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IMP vs. MSP: A tussle between strategic and tactical benefits


Contingent labor in all its forms has been a constant presence in any organization’s staffing plans. However, due to economic uncertainties, changing preferences of millennials and technological advances, the use of contingent labor has increased considerably. This has resulted in contingent labor becoming a more integrated piece of the overall workforce. Due to this, it is becoming imperative for organizations to focus more and more on effective sourcing and management of this workforce.

Until past few years, only temporary workers constituted a large part of the contingent workforce. There were staffing agencies which employed these temporary workers and enterprises either managed these staffing agencies internally or they outsourced this management of staffing agencies to MSPs. MSP model became really effective for managing this temporary labor as it saved enterprises a lot of time and money that went into gruesome task of managing staffing agencies.

As new ways of engaging talent in form of IC, SoW and freelancers emerged, buyers reached out to their MSP partners to help them manage these additional talent categories. However, after running multiple pilot programs with MSPs, buyers are now realizing that MSPs are not as effective in managing the emerging categories of talent as they were in managing the traditional temporary labor. Thus, buyers are considering taking the Internally Managed Program (IMP) route to manage their contingent labor.

An Internally Managed Program (IMP) is an initiative undertaken by the buyer organization to manage its contingent workforce. It is run by a team which is internal to the organization and may people from either the HR or procurement department or both. Buyers going for an IMP expect following strategic benefits:

Direct control over the program and supply base: An IMP can result in buyer having better control over the operational and recruitment processes. It might also result in better supplier engagement as all staffing suppliers are given equal opportunity to fill requisitions and buyer has full visibility over all the suppliers

Ability to undertake strategic initiatives: An IMP gives the buyer the opportunity to build a solution catering to all its diverse requirements which might not be possible with a standardized MSP solution. Apart from this, buyer can undertake strategic initiatives for achieving long term goals

Greater control over KPIs and SLAs: In case of an MSP enabled program, a buyer must stick to the initially decided SLAs and KPIs in the Master Service Agreement (MSA) and the SLA/KPI coverage might be limited due to MSP’s ability to measure additional parameters. An IMP can help buyers track performance of their contingent workforce program better

There is no doubt that it is in the best interest of buyers to go for an IMP if they can realize the above-mentioned benefits. However, there are multiple barriers that can derail the entire process of going in-house and result in increased problems instead of the intended benefits. Some of these obstacles include:
·       
      Weak internal Program Management Office (PMO): As an MSP has been managing the entire program on behalf of the client, their internal PMO doesn’t have the expertise to manage different suppliers, technology implementation, and other back-end functions

Limited market knowledge: While the buyer might have some insights into the generic market landscape, it will certainly lack the specificities around market rates, compliance requirements, country best practices, etc.

Lack of access to different talent types: With multiple new ways of engaging talent such as SoW, IC, freelancers emerging, buyers will find it difficult to source and manage this talent on their own

Minimal experience with advanced technology: While the buyer might be adept at running a VMS which it has been using in collaboration with MSP, it will certainly lack knowledge around new technologies in the market and the best technology fit for their existing systems

While one can argue that some of these barriers can be overcome by developing an expert team and investing in better technologies, it becomes important to look at the cost benefit scenario of undertaking such an exercise. There is no doubt that an IMP can offer increased strategic benefits over those offered by an MSP program; however, buyers need to evaluate the current benefits that they are getting and look the opportunity cost while making this decision.  

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