How MSP's have Changed the Staffing Industry

Times are changing for every industry; companies are becoming more technology driven and tech
friendly. This push towards being more digital is hurting some industries that rely on personal relations and face to face meetings. Everyone in the staffing business would love to have one-on-one interaction with hiring managers, set their markups, and send candidate’s resumes directly to the client. The simple fact is that this personal type of business is giving way to the MSP/VMS model (Managed Service Programs/Vender Management Systems). MSP’s are flourishing now, and it's time that vendors fully embrace this change. Over the last few years prized Fortune 500 companies like Yahoo!, Verizon, VISA, Facebook – have signed on with MSP’s utilizing proprietary software know as VMSs. Yes, the MSP/VMS model of contingent staffing is here to stay, and it is time those in the staffing world embrace it.

Now if the allure of signing one of those big clients is not enough of a reason to embrace the MSP business, take into account the fact that over $100 billion of revenue is through MSP programs. So how does a staffing company adapt to the MSP model of staffing and set themselves up for success? Simple, leverage technology to make your existing recruiting systems work seamlessly with these vendor management systems. David Gilcher, Lead Resource Manager, at Kavaliro Orlando discussed the shift he has seen over the past few years, and advise as to how companies can embrace the new technology.

David Gilcher, Lead Resource Manager

MSP and VMS have been industry standards for quite a while. Even when I started in the industry over a decade ago, companies were using these programs to manage staffing activity. Before VMS and MSP, multiple staffing agencies would contact and maintain relationships with various hiring managers. They would establish a rapport with those managers to get a better understanding of the positions and to receive preference to their submitted candidates. That practice still exists, but enterprise level organizations implementing these processes have limited those interactions.

A personal touch is lost in the transition to MSPs and VMSs. In most cases, agencies have no personal contact with hiring managers. Direct contact with hiring managers is discouraged and if violated, can lead to suspension or termination of staffing agreements, a very costly consequence.  With VMS and MSP programs, they go through one liaison or a team of people that work for the company managing the program. This system of contacts makes it difficult to establish a relationship with manager including getting a better understanding of the role beyond what’s in the job description.

The best way to bring back a personal touch is to maintain a positive relationship, with the team running the program. In instances when they allow manager contact, keeping the VMS/MSP coordinator in the know out of respect for the process. It goes a long way. Asking the right questions and respecting the process will get you further and less likely to lose your seat in the program.

How you pursue an MSP/VMS account and a standard account is different. Relationship building is different, as you develop relationships with the provider versus directly with hiring managers. However, working some valuable relationships with other managers at the client, when permitted, is essential to be added to a program and stay on it. There’s also an extensive RFP and vetting process that takes place before the staffing provider is added to the program. The RFP process can take anywhere from a few days up to a few years. It requires patience, smart relationship building, and persistence.

Pros of an MSP/VMS:

• Typically, it allows a fair and unbiased hiring process by giving each firm an equal opportunity to place a qualified candidate.
• Pre-set bill rates. It leaves out the need to haggle the rates for numerous positions.
• A one-stop resource for contact. You can develop a relationship with one person or a small team versus several managers across multiple channels. It’s easier to manage.
• Process and procedure are defined in the beginning and throughout the process.

Cons of an MSP/VMS:

• Lack of personal interaction with hiring managers who can affect the candidates the manager receives. They are simply receiving a resume and a write up without the agency being able to provide their personal perspective of a candidate.
• It also diminishes an agency’s ability to determine those hidden skill sets beyond the listed job description. In many cases, the description provided is one provided by the legal team without much room for the manager’s custom needs.
• In many VMS programs, candidates go days if not weeks without feedback. That is a process that must change.
• Competing with multiple agencies simultaneously for the same pool of candidates in the same markets is a challenge.
• Locked in rates. Even though there are some benefits to having locked in rates, there are also some difficulties. For rarer skill sets, you can get the same bill rate and return that you’d get for a lower level role at a company outside of a VMS/MSP program at a higher rate. That can lead to a lack of incentive for recruiters to work on more complicated orders.
• In some cases, the pay rates presented can be below market standard. Unfortunately, I’ve seen that occur time after time. More collaboration amongst HR and staffing vendors is needed to accurately determine pay rates based on specific skill sets, education, certifications, and location.

I don’t believe all companies will move to that type of process. It may not be considered necessary by a company to utilize those services. I have noticed though that many national and global enterprise brands have moved to an MSP/VMS process. As we all know, labor is one of if not the largest expense companies have. Companies see it as a solution to manage staffing agencies and regulate pricing for services. The relationship building and personal interactions with talent continue to be the strongest search tool today even with the innovations in staffing technology. MSP & VMS are here to stay. I’ve seen an enormous increase in their use the last decade. They’ll be around for quite a while; MSP’s have changed the staffing industry for good.

Want to know more about how MSP's have changed the staffing industry? Have questions on standard market rates, or how MSP and VMS systems price their positions? Sign up to speak with a Kavaliro Representative by clicking below, and we will be happy to provide you with the insight needed.