MSP’s: Never Stop Innovating

The STS Technical Services Leadership team attended the Staffing Industry Analysts’ Executive Forum in Phoenix, AZ this past week. This event is a high water mark for the industry and always full of collaboration, ideas, and inspiration that drives the next generation of industry best practices. However, I was struck by a recurring negative theme throughout the three day show that I would like to blog about here. What in the world has become of the thought leadership in the MSP space?

During a lunch break on the first day we were fortunate to be sitting with a Market Director-level Executive of a Top 5 International Staffing company. We were discussing the current state of industry affairs when the question was asked as to what innovation has occurred within the MSP industry in the last few years. Namely, how do MSP’s differentiate themselves from their competition? Shockingly, his answer was…..price. PRICE???

Now, for you “long in the tooth” staffing folks out there, do you remember the commoditization of our staffing industry? The long slow death of higher margins (in part brought on by the MSP themselves) meant we had to channel our inner Darwin and evolve. The most successful firms became a service and solutions oriented business with practices you see today including Recruitment Process Outsourcing, Consulting and Management services, and now the gig economy. Does the MSP thought leadership not see this commoditization taking place? Not to mention the fact that one of the first things you learn in business is to NOT compete on price!

One complaint I hear all the time is the lack of experience in the PMO office of these MSP’s. Now we know why. When you cut your price you replace senior level operations personnel with junior woodchucks to maintain some resemblance of margins, communication and leadership suffers. The result becomes many of the inefficient MSP’s we are familiar with today. Don’t we all just love taking reqs from Suzy-Q with 2 years staffing experience?

On day two we attended several topic specific consortiums including an MSP centric brainstorming session. The expert panel consisted of, among others, two high level executives running major MSP Enterprises who gave a presentation on how to succeed in this space (More submittals — Follow the process). They took many excellent questions from the audience and the answers continued to provide uninspiring direction. They spoke of their programs in terms of 70-80 vendors per program, and received questions as to why so many? Unfortunately, their answer was to pass the buck. That purchasing/supply chain now lead program implementation and have taken the direction away from the MSP themselves. The result being they no longer had the power to consult on either best practices or vendor selection.  Another admission in particular stood out which I paraphrase; “…the clients have basically stopped letting us manage these programs and now rather have us just administer the process.”  Isn’t that the very definition of being commoditized? I had to wonder if this would ever have occurred if they were running efficient programs in the first place.

Our last day at the conference focused on what the future holds for our industry. Projections show cyclical but positive growth over the next 10 years with numbers booming to $180+ Billion industry-wide revenue. All segments are expected to experience double digit growth except for….the MSP’s. On top of that, U.S. based market penetration has been flat over the past five years. Am I stating that MSP’s are going away? Emphatically, no. They just sure aren’t buying more of it. It seems clear a lack of innovation and refinement of best practices has resulted in the commoditization of the space. Now what?

I’ve made clear here our beliefs on driving an obligation to your staffing partners, and we all know the current business model within an MSP does a poor job of doing that. Let’s face it, we work the reqs when we see fit. Let’s start Innovation 1.0 right there and cut these programs down to a manageable few staffing partners. Let’s drive strategic, executive level partnerships between the triangle of operations (Client-MSP-Provider) and not a top down client-vendor hierarchy. Let’s develop win-win-win opportunities where consultation and brain storming create more efficient programs to drive problem solving. And let’s get back to having leaders run these programs.

One more point we have to admit is that we, the staffing providers, are part of the problem. If your sales goal is to simply make it on that vendor list and be 1 of a 100, you exacerbate the issue. Have a little dignity and say thanks, but no thanks. When we all refuse to work in an environment in which you have little upside, you will force innovation on an industry that doesn’t appear to know they need it. I was told in that conference a dozen times that if you don’t like the rules there are five thousand other vendors who want on that list. To that end, shame on us!

The team at STS Technical Services is committed to refining and redefining Recruiting Solutions. We look at staffing differently, and you can follow us at www.sts-ts.com, or on LinkedIn and Facebook.