While historically, managed services programs have been focused on cost savings and tactical execution, the emphasis has expanded from tick-box compliance to data-driven insights that power innovative approaches to modern talent challenges.

“The evolution has been a long time coming,” admits Brian Salkowski, president, Americas at Guidant Global. “Our tone and tenor have shifted from ‘thou shalt’ to mutual cooperation and working together toward outcomes that benefit everyone.”

Essentially, data analysis has become the centerpiece of an updated model that features widespread sharing of information, strategic decision-making and inclusive relationships with suppliers.

Here are four characteristics of today’s data-centric MSPs and a brief look at the external drivers of change.

Fully Integrated Talent Solutions

With some 53 million Americans classified as independent workers, and a persistently low unemployment rate, MSPs need to look beyond agency-sourced staff augmentation pools to meet the strategic objectives of business managers and procurement.

“How we solve talent issues has evolved,” Salkowski said. “We’ve gone beyond merely filling orders to designing the optimum sourcing strategy.”

When candidates were plentiful, MSPs would cull through résumés from dozens of staffing suppliers to fill a requisition. In today’s competitive talent market, the old process is no longer up to the task.

These days, MSPs consult with business leaders and stakeholders to fully understand the business objectives and issues before tackling a major project or long-term staffing initiative. They then conduct a rigorous, fact-based analysis of workforce, wage and performance data from VMS, in-house staff and external sources to formulate an end-to-end workforce strategy.

Analysts not only evaluate the entire talent pool but also job structure and tasks, time-to-productivity, projected attrition rates, as well as the appeal of an opportunity to find the most capable mix of employees, freelancers, contractors, agency contingents and SOWs within a given market for the lowest hourly rate.

For example, MSPs have recommended longer trial periods for temps as a way to lower hourly bill rates and reduce the cost of first-year turnover among call center staff. They’ve also developed alternative sourcing strategies and beefed up candidate pipeline levels to offset churn in light industrial environments. To be effective, staffing solutions must serve both the needs of the company and those of procurement.

The New Workforce
How big is the on-demand workforce? The numbers illustrate why talent supply chains need to expand:
• Approximately 10.1% of workers rely on alternative arrangements for their main job.
• As of May 2017, 5.9 million persons held contingent or temporary jobs. In addition, 10.6 million were independent contractors, 2.6 million were on-call workers, 1.4 million were temporary help agency workers and 933,000 workers were supplied by contract firms.
• 4% of the population has worked through an online platform at some point.
• 41% of freelancers also have a permanent job.
• 47% of millennials freelance, more than any other generation.
Sources: The US Bureau of Labor Statistics, JP Morgan, LinkedIn, Intuit, Upwork and the Freelancers Union

Predictive Insights

Staffing customers increasingly expect MSPs to evaluate the historical performance of agencies, recruiting cycle data and labor market information to predict future talent supply and improve recruiting performance.

To satisfy clients’ evolving needs, MSPs like Guidant have made substantial investments in support services and operations, including the addition of a data analytics team, Salkowski says.

So far, the investments in predictive models and tools have delivered ROI by pinpointing where the best hires come from, as well as superfluous job requirements and sourcing biases that may be limiting the talent pool while increasing costs and time to hire.

Contractors have access to data, too, so they know exactly what their skills are worth. With wages rising at the fastest rate in nearly a decade, MSPs need to forecast the wage elasticity of supply over a given time period to develop an effective, long-term staffing solution.

“Our data has become increasingly granular to meet the objectives of business units and procurement,” explains Michael Keiper, senior VP of MSP strategy and operation at Pinnacle Group.

“Having detailed data by job category, title and levels lets us run what-if scenarios to see how bill and pay rates impact time-to-fill, overall cost and talent mix for a project or position within a specific geography over time,” he says.

Organizational Alignment

In the past, recruiters who worked through managed providers were often barred from contacting hiring managers directly. As a result, they didn’t always understand the connection between their work and the client’s business goals and their objectives didn’t always mesh.

Data has become a catalyst for change.

The data analysis process invites conversations about talent and what has worked and what hasn’t, notes David Cooper, chief commercial officer at Geometric Results Inc.

Instead of viewing themselves as extensions of procurement, MSPs are reading clients’ annual reports and ensuring that everyone across the supply chain has unified goals and a sense of shared purpose toward meeting those objectives.

Frankly, the push toward predictive models and demand forecasting requires data sharing and collaboration across the supply chain. Whether it’s participating in an intake meeting for a single requisition or developing a talent management plan for an entire business unit, everyone has an equal seat at the table.

Even in vendor-neutral environments, program managers are analyzing hiring manager behaviors and the profiles of successful candidates to help recruiters translate multi-page job descriptions into fillable orders, says Ashish Kaushal, CEO of HireTalent.

“Highly sought-after contractors want interesting work that makes a difference,” Kaushal adds. “MSPs are using historical data to provide context, which helps us create a compelling hook to grab the candidate’s interest.”

Measures That Matter

Under previous models, suppliers were primarily evaluated on cycle times with little regard for what the client needed to achieve or whether the submitted candidates were qualified. Even worse, line managers developed loyalties to suppliers that were not supported by facts.

Many MSPs have instituted nextgeneration, performance-based metrics linked to the quality of submittals and output of contractors. Best of all, they are able to impact performance by sharing the results with suppliers and managers in near real time.

“We now know which supplier is best at providing a specific skill set at an exact price point within each market,” Keiper says. “We can also use the results to educate customers and give them a sense of how their recruiting performance compares to the competition.”

“There’s less focus on transaction speed and more focus on contractor relationship management,” Kaushal agrees. “Some companies even award retention or spot performance bonuses to contractors based on throughput.”

The Legacy of the Great Recession
Although the financial crisis of 2008 and recession ended long ago, the hangover continues to influence the labor market.

“The Great Recession pushed employers harder to control costs and increased their concerns about risk; and that orientation persists today,” explains Peter Cappelli, director of the Wharton School’s Center for Human Resources.

There is no evidence of real talent shortages or skill mismatches, he adds. In fact, there are surpluses of talent in one part of the country and standing vacancies in another. What we have is employers complaining that they cannot find what they want at the wage they are willing to pay.

“That just ignores the way markets work,” he points out. Other factors that fuel the need for a collaborative, data-driven approach to talent management:

  • Skill requirements in job postings increased in areas that were hit hard by the Great Recession and these effects continued through 2015.
  • The US labor force is projected to grow just 0.5% between 2014 and 2024 due to slowing birth rates, retirements and continuing decreases in the labor force participation rate.
  • As of October, the number of US job openings exceeded the number of unemployed workers by one million.