Despite the fact that vendor neutral recruitment has been around for a long time, myths and misconceptions persist around how this MSP model works - and what its advantages are. We tackled some of these in our beginner’s guide to vendor neutral MSP.
In this article, I want to take a look at the past and present of vendor neutral MSP, so that we can examine what the future holds for this increasingly popular procurement model.
Let’s begin at the beginning.
The past: the emergence of vendor neutral MSP
The vendor neutral model has its origins in recruitment. In fact, the entire managed service programme (MSP) way of working can be traced to a time when employers wanted better value from their supply of temporary labour.
Initially, recruiters responded to this need for better rates and greater efficiencies by taking complete control of their customers’ contingent workforces – unintentionally creating the master vendor MSP model in the process. However, it wasn’t long before flaws in this ‘one firm supplies all’ model were recognised.
Vendor neutral emerges to provide competition and variety
Vendor neutral MSP emerged as an alternative for meeting complex resourcing needs that a single, or ‘master’, supplier would struggle with - for example, multi-site and multi-role contracts, or those requiring specialist, hard-to-find skills.
By partnering with an agreed list of diverse recruitment suppliers, and giving them all a fair opportunity to submit candidates, vendor neutral MSPs gave their customers the ability to:
- investigate sourcing options
- scale requirements quickly
- add new vendors easily, and
- enjoy cost savings as a result.
However, there was a common misconception in those early days that the MSP was an unnecessary layer of cost. As we explored in a previous article, this couldn’t have been further from the truth. For a number of reasons, not least the competition it creates, vendor neutral MSP models are often the more cost-effective model, with customers finding more money in their pockets through savings delivered.
And once vendor neutral MSPs had demonstrated their value and assuaged these fears, this model became the preferred method of sourcing.
The present: the growth and influence of SOW and Services Procurement
At the start of 2022, we’re seeing a shift in the use of the vendor neutral model. It’s moving from being just a resourcing solution to being the go-to way to source any people-based professional service.
At the moment, this is most commonly applied in the use of consultants. But here at Comensura, our customers are now using our vendor neutral service to secure:
- training services
- financial management and forensic accounting services
- IT product development, digitalisation and software-as-a-service (SAAS)
- search and selection services
In the UK, the extension of IR35 rules into the private sector and ongoing talent scarcity have played a big part in the shift towards consultancy based projects. Businesses are increasingly looking to bring on board expertise on a project-driven basis, and statement of work (SOW) is how they’re doing it.
However, any piece of work that is outcome-led and has a clear beginning, middle and end provides a good basis for SOW. What we’re seeing now is the merging of statement of work and vendor neutral principles, which is opening up limitless opportunities for the improved procurement of services.
Vendor neutral meets statement of work
Many organisations have realised that keeping a ‘warm bench’ of potential suppliers, and inviting them to compete for SOW contracts as they arise, is a great way to mitigate both the risks of engaging contractors and acute talent scarcity in 2022.
What’s more - and here’s the really compelling point for most - it’s a great way to manage the cost of supply. Built into the statement of work approach is the principle that the supplier assumes the risk of delivery. By agreeing milestones, payment schedules, and outcomes upfront, stealth costs and scope creep can be kept firmly in check.
At a time of unprecedented external pressures, this low-risk approach is yet another plus point for the vendor neutral procurement of services. And just as this way of working expanded beyond recruitment and the public sector, it’s about to expand beyond the professional services too.
The future: what’s next for the vendor neutral model?
Vendor neutral MSP and statement of work are about getting competitive quotes from suppliers, choosing one to work with, and handing over the risk of delivery. These are simple, but effective, ways of working.
As the benefits of this approach become more widely recognised, it will become the preferred way of procuring any people-based professional service.
With skills shortages rife and procurement leaders coming under increasing pressure to reduce cost and risk, I expect a growing number of organisations will turn to vendor neutral sourcing to ensure that their consultancy and outside-IR35 contingent workforce resourcing needs are met
- their other long tail professional service requirements are effectively managed
- healthy and effective quality and price competition is tested every time
- all spend is captured compliantly and on-contract, follows internal governance procedures, and is visible and controlled
- project and consultancy costs are delivered in line with formalised requirements, and
- scope creep and stealth costs are avoided.
Having a large and diverse warm bench of suppliers ready to provide any category of service means that vendor neutral providers can rapidly get the right people based services, in the right place at the right time.
By managing these services using cutting-edge VMS technology, in partnership with the people and process expertise of a specialist vendor neutral MSP such as Comensura, organisations will gain the visibility and control they need to achieve high quality, low risk, and reduced costs - whatever kind of service they’re buying.
Find out how Comensura can help
Want to know more about the benefits of vendor neutral MSP and statement of work services procurement? Contact us to discuss your needs and find out how our experienced team can meet them.