There are too many Contingent Managed Service Providers that have spent too long resisting change. Some have failed to evolve their service offerings or embrace new technology. Others remain purely transactional rather than adopting a solutions-driven approach. Instead of fostering innovation and reducing costs, they focus on maintaining the status quo. These types of organisations now face a different sort of challenge in 2025. While the market remains sluggish, a new generation of Managed Service Providers is changing the dynamic and offering clients something different. Maybe now, finally, traditional providers will start to rethink how they work.
Why will 2025 be different for Contingent Managed Service Providers?
2025 is threatening to be a shock to the system for any organisation with their head still buried in the sand.
Labour markets around the world continue to be acutely sensitive to the slightest climate change. While some industry analysts are predicting a new sense of stability, others point to global trends that have been turning downwards for some time now. Fewer new roles being created, opportunities for employment are decreasing, and the number of people in work continues to decline.
Every slight political shift, change in legislation affecting business or dip in the economy seems to have an amplified impact on recruitment industry right now. On the other hand, every uptick seems to have commentators instantly talking about a revival and forecasting growth.
What happens in politics, the economy and the wider world will continue to be unpredictable. The real question that Managed Service Providers face is how to deal with the challenge. What can they do to succeed?
What do clients expect in 2025?
In 2025, talent acquisition teams encounter a multifaceted set of challenges as they strive to attract and retain top talent in an evolving landscape. Key challenges include:
1. Integration of Artificial Intelligence (AI): most talent acquisition professionals embrace the impact that AI can make. But many also have concerns that the hiring process may become even more impersonal.
2. Emphasis on Critical Skills: clients want to work with partners who can help them to identify key skill sets, prioritise roles and be more proactive in building talent communities.
3. Adapting to Hybrid Work Models: The shift towards hybrid work environments has encouraged many organisations to rely more on contingent workers. The added flexibility that this requires means that clients want their MSPs to think differently about how to attract and engage talent in a global marketplace.
4. Data-Driven Recruitment: Limited access to comprehensive data across the recruitment funnel hampers decision-making. More traditional MSPs will face increasing demands from clients to produce real-time hiring data and improved cost analysis.
5. Economic Constraints: Balancing increased hiring volumes with stagnant or shrinking budgets presents a significant challenge. Organisations need employers who can optimise recruitment processes and leverage technology to achieve more with less.
6. Evolving Candidate Expectations: Candidates increasingly seek roles that offer flexibility, purpose, and opportunities for growth. Meeting these expectations requires organisations to adapt their value propositions and create engaging candidate experiences to remain competitive.
What should Contingent Managed Service Providers be doing differently?
Addressing these challenges necessitates a strategic and adaptable approach, leveraging technology while maintaining a human-centric focus to attract and retain top talent effectively.
Build and Leverage a Direct-to-Talent Model
Establishing a direct-to-talent channel can reduce reliance on recruitment agencies, cut costs, and improve the quality of hires. This involves creating talent communities, fostering direct relationships with candidates, and using programmatic attraction platforms to enhance employer branding.
Enhance Employer Branding
Strong employer branding, tailored for the contingent workforce, can improve talent attraction and help to build effective talent communities. MSPs should focus on creating a compelling Contingent Value Proposition (CVP) that aligns with the company’s mission, values, and culture.
Focus on Total Talent Management
Integrating contingent and permanent talent strategies enables a holistic workforce approach. MSPs should encourage collaboration across HR, procurement, and business units to unify talent sourcing and management.
Foster Continuous Improvement and Innovation
Avoiding complacency is critical. MSPs should continuously evaluate and evolve their processes, actively seek cost-effective sourcing methods, and use data-driven insights to refine strategies.
Tailor Strategies for Changing Workforce Needs
As more professionals opt for contingent work due to flexibility and autonomy, MSPs need to adapt their strategies to engage and retain diverse talent pools. This includes addressing issues like misclassification, ensuring robust onboarding processes, and creating engaging talent experiences.
Drive Strategic Workforce Planning
MSPs should guide organisations in long-term workforce planning to handle unpredictable market dynamics and talent shortages. This involves crafting scalable, agile solutions that align with business needs.
By addressing these areas, MSPs can not only improve their management of the contingent workforce but also enhance their value proposition to clients.
Conclusion
The role of a Managed Service Provider (MSP) is evolving rapidly to meet the shifting dynamics of the global workforce and emerging client expectations. Once focused primarily on transactional processes and compliance, modern MSPs are transitioning into strategic partners that offer integrated, technology-driven talent solutions. They now emphasise direct sourcing to reduce costs and build stronger employer brands, leverage advanced analytics for talent intelligence, and adopt total talent management approaches that seamlessly blend contingent and permanent workforce strategies. This shift reflects the increasing need for agility, innovation, and collaboration in managing diverse talent pools, enabling organisations to stay competitive in a global talent market characterised by skills shortages and rapid technological advancements.