Initially, procurement departments aimed to reduce costs by managing the growing contingent workforce. They treated skilled individuals as any other resource, focusing on cost, risk, and measurement. The introduction of cloud-based Vendor Management System (VMS) technologies provided better reporting, offering qualitative information such as staffing provider details, contractor performance, compliance. Not only that, but the implementation of a VMS also provides quantitative data as well such as hours, positions, costs. Despite these improvements, technology alone couldn’t fully address the challenges of managing complex relationships and implementing change management. As a solution, staffing providers became Managed Service Providers (MSPs), centralizing contingent workers under one program. However, this created potential bias, as MSPs with staffing affiliations might favor certain firms. To ensure impartiality, the “vendor and technology neutral MSP model” emerged, prioritizing the client’s interests. Discover the drawbacks of non-neutral MSP models and the benefits of a vendor-neutral MSP in Arrant Services’ insightful blog post.
Disadvantages of a Non-Neutral MSP Model:
Competing Interests
One significant drawback of a non-neutral MSP model is the conflict of interest it presents. In some cases, non-neutral MSPs may have a vested interest in directing as much spending as possible towards their own or affiliated staffing service providers. Their primary motivation for doing so is the substantial revenue they can generate through staffing, rather than acting solely as the managed services provider. Even if clients have a good understanding of their supplier base, it remains challenging to ascertain whether an MSP has been directing requisitions, and thus spending, exclusively to their network. This is especially true for large MSPs that own or have partnerships with numerous smaller firms.
It’s important to be cautious of managed services providers that include their parent company’s staffing entity among the top-tier providers with priority access to sourcing requisitions. This should be seen as a red flag.
Why does this pose a disadvantage for clients? When the sourcing process lacks competitiveness or even becomes collusive, staffing rates tend to be significantly higher. Moreover, without access to a large and diverse pool of resources, the quality of available talent is likely to be lower.
Vendor Management and Compliance
Implementing an MSP program initially meets resistance from staffing vendors who dislike the increased competition and accountability. However, with the presence of a vendor-neutral MSP, vendors are more likely to actively participate, recognizing the fair opportunity to compete and gain market share. In contrast, non-neutral MSPs raise concerns about bias and hinder vendor performance. Choosing a vendor-neutral MSP promotes healthy competition, ensures compliance, and enhances overall program effectiveness.
The Persistence of Non-Neutral MSPs: Why are They Chosen?
Despite the drawbacks, many organizations continue to opt for non-neutral managed services providers (MSPs). Here are a few key reasons:
1. Client Preferences: Some clients lean towards a hybrid approach, combining the benefits of a Master Vendor and an MSP, especially for high-volume or high-turnover positions.
2. Established Multinational MSPs: The familiarity and perceived reliability of well-known multinational MSPs with extensive staffing solutions make them seem like a safer choice for clients.
3. Lack of Awareness: Clients often realize the importance of MSP vendor neutrality only after committing to a non-neutral MSP, when it’s too late to change course.
The Benefits of a Vendor-Neutral MSP
Taking a Holistic Market Approach with a Vendor-Neutral MSP
A vendor-neutral MSP brings their deep domain knowledge and advanced technologies to build an optimal MSP program that aligns with your specific requirements. By applying best practices in professional services and staffing procurement, they ensure a comprehensive and tailored approach to deliver superior outcomes.
Before recommending suppliers, a vendor-neutral MSP thoroughly assesses your complete spend footprint, identifying areas where additional support from staffing vendors is needed. Unlike biased MSPs, they don’t aim to replace suppliers with their own. Instead, they focus on recommending suppliers based on their strengths and core competencies rather than personal relationships. Through a rigorous process that includes developing a business requirements document, conducting RFPS, coordinating meetings, and utilizing market research, they curate the right vendor mix that perfectly suits your needs.
Increased Savings with a Vendor-Neutral MSP
Partnering with a vendor-neutral MSP provides objective visibility through their utilization of VMS technology. This lets you to work out pricing disparities to your advantage among suppliers offering the same services, resulting in ongoing cost savings. They enforce geography-specific rate cards, implement rate reductions based on longevity, and set caps on supplier markups to optimize cost efficiency. Moreover, their expertise in demand management ensures that resources are allocated strategically, maximizing savings. As a truly neutral MSP, their sole focus is on your satisfaction rather than their own financial gains.
Embracing a Competitive and Transparent Process
Vendor-neutral MSPs prioritize transparency and competition throughout the procure-to-pay process. They customize and automate the entire workflow to meet your unique requirements. Complete visibility is provided, including disclosure of their own profit levels, ensuring transparency at every step. By sourcing every requisition and fostering a competitive bidding environment within the VMS tool, they drive maximum savings. With no vested interest in specific contractors or subsidiaries, a vendor-neutral MSP always prioritizes placing the best candidate based on merit, promoting fair and unbiased decision-making.
Strategic Solutions for Your Success
With no affiliations to staffing vendors or technology firms, a vendor-neutral MSP offers strategic solutions designed solely for your organization’s success. Their recommended suppliers and preferred provider programs are carefully selected with your best interests in mind. By partnering with a vendor-neutral MSP like Arrant Services, you can effectively manage your growing contingent workforce, achieve cost savings, and gain a competitive edge. Experience the benefits of unbiased expertise and tailored solutions. Contact our team of contingent workforce management experts today to learn more.In conclusion, choosing a vendor-neutral Managed Services Provider (MSP) offers significant advantages. Non-neutral MSP models pose challenges due to competing interests and limited vendor management. However, a vendor-neutral MSP takes a holistic approach, leveraging expertise and advanced technologies to create tailored MSP programs. They recommend suppliers based on strength and competencies, ensuring fairness and competition. Objective visibility leads to increased savings through pricing optimization and demand management. Transparency, unbiased decision-making, and strategic solutions further enhance program effectiveness. Partnering with a vendor-neutral MSP like Arrant Services provides unbiased expertise for managing contingent workforce, driving success. Contact their team of experts to learn more.
