Cracking the code: Episode 2 - Cost saving MSP solution

Cracking the code: Episode 2 – Cost saving MSP solution

In this episode of Cracking the code thought leadership video series, Shauzab Ladha, Global Segment Head of Technology & Consulting, sits down with John Black, Global Programme Head, to discuss John’s recent article Level up your contingent labour cost savings with an MSP.”
Organisations must consider their contingent labour strategy, especially when it comes to cost savings. Let’s listen in as Shauzab and John discuss this topic, highlighting key questions such as:
  • What are some of the challenges of managing a contingent workforce?
  • Why organisations are outsourcing contingent workforce management to a third party?
  • How MSPs can help clients drive cost savings?
  • Why partner with an MSP?

Shauzab Ladha: Joining me today is John Black, who comes to us with 20-plus years of experience in the talent management space. And more importantly, he is part of our leadership team in Pontoon’s Technology & Consulting segment. Welcome, John.

What’s super exciting is some of your thought leadership work around employers levelling up their contingent labour cost savings with an MSP. When we look at the marketplace today, we’re hit with many headwinds. So this topic is of significant importance to many of our clients. I’d love to get your perspectives on some of the unique challenges that clients are experiencing when managing a contingent workforce.

John Black: So I like to think of three categories when answering this question; one is delivery, one is cost, and one is compliance. And when we think about contingent labour, we have to think about multiple stakeholders across a client’s enterprise. So from a delivery manager’s or a hiring manager’s perspective, it is access to the talent when they need it and commitment to retain that talent through the duration of the need or the project.

When we think about cost, we’re talking about the PNL owner or procurement and how to maintain cost in alignment with our client’s margin projections. And that’s where we find ourselves, particularly in the contingent labour space today, controlling the cost because of the impact of margins on the business.

And then lastly there is compliance. So mainly, if you think about the United States, we have 50 states, all with their own employment laws and federal law, and in some cases, depending upon where you are, they don’t always align.

So our clients have to be able to know what compliance and labour laws they need to follow. This is where contingent labour can add a little complexity because you also have worker classification. Are they independent contractors, or are they true contingent workers? How is that classification done? So there are multiple layers to the complexity of working with contingent labour.

Shauzab Ladha: Indeed. The global regulatory environment and the changes we see at the country level are challenging to keep up with. We hear that from our clients every day. Especially as clients move into new markets and want to stay abreast of local legislation and employment law, we want to keep our finger on the pulse of this super complex area of business operations. In your experience, John, what are the strategic reasons that lead organisations to outsource their contingent workforce management to a third party?

John Black: Expertise is number one. I like to put it in medical terms when I’m asked this, you know, if you have a complex problem, you want to go to a specialist, you don’t go to someone general. In my mind, an MSP is your specialist. An MSP has experience working across very large-scale clients. We know about working with our client’s supply base. We have an understanding of what works and what doesn’t work.

That’s value back to our clients. When conversing with potential clients, I also like to talk about what they want to focus on. Do they want to focus on their core business, or do they want to focus on these elements that can be quite a bit noisy? Keep their delivery teams focused on delivering to their end clients, and let us help support that vision and their needs.

Shauzab Ladha: One of the core takeaways from your thought leadership article was around cost savings and the fact that companies can absolutely realise significant cost savings with an MSP. What are some of the ways that MSPs can help employers drive cost savings?

John Black: It’s a bit of a complex recipe in my mind. Creating the perfect meal takes many parts and different ingredients to make that recipe. You must standardise your cost model. Employers must look at their contracts. Do they have consistency in the terms and the deliverables with suppliers? You need to maximise your spend and leverage that to your benefit. Other tactical things that I like to look at are cost deviations. We must look at geographies and talent and understand a reasonable cost range versus having a vast range, a deviation.

Let’s say you have an opening for a SAP developer in San Jose, California. You should have within a 5% deviation in the cost to acquire the talent. Unfortunately, I see numbers ranging from the high teens to the low 20% deviations.

You have to attack that as cost leakage. That’s where an MSP can help step in and align those contracts, working with your suppliers and controlling that cost deviation. Those are some primary things to reduce your costs immediately.

It’s not just looking at the cost deviations but leveraging data to make informed hiring decisions. Take Pontoon’s data analytics capabilities, for instance. We have global data, so if the client comes to us and says, “Hey, I’m thinking about investing in new talent; I need this skill set in this location.” The client may want to source in a specific region, but with our data modelling, we can show them that perhaps a major city in the Midwest would have more access to talent to drive their cost or investment down. They can also expand their footprint in that geography for future business opportunities.

Not only do we have current data, but we also have historical data and the ability to begin forecasting when talking with some of our clients. It’s not always about today regarding cost. It is what’s happening two to three years from now because they’re locked in on contracts. Contracts that employers sign today at an agreed-upon cost model will be 12 to 15% more in three years when you get to the renewal. That’s where Pontoon can help guide our clients and make cost savings salary recommendations. It’s really about controlling costs and advising our clients where they need to make those investments.

Shauzab Ladha: Great insights, John. I encourage our listeners to read your article, which concerns levelling up your contingent labour cost savings within MSP. What are your final thoughts or advice for our listeners when choosing an MSP partner?

John Black: That’s an excellent question, and I’m a little biased in my response. But what I would say if someone is evaluating whether or not to bring an MSP provider in is to look for a partner that has the experience. Ask them questions about how they have transformed both their talent acquisition and costing models, deep dive into their data capabilities, and then go with a provider with sister companies that they can lean on to give a more robust solution.

So, if you’re looking to optimise your contingent labour strategy and drive cost savings, it’s time to partner with an MSP. Contact us today to learn more about how we can help you achieve your contingent workforce goals. Also, don’t miss out on more valuable industry insight videos and thought leadership articles; visit our insights page.

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