neutral MSP?    

A purely vendor-neutral MSP acts as an impartial intermediary between an organization and staffing suppliers. No staffing agency is prioritized over another, so suppliers are incentivized to provide their best candidates as quickly as possible, providing unbiased access to a broad talent pool.

The vendor-neutral MSP model drives competition among suppliers to provide better rates and improved services, helping organizations save on costs instead. The client company can negotiate favorable terms and access wider, more diverse talent pools. Additionally, cost transparency and performance metrics ensure that suppliers deliver value, ultimately leading to reduced spend and enhanced service quality.

Why choose Magnit for MSP services?   

Magnit stands apart with its unwavering commitment to providing seamless services-driven excellence, providing organizations a single MSP that ensures scaling with speed, flexibility, and the expertise needed to adjust to local, economic and industry shifts. With 30-plus years of experience and innovation, Magnit collaborates closely with clients to understand their unique workforce challenges and business objectives and then offer unparalleled support and attention.

With Magnit MSP, companies can manage the contingent worker lifecycle from beginning to end, including onboarding and offboarding, in one place and in less time with enterprise-level standardization.​ Magnit’s unique purely vendor-neutral model ensures that staffing suppliers are providing excellent candidates at competitive rates quickly.

Magnit MSP can also help organizations optimize services procurement, deliver cost savings, risk mitigation, and actionable insights that enable control and visibility. Additionally, through our integrated direct sourcing, clients can source talent from their own curated private talent pools, empowering them to fill roles faster and drive further cost budget optimization. From a DE&I perspective, Magnit MSP can provide clients with actionable insights to drive cultural inclusion, enhance worker diversity, and promote supplier diversity.

See why Magnit MSP is a recognized industry leader when you download Everest Group’s CWM/MSP Peak Matrix 2022 Report

Frequently Asked Questions  

1. What is the difference between typical staffing agencies and an MSP?

Staffing agencies normally primarily focus on matching candidates with job openings for a fee, as opposed to MSPs, which specialize in managing an organization's whole contingent workforce, which includes temporary, contract, and freelance workers. MSPs typically handle supplier management, workforce planning, compliance, and technology solutions in addition to talent acquisition. Unlike staffing agencies, MSPs are more comprehensive workforce management partners, offering end-to-end solutions that extend beyond mere recruitment.

2. How much do MSP services typically cost?

The cost of MSP services can vary widely based on factors such as the scope of services, size of the organization and complexity of the workforce. Due to these variables, it’s difficult to provide exact numbers for the cost of MSP services. What is accurate to state is that most MSPs charge a percentage of the total contingent talent spend under management that is typically supplier funded and in single-digit percentages.

The best approach is to contact multiple MSP providers, outline your specific needs, and request detailed proposals. This allows you to compare offerings, which is critical given the considerable differences in service levels between providers, and choose the MSP that best aligns with your organization’s goals and requirements.

3. How large does a business have to be to leverage an MSP?

The size of a business required to leverage an MSP depends on the organization's contingent workforce needs and complexity. While larger enterprises with substantial contingent worker requirements may benefit the most from MSP services, smaller businesses can also utilize MSPs if they have a sizable and dynamic contingent workforce, since MSPs can help streamline their processes and ensure compliance.

Ready to learn more? Discover how you can unlock your contingent workforce’s full potential in our Quick Start Guide.

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.

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