What is MSP (Managed Service Provider)?
Definition: A Managed Service Provider (MSP) in staffing is an outsourced program that manages an organization's contingent workforce, handling vendor management, compliance, technology, and reporting for temporary and contract staffing.
Also known as: Managed Services Provider, Contingent Workforce MSP, Staffing MSP
Quick Summary
TL;DRA Managed Service Provider (MSP) is an outsourced program that manages a company's contingent workforce. The MSP handles vendor management, compliance, reporting, and often uses a VMS technology platform. For staffing agencies, MSPs are both gatekeepers to large enterprise accounts and partners that create significant placement volume.
Key Facts
Role
Manages contingent workforce
Industry definition
Function
Vendor, compliance, reporting
MSP responsibilities
Market Size
$200B+ annually
SIA research
Benefit
Centralized workforce control
Client value
Why MSPs Matter for Staffing Agencies
Large enterprises increasingly use MSPs to manage their contingent workforce, consolidating vendor relationships and standardizing processes. For staffing agencies, this creates a dual reality: MSPs control access to large-volume enterprise accounts, but working within MSP programs means lower margins, standardized processes, and less direct client contact. Understanding the MSP landscape is essential for staffing agency strategy.
Common Pain Points
- 1Reduced margins when working through MSP programs
- 2Limited direct access to hiring managers
- 3Standardized rates that don't allow differentiation
- 4Administrative burden of MSP compliance requirements
How MSP Programs Work
Understanding MSP operations helps agencies navigate these relationships.
- 1
Client Engages MSP
A company outsources contingent workforce management to an MSP. The MSP becomes responsible for all temporary/contract staffing.
- 2
MSP Creates Vendor Network
The MSP selects and manages staffing suppliers. Agencies must qualify for the MSP's vendor list to receive requisitions.
- 3
Jobs Flow Through VMS
Requisitions are posted to a VMS (Vendor Management System) where qualified agencies submit candidates competitively.
- 4
MSP Manages Process
The MSP handles candidate selection, rate negotiation, compliance, onboarding, and reporting. Agencies focus on sourcing.
Result
MSP relationships trade margin for volume and administrative efficiency.
MSP Deep Dive for Staffing Agencies
Types of MSP Models
Vendor-neutral MSPs represent no single staffing firm and manage multiple suppliers objectively. Master vendor MSPs are staffing firms that also manage the program, often filling most roles themselves. Hybrid models combine elements of both. Each model has different implications for agencies seeking to participate.
Getting on MSP Vendor Lists
MSPs evaluate potential suppliers on: fill rate history, quality metrics (time-to-fill, tenure, hiring manager satisfaction), compliance capabilities, insurance coverage, geographic reach, specialty focus, and technology compatibility. Standing out requires demonstrating measurable performance advantages.
Succeeding Within MSP Programs
Success strategies: specialize in hard-to-fill niches where you can deliver unique value; maintain excellent metrics to earn preferred vendor status; build relationships with MSP program managers; invest in VMS proficiency to respond quickly to reqs; ensure perfect compliance to avoid losing vendor status.
Common Misconceptions
- MSPs always offer lower quality staffing
- All MSPs work the same way
- MSP programs are only for huge enterprises
- Agencies can't differentiate within MSP programs
MSP vs Direct Client Relationships
| Factor | MSP Program | Direct Client |
|---|---|---|
| Access | Large enterprise volume | Varies by relationship |
| Margins | Lower, standardized | Negotiable, often higher |
| Client Contact | Through MSP filter | Direct relationships |
| Competition | Competitive vendor pool | May be exclusive |
| Admin Burden | MSP handles compliance | Agency manages all |
| Payment | Standardized terms | Negotiated terms |
Trade-offs for staffing agencies
Related Terms
Frequently Asked Questions
Related Resources
Stand Out in MSP Programs
Professional resume formatting that meets MSP standards