MSP models explained

Today, many organisations take a hybrid approach to talent, blending permanent employees with a flexible contingent workforce to meet their evolving needs. Managing this mix effectively can be complex, leading many businesses to partner with a specialist Managed Service Provider (MSP) and adopt an MSP model to streamline their contingent workforce management.

An MSP delivers business critical services to organisations, helping them effectively manage their contingent workforce. A strategic partnership, having an MSP in place helps organisations to enhance the flow and quality of contingent workforces by implementing processes that boost efficiency while mitigating risks such as compliance, resulting in improved cost outcomes.

However, MSPs can differ significantly in their structures and capabilities. Typically, a managed service programme run by an MSP includes the following elements:

A supply chain.
Technology (often referred to as a vendor management system or VMS) to oversee transactional engagements within the supply chain.
A dedicated team responsible for implementing processes and communicating with clients to ensure smooth operation.

How these elements are managed can vary, leading to various MSP models such as Vendor Neutral, Hybrid, or Master Vendor MSP models.

What is a Vendor Neutral MSP model?

A Vendor Neutral model involves the MSP partnering with an agreed list of preferred recruitment suppliers, all of which are selected based on their ability to meet your business’s specific talent needs.

This model ensures an impartial approach by offering all approved suppliers the opportunity to compete equally in providing candidates for your talent requirements.

Rather than favouring a single supplier, the Vendor Neutral MSP model promotes a competitive environment where suppliers are evaluated solely on the quality and suitability of the candidates they present.

This approach is designed to give organisations access to a diverse range of talent by leveraging the strengths of multiple specialist suppliers, ensuring that the best possible candidates are identified for each role.

Benefits of a Vendor Neutral MSP

Competitive supply chain: Engaging multiple suppliers fosters healthy competition, which can lead to better-quality candidates and more innovative recruitment approaches.
Transparency: This approach ensures a fair and impartial hiring process, offering transparency and accountability in meeting your business’s talent needs.
Access to diverse suppliers: The Vendor Neutral MSP model allows businesses to tap into a broader range of suppliers. This makes it particularly effective for filling different verticals or niche skills.

Challenges of a Vendor Neutral MSP

While the Vendor Neutral model approach has significant benefits, its success depends heavily on finding the right mix and balance of suppliers.

Without careful management, it may lead to:

Difficulty filling niche or hard-to-fill roles: While the model promotes diversity in suppliers, it may still be challenging to find suppliers that are equipped to source highly specialised or niche roles.
Prolonged hiring times: If the right mix of suppliers isn’t in place, the competitive process could result in delays in identifying and securing the right candidates.
Inconsistent quality: The MSP should have the expertise and capacity to effectively manage a large pool of suppliers. Without strong supplier management inconsistencies in standard of quality could arise.

Is the Vendor Neutral MSP model right for your business?

The Vendor Neutral model is most suitable for businesses that:

Operate in industries requiring a broad range of skills and roles.
Prioritise diversity in their talent acquisition.
Value competitive and transparent hiring processes.

Business professionals in a modern office, discussing the streamlined and efficient approach of the Master Vendor MSP model.

What is a Master Vendor MSP model?

A Master Vendor MSP model centralises contingent workforce management by having a single primary supplier to handle recruitment. This supplier not only provides the majority of your contingent staff but also oversees other approved suppliers when needed. This ensures a seamless and efficient hiring process.

The Master Vendor MSP model utilises its own talent pool, giving businesses faster access to pre-vetted and qualified candidates. This helps to streamline the overall recruitment journey.

By consolidating supplier relationships and assigning primary responsibility to one provider, the model simplifies operations and delivers a consistent talent pipeline.

Benefits of Master Vendor MSP model

Streamlined recruitment process: By consolidating your contingent workforce recruitment under one primary supplier, the Master Vendor model simplifies processes by providing a single point of contact for your contingent workforce needs.
Consistency of talent: The primary supplier’s established talent pool can ensure quicker access to top-tier candidates. This particularly beneficial for frequently required or high-volume roles.
Improved cost control: This centralised approach enables greater visibility into your recruitment spending, helping to identify cost-saving opportunities through standardised rates.
Stronger supplier relationship: With a dedicated supplier responsible for your contingent staffing, businesses can build stronger, more collaborative partnerships, leading to better alignment with your long-term business goals.

Challenges of the Master Vendor MSP model

Limited supplier diversity: Relying on a single primary supplier may limit access to the broader talent market, especially for niche or highly specialised roles that fall outside the supplier’s expertise.
Potential overreliance: By relying on one supplier for your hiring needs it may create a dependency, which may pose risks if the supplier is unable to meet demand or maintain performance standards.
Reduced competition: Unlike models that engage multiple suppliers, the absence of supplier competition may reduce incentives to innovate or improve candidate quality over time.

Is the Master Vendor MSP model right for your business?

This model works best for businesses with high-volume hiring needs or predictable staffing requirements.

It’s ideal for organisations seeking simplicity, speed, and cost control in workforce management.

What is a Hybrid MSP model?

The Hybrid MSP model blends elements of the Neutral Vendor and Master Vendor models. This offers a flexible and tailored approach to workforce management.

This model typically assigns a primary supplier to handle high-volume or frequently hired roles, while engaging a broader supplier base to manage sporadic or niche hires.

The Hybrid Model is not a one-size-fits-all solution; instead, it is customised to align with the unique hiring needs of each organisation.

Benefits of the Hybrid model

Flexibility: Combines the structure of a Master Vendor model for common roles with the diversity of a Neutral Vendor model for niche or irregular positions.
Scalability: The model adapts to your specific hiring demands, making it ideal for businesses with varied workforce needs.
Optimised supplier relationships: Leverages the strengths of a primary supplier while maintaining access to multiple providers for broader talent pools.

Challenges of the Hybrid model

Complex implementation: Managing two distinct supplier strategies can require robust coordination and oversight.
Cost management: Balancing the efficiencies of a Master Vendor with the added competition of a Neutral Vendor may complicate cost control.
Supplier performance monitoring: Ensuring both primary and secondary suppliers deliver consistently high-quality results can be resource-intensive.

Is the Hybrid MSP model right for your business?

The Hybrid model is best suited to large organisations with diverse hiring needs across their entire workforce.

It’s particularly effective for businesses requiring a mix of high-volume hiring and access to specialised talent, offering the flexibility to meet both demands without sacrificing efficiency or quality.

Smarter contingent workforce management

In today’s fast-paced business environment, selecting the right workforce solution is crucial to meeting your hiring needs.

Whether you opt for the streamlined approach of a Master Vendor, the competitive flexibility of a Vendor Neutral model, or the tailored balance of a Hybrid model, each model offers distinct advantages suited to different organisational requirements.

By understanding your specific workforce needs, you can choose the model that best aligns with your goals. Whether it’s improving efficiency, reducing costs, or securing the right talent, the right approach can make all the difference.

Discover more about Managed Service Provider (MSP) solutions.

February 5, 2025