“What’s in a name?” Shakespeare asked when penning a now famous line of dialog from Romeo and Juliet. The question here becomes more interesting in the context of managed services providers (MSPs). Depending on the type of business and industry, MSPs can mean two different things: a third-party company that manages a client’s IT infrastructure or a third-party company that manages a client’s contingent talent processes, working as a bridge between hiring managers and staffing agencies. Here’s the thing, though, as a slew of automation technologies infiltrate the staffing landscape to increase recruitment productivity, talent engagement, and people processes: if a staffing MSP took on some of the attributes of an IT MSP, it could present a unique opportunity to introduce new dynamics that consolidate, streamline, and enhance efficiencies across the supplier base for the greater benefit of clients. 

Trends Shaping the MSP Space in 2024

As JP Morgan noted, “The U.S. labor market added 353,000 jobs in January 2024, nearly doubling economists’ forecasts and topping December 2023’s upwardly revised gains of 333,000.” Analysts are no longer raising the alarm of recession, and the hiring outlook for this year is attracting positive momentum. 

Of course, that doesn’t mean there won’t be some hurdles to overcome. The world is changing rapidly, with technology advancing at an accelerated pace. As we recently pointed out, “MSPs face a unique challenge: how to secure the top tech talent they need to stay ahead of the curve. Concentrating on supplier selection and reconfiguring supply bases should be strategic considerations for this new year.”

The staffing industry is undergoing a period of significant transformation. The rise of technology, a shifting talent landscape, and evolving client needs are reshaping the way agencies and MSPs must operate — and partner. So, let’s take a closer look at the ongoing trends influencing the workforce solutions industry.

Technology Adoption

Staffing agencies are increasingly adopting technologies like AI-powered recruitment tools, chatbots, and automation to streamline processes and improve efficiency. This creates opportunities for MSPs to offer solutions that support these technologies and manage their infrastructure.

Focus on Skills and Training

The demand for workers with specific skill sets is rising. Staffing agencies are focusing on providing training and development opportunities to their candidates. This opens doors for MSPs to offer their expertise in talent management and skills development platforms.

Compliance and Security

With stricter regulations and growing security concerns, staffing agencies need robust data security and compliance measures. This presents an opportunity for MSPs to offer cybersecurity solutions and data management services specifically tailored to the staffing industry.

Evolving Client Needs

As the industry landscape changes, staffing agencies require flexible and scalable solutions. MSPs can cater to these needs by offering customized service packages and adaptable IT infrastructure that can grow with the agency's requirements.

Forging a New Kind of Partnership Between MSPs and Staffing Providers

MSPs amass a wealth of client insight, technological prowess, supply chain expertise, and troves of data. And all of this propels client programs to success. Yet what if MSPs provided a similar type of managed service to the suppliers in the program? 

Technological Transformation

The rise of technology is impacting every aspect of the staffing industry. From sourcing and screening candidates to onboarding and payroll management, innovative solutions are streamlining processes and enhancing efficiency. However, implementing and managing these technologies can be a challenge for many staffing agencies. Here’s how an MSP could help.

• Expertise:  MSPs possess specialized knowledge and experience in managing IT infrastructure for the staffing industry. They can provide guidance on selecting the right tools, implementing them effectively, and ensuring ongoing support and maintenance.
• Integration:  Staffing agencies often utilize multiple software systems for different functions like applicant tracking, payroll, and accounting. MSPs can help integrate these disparate systems, creating a seamless workflow and improved data management.
• Scalability:  As your agency grows, your IT needs will evolve. An MSP can offer a scalable solution that adapts to your changing requirements, ensuring your systems can support your growing business.

The Skills-Based Approach

The demand for skilled workers across various industries is on the rise. Clients are increasingly seeking candidates with specific skills and qualifications to fill critical positions. For staffing agencies, this shift requires a move towards a skills-based approach to talent acquisition. Here's how an MSP can assist in this transition:

• Data-driven insights: MSPs can provide access to data analytics tools that help you identify the skills most in demand within your niche market. This allows you to tailor your recruitment efforts and attract the right talent pool.
• Skills gap analysis: MSPs can offer services to help you analyze the skills gap within your client base. This information can be used to develop targeted training programs and upskilling initiatives for your candidates.
• Technology enabled solutions: Many MSPs offer platforms and tools that utilize AI and Big Data to automate skills-based searches and improve candidate matching accuracy.

Compliance and Security

The staffing industry operates within a framework of regulations and compliance requirements. Additionally, data security is paramount, as agencies handle sensitive information about both employers and job seekers. Given the strong relationships that MSPs share with vendor management system (VMS) and human resource information solutions (HRIS) providers, partnering with an MSP could strengthen the compliance and security posture of staffing providers.

• Compliance expertise:  MSPs could help ensure that staffing suppliers adhere to relevant data privacy and security regulations, such as GDPR and CCPA. They could advise on necessary security protocols and ensure that staffing partner systems remain compliant with industry standards.
• Cybersecurity solutions: In cooperation with VMS providers, MSPs could offer a range of cybersecurity solutions, including data encryption, access control, and vulnerability management. These services can mitigate security risks and protect sensitive data from potential breaches.

Evolving Client Needs

Clients in the modern era are looking for more than just temporary staffing solutions. They seek flexible, scalable, and customized services that address their specific needs. An MSP partnership can empower staffing agencies to meet these evolving client requirements:

• Vendor Management System (VMS):  Many MSPs utilize VMS platforms that streamline the entire contingent workforce management process. This enables efficient sourcing, onboarding, and management of temporary and contract workers, providing a cost-effective and transparent solution for your clients.
• Customizable solutions: MSPs can offer tailored service packages that address the specific needs and challenges of each client. This allows their workforce solutions partners to provide a more comprehensive staffing experience that builds stronger client relationships.
• Scalability: MSPs can provide the infrastructure and resources that staffing agencies need to scale their operations and cater to larger clients with complex staffing requirements.

Partnering with an MSP can be a strategic decision for staffing providers seeking new ways to navigate the shifting nature of the industry. By leveraging its expertise in technology, skills-based recruitment, compliance, and client service delivery, MSPs could help their suppliers achieve greater efficiency, enhanced capabilities, consolidated tools, and strategic planning for long-term success.

Photo by Ross Sneddon on Unsplash