RPO and MSP - What's the Difference?

Consolidated purchasing of temporary or contingent workers drives down costs and relieves your HR function of an onerous burden.

In a recent article we explained our view of why companies choose Recruitment Process Outsourcing (RPO). Another acronym that is widely used in the recruitment business, often without proper definition, is MSP – Managed Staffing Provision. It is often misunderstood because a key word is missing, namely contingent (i.e. non-permanent or temporary).

Whereas RPO focuses on the recruitment process (usually, but by no means always, for permanent staff), MSP programmes offer a client end-to-end control of and visibility over the non-permanent workforce. These can include temporary workers, contractors, consultants and freelancers engaged under a statement of work.

MSP can thus relieve both your HR and TA functions of the entire burden of managing contingent staff, and should do so in a way that is both cost-effective and, at the same time, compliant. However, like RPO, we believe that this can and should be planned, managed and executed in a personalised way that truly reflects your brand, your position in the market and your Employee Value Proposition (EVP).

Essentially, this means harnessing the power of your brand to source talent directly and/or through the management of preferred suppliers, i.e. saving you the need to go through one or more agencies, ensuring that you secure the best talent in the market at competitive rates, not just the most readily available talent on the market.

Increasing globalisation of talent means that the your MSP provider must have extensive knowledge of tax, labour legislation, and employment law in all of the countries affected: for example, an IT or digital development project could involve assembling a multinational team of project managers and developers.

MSP Programme Services

Clients are free to choose the flexible package of services but a comprehensive end-to-end MSP programme would cover all of the following: 

• Engagement of all forms for contingent labour.
• Building qualified pools of candidates.
• Streamlining the recruitment and selection process.
• Managing contingent workers during their assignment from on-boarding to off-boarding.
• Review of current supplier and contract structures.
• Contracts management.
• Standardisation of contractual terms and corporate policies in contracting.
• Providing enterprise reporting and analysis for the programme.
• Management of a selected supplier base.
• Management of staffing supplier invoices.
• Maintenance of a comprehensive quality management process, including formal and documented quarterly business reviews and annual strategic reviews of the programme.

Cost savings & compliance

There are many reasons why companies choose to engage an MSP provider but most of them come down to cost savings and compliance. First generation savings are typically in the range 10-20%, depending on how much leverage over pricing the client has achieved in the past. On-going savings can run at 3-5% depending on the market for the skills required and the power of the client’s brand.

In addition, the freeing up of your HR and TA teams can deliver further “soft” savings of around 8%, according to research by the Aberdeen Group.

On the other hand, hiring contingent labour can entail a high degree of risk. An MSP must therefore ensure that all candidates are screened to make sure that they are suitable hires before starting the assignment. This includes verifying passports and right-to-work documentation for individual workers as well as carrying out robust vetting procedures before any supplier is enrolled into the programme.

Why MSP?

In today’s jobs market, there is a growing shortage of workers with critical skill sets, especially as the baby boomer generation retires. One consequence has been the steady growth in the size and cost of the contingent workforce that is required both to supplement internal talent capabilities and to meet operational demands for flexibility and responsiveness.

Engaging an MSP provider is the ideal solution for medium-sized companies that require this flexibility while keeping a tight lid on costs.