MSP models at risk of becoming unsustainable, says Green

June 9, 2010
Lizzie Syddall

Managed service provider (MSP) models of supplying staff to the public sector are in danger of becoming unsustainable, according to the chief executive of the Recruitment & Employment Confederation.

Kevin Green (pictured) told recruiters at the REC’s ‘The future of public sector resourcing’ conference in London yesterday that models such as master and neutral vendors had inherent flaws.

The first was the inability of recruiters to “have a conversation” with the client, said Green. “Understanding a client’s culture is very difficult when you cannot have a conversation with the client. How can you have a partnership?”

Green said another inherent flaw was that suppliers would find the low margins increasingly less attractive as the private sector recovers.

“Good second and third tier suppliers will have a choice about who they work with when the private sector picks up,” said Green.

“The danger is that you get good second and third tier suppliers walking away and that the quality of the candidate diminishes.”

Readers’ comments (6)

Geoff Johnston, Director, L37 Consulting Limited | Wed, 9 Jun 2010 1:30 pm
Couldn’t agree more with what Kevin is saying, certainly with regards to the partnership element in an MSP/master vendor model.

From the buyer’s perspective it has an impact on being able to engage with the suppliers on a strategic level and this at the same time impacts on the recruiters being able to build the necessary relationships. If the buyer allows a linear relationship to develop then they are doing themselves a disservice. Likewise, if the recruiter allows a linear relationship then they are doing their client and other recruiters working through them a disservice.

With regards to margins, it doesn’t make any difference whether a recruiter is dealing with private sector or public sector clients. Having worked in both sectors as a buyer, driving down the mark-ups/margins has always been a key goal. Buyers need to move out of this frame of thinking and more into considering “best value”. Low costs does not necessarily equal best or even good value. A buyer can only cut the cost so many times before the whole proposition falls apart.

There are ways and means that both the buyer and the recruiter can ensure that both parties obtain maximum benefit from certainly a vendor neutral scenario and potentially an MSP solution but these would take too much time and space to discuss on here.

Paul Harris | Wed, 9 Jun 2010 1:48 pm
Relationships and margins are being destroyed. Public services WILL suffer – there is no doubt.

Marilyn Laurence | Wed, 9 Jun 2010 1:56 pm
I agree and the problem with being in the second and third tier is that the role becomes live and you have approximately 5 minutes to repond before it is closed by which time you are supposed to meet the candidate, reference check for 3-5 years, CRB check interview and submit – I gave up ages ago as got nowhere

Lisa Foster | Wed, 9 Jun 2010 1:56 pm
Hurrah for Kevin Green! At last, someone within the high ranks of the REC has voiced what all good public sector recruitment consultants have known and suffered since the birth of MSPs.

simon peacock | Wed, 9 Jun 2010 2:09 pm
MSPs and neutral vendors have only benefitted the larger agencies out there able to secure these types of contracts. Many clients and tiered recruiters have used the systems begrudgingly since their inception. Candidates and contractors have their choice of whom they work with dictated to them. All this for lousy/diminishing margins. Recruitment consultants replaced by data-inputters who couldn’t influence a client even if they got to speak to one.

Sue | Wed, 9 Jun 2010 2:11 pm
I think this is something large private sector companies should bear in mind too. My agency has chosen to walk away from two MSP arrangements on the basis of low margin, poor feedback and inability to interact with the actual recruiting managers. A third is under consideration, particularly after receiving a call this morning explaining payment terms for temps, which are already on a ‘paid when paid’ arrangement, are to be extended again to approximately 90 days. This is not good business and my consultants are not only losing interest but now concentrate placing their best candidates into more profitable roles. For now the MSP arrangements will survive but looking forward to a more buoyant economy (oh, how I look forward to recovery!), the skill shortage will be ever more apparent and recruiters will be able to choose who they supply to and independently negotiate more favourable rates for themselves and their candidates.

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