MSPs are continuing to see a demand for their services – and for good reason. Economic uncertainty. Unstable markets. Risks of global downturn. With many scenarios on the table, it’s clear that the need to reduce hiring costs is more critical than ever. But at the same time, the contingent workforce continues to grow and evolve – which means MSPs will need to offer their clients real agility and innovation. Striking the balance between innovation and cost-saving isn’t always easy.
If organisations want to continue to drive down costs while being innovative and creative around how they hire, there are few key areas they need to focus on.
How is the business landscape evolving?
Times are changing for employers. In the UK, businesses are dealing with the aftermath of the Autumn budget, with increases in National Insurance and changes to tax and employer law impacting organisations large and small. This means the cost of recruiting is likely to increase.
63% of businesses are concerned about tax rises, including the rise in employers’ National Insurance Contributions (NICs)
British Chamber of Commerce
But changes to labour marketing legislation are only one part of the story here. Candidate expectations are changing too. As more workers prioritise flexibility and work life balance over traditional career structures, the contingent workforce is growing rapidly – and organisations need to be able to standardise agency pay rates, ensure compliance, and tackle inefficiencies across the talent lifecycle.
The Global Contingent Workforce Management Market size is expected to reach $325.7 Trillion by 2028, rising at a market growth of 10.1% CAGR during the forecast period.
KBV Research
What should an effective MSP deliver?
With so many factors at work, MSPs need to be more proactive and dynamic than they once were. Offering a transactional approach to cutting costs isn’t enough; as client expectations rise, organisations require an agile recruitment partner that can quickly adapt to new conditions and manage spend while continuously improving hiring.
It’s these MSP that can help businesses shift gear. The best partners can provide the end-to-end expertise needed to innovate, reduce costs and deliver quality hiring experiences and talent.
Utilising a recruitment MSP (Managed Service Provider) for contingent workforce management can lead to 20% overall savings on contingent staffing and placement fees compared to managing recruitment without an MSP.
Staffing Industry Analysts
Auditing the talent supply chain
When was the last time you audited your supply chain? Not enough organisations have real visibility over where talent comes from, or enough transparency over costs, contracts and invoicing.
In our recent audit, 15 out of 50 agencies and umbrella companies failed to pay the minimum wage to their temporary workers. The responsibility for contractors, freelancers and temporary workers might lie in different places, but that doesn’t mean your organisation won’t face reputational damage or potential financial penalties.
Effective MSPs will review the recruitment agencies you use to ensure they:
- Charge fair rates to the client
- Pay fair wages to contractors
- Source the right people for the right roles
- Stay compliant and abide by right to work checks
An audit of the talent supply chain will on average save 8-12%, which means this alone can help large-scale organisations save millions each year.
What’s harder to measure – but just as valuable – is the impact best practices have on your reputation as an employer. Utilising an audit will quickly identify whether rogue agencies are supplying non-compliant staff, and reduce the likelihood of fines and disrupted operations.
Up to 60% of recruitment agencies fail compliance checks on the first audit.
Talent Works
Improving practice and processes to reduce hiring costs
How do you make the most of the technology that’s available on the market today? Technology is constantly changing, and MSPs need to be an expert voice in helping their clients build the right HR tech stack.
Not every organisation wants or requires a VMS (Vendor Management System) for this. What organisations actually need is an MSP with the expertise to develop the right roadmap and strategic plans to improve their hiring across the board.
Instead of implementing the same technology over and over again, forward-thinking providers will understand the changing market and shape the right solution around each client’s specific needs. As they’re responsible for the end-to-end hiring process, these skilled MSPs can drive efficiencies in:
- Invoicing
- Contract management
- Payroll
- Timesheets
- Onboarding/offboarding
This not only reduces costs over time, but also improves time-to-hire – a critical element for hiring temporary workers. As a VMS is a centralised platform, it can deliver better experiences for your contractors, helping them navigate processes smoothly and get paid on time.
Some 78% of organisations have increased their use of technology in the recruitment and onboarding process over the last 12 months. They are increasingly reporting that technology has improved their candidates’ experience and sped up the recruitment process.
CIPD
Reduce hiring costs with a direct-to-talent channel
Traditional MSPs focus on fulfilment, supply chains and recruitment agencies. But this reliance on agencies to find and supply temporary and contract workers means businesses can end up paying big fees every time.
Today’s organisations demand a more strategic approach from their MSPs. Proactive partners can help businesses shape their own contractor talent base to identify, engage and recruit contingent talent directly. By building relationships with contractors and managing ongoing communication, organisations can reduce their reliance on recruitment agencies and bring costs under control.
If this direct talent base can be maintained, there are added benefits. Businesses will not only improve their time-to-hire, but also find more opportunities for direct recruitment marketing and employer brand building to appeal to new audiences.
Conclusion
It will, undoubtedly, be a priority for many organisations to reduce hiring costs right now. But it’s not about slashing talent acquisition budgets at random. It’s about taking a strategic approach to ensure costs are controlled, and organisational culture is preserved.
Choosing the right partner is just as important as the service itself. Effective cost savings rely on an MSP that not only responds quickly to market changes, but strives for continuous optimisation. In an increasingly complex climate, MSPs will need to be more strategic in their approach and have the depth of expertise needed to bring more bespoke, tailored solutions to each client. Because reducing costs, while continuing to find, attract and compete for the best talent, is the puzzle that every organisation will have to solve.
