This is Why MSPs Remain the Holy Grail for Recruiters
For recruiters, the dream used to be getting your name on a big company’s Preferred Supplier List with the promise of regular work that came with it
Then it was all about retainers – partial payments upfront and higher fees.
Today…
It’s all about Managed Service Provider (MSP) contracts.
This is the recruitment service that today is considered to be the holy grail. The gold standard.
The assurance that, amongst recruiters, you are the elite.
But why are MSPs so sought after by recruiters? Why do so many recruiters feel like it’s out of reach? And what does it take to reach this level of service?
Double Digit Growth
According to a report by the World Employment Confederation, “MSP markets grew by 12% in 2017 compared to the year before.” And while much of this is in the temporary employee space, it’s becoming a focus for permanent recruiters as well.
A MANAGED SERVICE PROVIDER contract usually takes the form of a commitment to completely manage a company’s recruitment requirements. In addition to regular recruitment processes, this can also include reporting, tracking, on-boarding, development planning and long-term scheduling.
This model is also sometimes referred to as RECRUITMENT PROCESS OUTSOURCING (RPO). The only real difference is that a firm providing an MSP function may not be a recruiter, in which case finding a suitable specialist will be part of their responsibilities.
It’s not hard to figure out the attraction. Not only does it provide the recruiter with steady, ongoing work, but billing is often consolidated into monthly or quarterly payments. You don’t need me to tell you that reliable cash flow is one of the biggest headaches that recruitment business owners would love to cure.
But it’s a pretty sweet deal for employers as well. It offers predictable costs, reliable service, and frees them up from the time-consuming administration and busy work that often accompanies each recruitment campaign.
Why don’t all recruiters and their clients operate under this lucrative model?
Mainly because it’s a long way out of their comfort zone.
Recruiters (and, critically, clients) may be under the impression that it’s unsuitable for their setup.
And if even if they like the idea, they don’t know how to find clients that will work under this model, or how to convince them to consider it.
And even if they can win MSPs, they don’t know what’s required to handle the project.
Let’s address each of these problems in turn…
Pitching for MSPs
Not every client is going to be suitable for an MSP contract. For a small business that only needs a new hire once per year or less, this would be overkill. But as soon as that number rises to 2-3 hires per year or more, you should absolutely be considering bringing that client into an MSP arrangement.
It’s very unlikely that you’ll stumble across a rapidly growing firm that is offering an MSP, so you need to look for opportunities and seize it.
If you have an existing client that uses your recruitment services on a regular basis (whether it’s on a contingency or retained basis), you should put together a proposal and pitch an MSP contract.
And if you win a new piece of business with a firm that clearly has long-term growth plans, again you should be proposing and pitching an MSP contract.
You’re not going to win an MSP by accident. You have to get out there, recognise the opportunities and pitch for the business.
Winning MSPs
When you get the opportunity to pitch an MSP, the temptation is to talk about your expertise, your experience and your network. This is obviously going to be part of your presentation, but it should only be a small part.
The vast majority of your presentation should be about the time and cost savings that an MSP will provide.
When we pitch for an MSP we rely heavily on two key arguments.
1) The cost of a mis-hire
Our Recruitment Audit Tool lets us use the client’s own figures to show how much money they’re currently wasting, each time they make a bad hire. We then show them a comparison based on our retention rates that shows an estimate of how much money they will save using our services. I can’t overstate how powerful this is.
2) The time and resources saved
There isn’t an executive alive who won’t jump at the opportunity to free up some of their time. It’s easy to show how an MSP will benefit the client in this regard, but we build on this argument by showing how much time is spent on all the different elements of recruitment that we will be handling for them. For good measure, we talk about the commercial downtime that will be reduced by allowing us to implement a swift, professional recruitment service on their behalf.
Managing MSPs
There’s a bit of a learning curve initially. You must give plenty of thought to the design of your contract and the additional resources you’ll need to handle some of the additional responsibilities created by the service. The senior recruiter (or recruiters) that handle the MSP will likely need additional resources in the form of administrators and assistants. The additional costs will need to be factored into the price you quote to the client.
The good news is that, once you’ve got everything running smoothly, the time it takes to manage the client reduces. A lot of the work you carry out at the start of the contract can be reused over multiple campaigns, and your familiarity with the client will naturally speed up your processes.
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If you’re seized by an entrepreneurial spirit and want to dive right in and look for MSPs, you should go for it.
But if you feel like you need more knowledge than can be contained in a single article, we have you covered. i-intro® provides training, software, and resources specifically tailored to help recruiters develop MSP contracts.