Spend Matters (one of the industry’s leading trades) recently published an article titled, “Unlocking Hidden Cost Savings Through Third-Party Payrolling: Does Your MSP Go All Out for You?” This article explains how an effective MSP maximizes third-party payroll utilization to drive cost savings and value for an organization.
Any reader, especially in those in Procurement, might be asking how do companies unlock these savings? Well, the author begins the piece by saying, “As companies rely more on non-employees to fill mission critical-roles, procurement leaders are realizing that their business objectives are not always aligned with those of their managed service provider (MSP). One scenario where this can be the case is the MSP’s rate of third-party payroll utilization — the percentage of spend for contingent workers who are W2 payrolled by a third party but sourced directly by the client.”
Lastly, the author points out one of the most notable pieces of the article. The author asks the following:
“Is your MSP transparent?
Then, he goes on to state, “It is important to understand your MSP’s business model and ensure it views third-party payrolling as a useful tool in your contingent workforce program rather than a threat to its profit margins. This kind of strategy must be implemented with a vendor-neutral MSP, meaning the provider has no ownership interest or affilitation with a staffing company. While a non-neutral MSP relationship could work for filling administrative and clerical positions in a quick and efficient manner, securing cost savings and risk avoidance benefits from increased third-party payroll utilization requires the MSP to operate with a fully staffing-neutral business model”
PRO’s model is vendor-neutral and it’s what distinguishes itself from other MSPs in the industry. In fact the author states the following, “Not all MSPs, however, are structured to support this approach. For example, when the sourcing of open orders is left to staffing firms or staffing-aligned MSPs, procurement organizations typically face markups that can range from 35%–50% for staffing agency-supplied workers.”
Check out the full article to see the benefits of third-party payrolling and why a vendor-neutral MSP is critical to your third-party payrolling program.
If you or a member of your team would benefit from a further discussion on how PRO is helping companies implement winning contingent workforce management programs globally, please contact a PRO representative at 800.291.1099 or email at firstname.lastname@example.org.
Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of PRO Unlimited and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.