How MSPs Are Missing the Mark

I see the statistics — demand for IT talent is at an all-time high; the number of computer science graduates has flattened in recent years and is down 40 percent from 2002. I see a digital boom extending deep into the future, transforming everything we do.

And I see Fortune 500 companies’ success and failure balancing on the execution of business strategies massively reliant on technology. I read about the growth of data outpacing the growth of computing power many fold and studies showing how harnessing that data drives remarkable competitive advantage.

From my perspective, access to talent, particularly technical consultants, has never been more important. Yet, amazingly, most Fortune 500 companies have implemented Managed Services Programs that focus on cost savings and compliance; not talent acquisition.

Look at MSP processes, procedures, systems and staff. How are programs measured? Spend and headcount. On what criteria are P&S bonuses based? Year over year cost savings. Background of the onsite staff? Commercial staffing and process administration; not technical staffing. Where did the program processes and business rules originate? That’s a long story but clearly not based in talent fulfillment.

As a result, most MSPs miss the mark. They drive compliance and cost saving and drive away the best talent and extraordinary results. They execute onerous contingent talent acquisition processes. Buyers go to other sources to access talent, like full-service consulting companies and offshore/onshore service providers.

However, I find that the more the MSP focuses on hiring manager satisfaction, the greater the adoption of the program. What drives hiring manager satisfaction? Access to the right talent, quickly, AND the ability to influence the talent acquisition process. I have found that the more hiring managers are engaged in the staffing process — from job description creation to communications with staffing suppliers to candidate screening and selection — the higher the quality of the results — better qualified candidates, higher offer acceptance rates, higher consultant retention levels — all in all, greater productivity.

Why? Because hiring manager involvement floods the supply chain with information about projects, the culture, challenges and lessons learned. All this drives efficiencies and leads to breakthrough results in talent acquisition. And direct communication with suppliers inspires higher commitment to the program for both the hiring manager and the supplier.

I believe the greatest results are returned by programs where collaboration involves all stakeholders including business and IT leadership, corporate human resources, procurement and supply, the external managed service provider (if one is engaged) as well as hiring managers and staffing suppliers. Only by working together in earnest will exceptional results be achieved.

The challenge for contingent staffing program leadership is to have the courage to raise awareness of the importance of contingent labor and their program, to engage senior executives in meaningful dialogue and promote real collaboration where mutual goals are pursued, where appreciative inquiry is encouraged, and where trust and understanding is fostered; and to treat preferred suppliers as trusted strategic partners. Unless this happens during the next three years, corporations will lose access to critical IT talent and this will derail even the best business strategies.


Stephen Graziani

Stephen Graziani
Stephen Graziani is senior vice president of Q Analysts LLC. He leads the company’s sales and marketing initiatives and is responsible for strategic accounts. Graziani has 25 years’ experience in applied technology and information technology staffing services.

Stephen Graziani

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16 Responses to “How MSPs Are Missing the Mark”

  1. SplitUp123 says:

    HOW DO YOU DO THIS ON MSP!!!! ##############################

  2. dbellnz says:

    Great post. I tend to believe – probably biased due to a talent acquisition and category management blend of career – that MSPs have found themselves where they are due to a total lack of interest from talent leaders in the past. The commercial guys will fill in the blanks without real talent acquisition interest. Obviously. Many HR leaders ignore or commoditise contingent talent. That’s changing…… So hopefully some of the focus purely on cost and efficiencies can turn to where it should lie – a crucial talent stream that needs equal focus from TA guys. Bring it on.

  3. Conor Smith says:

    First I would like to comment you on a terrific posting, Stephen.   I thought it was insightful, balanced, and fair.  I think MSP’s are a valuable tool to help large corporations gain visibility into their contingent workforce programs and gain some efficiences.  Unfortunately,  the priorities of most programs are out of whack.   While gaining efficiencies, visibility of spend,  control over vendors etc is important,  shouldn’t the main purpose of any MSP be to create a program that enables the organization the best and quickest way to access the top talent in the marketplace?  And while clearly cost is a concern for a buyer of any service,  in the talent acquisition industry shouldn’t the true cost be measured by the ultimate value the vendor and talent provided the organization?  Aren’t the real measures of value provided by metrics such as whether or not the talent completed the work they were hired to do (quality measures including turnover/attrition,  would the hiring manager hire the talent again to do the work etc)?  Speed to hire?  (how long did the positions stay open when the hiring manager needed talent to complete his or her objective –  think opportunity cost).   How about accuracy?  How many resumes and interviews did the hiring managers have to sit through before finding a qualified talent?  Every minute wasted is a cost to the organization because the manager isn’t performing the work the company hired him or her to do.   The list goes on and on,   yet the most common cost savings value measurement put on vendors in MSP is mark up adherence.  
    But perhaps most importantly,  isn’t the most critical measurement what your customers and vendors say about doing business with you?   According to Staffing Industry Analysts the 2012 Net Promoter score for MSP’s from buyers is 4% and from suppliers (the lifeline to success of any MSP) is -52%.     This says it all.  
    We as leaders in the talent industry need to keep speaking up (LOUDLY) that we believe properly utilizing contingent labor is a critical strategy for a company’s success and MSP’s that don’t facilite quality hiring (driven by value and communication)  are not only doing damage to the companies they serve but also damaging our collective reputations.   A 4% NPS by buyers and -52% NPS by suppliers is an indictment on our industry and the value we provide.   We need to do better.

  4. Julia Fournier says:

    Not sure if you have considered this, but the issue here might speak to the definition of spend under management by an IT service provider. If SOW’s, Time and Material mandates and contractors are not being managed in the same program it is impossible to provide value to an IT organization. Our programs manage a number of categories some of which are only differentiated by methods of invoicing. Our experience has been that strong IT programs that encompass all methods of buying and or invoicing enable MSP’s to better meet the needs of the IT organization through offering cost, resource and vendor strategies that go beyond savings and spend optimization. You are right that the challenges in most traditional IT contingent labor programs is that the spend under management isn’t broad enough to realize an overall vision and strategy because it doesn’t encompass all spend.The key to success is in fact to ensure that the MSP selected for this category of spend has a knowledge base that goes beyond talent acquisition and much deeper into the buying patterns and strategic alliances of the client’s they service.
    Unfortunately the term MSP doesn’t apply to all service providers in the space, and frankly some client’s do in fact have different pain points that need to be addressed therefore, some MSP’s are better suited than other’s. As an example if HR owns the category you will see that an MSP decision will be based on visibility, hourly cost and talent. If procurement owns the program in conjunction with HR you might see an emphasis on all facets that need to be there in order to achieve an effective program which will no doubt include a greater emphasis on spend migration and under management, and savings overall. I can say though that there are some MSP’s out there that go far beyond talent acquisition and staffing, and their programs are founded on providing strategic vision, vendor recommendations and spend optimization solutions to the C suite. In some instances they may even work with their client’s to ensure that the programs they support have the right level of executive sponsorship before they proceed to implementation, which is a missing link in many programs, and not representative of the MSP. What is broken sometimes in some programs is who owns the program? What is the level of executive sponsorship and how inclusive is the spend under management in support of IT talent overall.
    Just a different perspective.

    • stephengraziani says:

       @Julia Fournier
       Julia – you make some excellent points and I do agree that a broader spend under management is help achieve program results.  My main point is not that spend is managed (that can be a good thing) but that the process associated with that management adversely impact service quality.  It doesn’t matter if the spend is contigent or project, if meaningful information sharing and dialogue about client’s needs, environment, timelines etc is not available then service quality necessarily decrease.  I think the challenge and opportunity for MSP’s is find a way to flood the supply chain with knowledge.  Unless and until that challenge can be addressed then programs will continue to struggle with compliance, poor hiring cycle time, unqualified candidates, high CW turnover, higher direct and indirect costs and general supply chain friction.  That said – I believe that can be addressed with innovation and investment.

  5. rgg1964 says:

    We have worked with MSPs that treat us as partners and others who do not. While they may save their client money, the quality of the talent presented to the MSP seems to be less important than potential cost savings.

    • stephengraziani says:

       Cost savings are easier measure and P&S compensation is frequently tied to that.  Quality is hard to measure and I am not aware of P&S compensation tied to quality based outcomes. 

  6. dbellnz says:

    I think its a great blog, but also needs another perspective.  the fact is contingent talent has traditionally been ignored or commoditised by HR leaders (effectively ignoring this evolving and crucial talent pool).  Other functions, with a different mindset, have ‘filled in the blanks’.  Its good that, with visibility and efficiencies now in place, that the debate is quite rightly shifted to quality and effectiveness.  Its not MSPs or SCM missing the mark, in my opinion its still the lack of interest of talent leaders to evolve the effectiveness of this platform.  thx for sharing, a great read   

    • stephengraziani says:

       You are right — HR has yet to embrace the virtual / flexible workforce in a meaningful way.  Not that there isn’t discussion of that in the hallways and around the water coolers in major corporations.  For instance, when I ran MSP at Kaiser Permanente I had numerous conversations with the VP of HR for their IT group. And the Human Capital Institute has also done some work in this area specifically around workforce planning.
      Yet even where programs are “owned” by the HR the execution of the programs is virtually the same as when they are “own” by procurement.  In fact I saw and SIA survery that showed HR owned programs were more restrictive. 
      Look at how recruiting is done in large corporationes — the best internal corporate recruiters realize that to attract the best talent they must engage the hiring manager in the process — to define the requirement, to calibrate the search, to positively engage the candidate etc.  Yet in many centralized contingent staffing programs these very processes are designed OUT.
      It is no surprise that, hiring managers engage Accenture and Infosys to get staff to augment their team.  Here at least they can discuss their needs, provide feedback and participate in the process. 
      Some programs get it.  Allegis and Tapfin have programs that have the right on-site team in place and processes that support collaboration. 

      • dbellnz says:

        @stephengraziani Agree Stephen. It’s almost like stage one is now here I.e. “what the hell has been happening or what don’t we know”. Stage two is like “wow, all forms of talent are important not just traditional FTE”. stage 3 is integrated programmes I am sure and / or evolving the good ones further.

  7. Vishal Goyal says:

    Superb article, Stephen.
    The question now is, how do we help companies manage multiple – mostly disparate and sometimes conflicting – targets? Cost Savings is in the bloodstream of companies. Plus, it is a very tangible methodology of measrement that directly relates with the bottomline. Companies need hand-holding to migrate from this traditional measure to something more intangible and arcane measure – Effective Talent Fulfillment.
    Well, one way could be bringing up the taboo topic – Failures.
    Our culture believes more in Rewards. That is the reason, there are tomes on cases of successful companies, their methodologies, etc. However, we will be hard pressed to find an article that talks about ‘Failure to Hire Right’ as the Root Cause of a doomed project – except perhaps at the CEO level – which is not the target of your article anyway.
    Bottomline, we if we can create case studies of “What Could Have Been” etc, that may help the decision makers.
    I truly appreciate your ideas in the article and look forward to many more such insightful messages.

  8. ManageRight says:

    Great article Stephen.  You could not be more right.  Speaking from the MSP’s perspective, I can assure you that most (if not all) MSP’s just don’t get it.  The one’s that do, fail to have the courage to educate their clients.  I do not want to sound self promoting here, but, this is exactly why I started ManageRight.  I have been in staffing for 20 years now and have a clear understanding of the important relationship between talent acquisition and business process.  We educate our clients about lessons learned in the arena and encourage them to adopt the business process the connects vendors to the hiring managers, rather than creating a larger disconnect.  We believe that it is one of the big reasons for our success.  Our vendor participation is 99% and a measurable we share with our clients.  Thanks for the great post.  
    Jean-Paul Renard 

    • stephengraziani says:

       Jean-Paul — I would like to hear more about your programs.  How do you engage stakeholders in the process? 
      When I oversaw the program at Kaiser, we changed the rule so that hiring managers could speak with preferred suppliers about their departments, initiatives but not specific requirements.  I also instituted monthly supplier meetings where we discussed the program, reviewed results, met with guest IT Directors and VP’s and worked on ways to improve outcomes.  I did that for two years — and the results were great.  They have gotten away from the monthly meetings now — it was large investment in time but appropriate when implementing the changes and building supplier trust and program competency. 

      • ManageRight says:

        Stephen — I love the idea of monthly meetings but we have found that our clients are just far to busy to commit (to your earlier point).  I believe the key is to build the software application to meet the communication environment we are trying to create.  If we create an optimal business process and then configure the the software to meet that optimal business process without question, then we will have a winning program.  
        Our goal is to build an application that embraces a “social culture”, rather than discourages it.  Unfortunately, VMS/MSP’s do typically “miss the mark” when they do not have the understanding of  the social environment that needs to be in place in order to support talent acquisition efforts.   
        Again, I do not want to sound self promoting, but,  ManageRight embraces to social interaction between vendors and hiring managers by its internal communication methods.  Hiring managers and vendors can speak with one another through the application (think facebook) yet it measures performance on both ends to police the process to insure its effectiveness.  When we measure the fill rate ratios of between allowing interaction between vendors and hiring managers and restricting interaction, allowing interaction fill rates are almost doubled!  It is quite an easy sell when you can provide the metrics to your client, even if you are in midstream.  
        We (VMS/MSP’s), have to do a better job of educating our clients.  Although, we too have clients that restrict communication between vendors and hiring managers, we can also build compelling arguments through metrics.  I could provide you quite a few examples and I would be glad to speak with you offline if you are looking for strategies.
        – JP 

    • mbossart says:

      @ManageRight Jean-Paul,
      I like the ideas you share above, especially connecting vendors to hiring managers. We have recently started a staffing services business unit, because it has become another way for our specialized expertise in the life sciences to benefit our customers. And I do hope we can create more compelling arguments to our client’s MSPs to allow us access to hiring managers. If you have ideas, I am open to hearing them!
      Mitchell T. Bossart

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