Providing a professional service is a complex category – and in the public sector a high profile one following an NAO report on the subject.
The scrutiny on conventional hiring through contingent labour framework is very high.
As an inadvertent consequence, public sector buyers can be tempted to consider Government frameworks for access to the resources as a managed service.
A qualifying spend through these frameworks usually has the added benefit of being outside the off-payroll working rules. The entire supply chain benefits from a treatment like that. However, there are risks with this approach.
Here are 4 things you should check when considering a managed service provider.
1) Is your recruitment agency masquerading as an MSP?
Increasingly, the interim arm of recruitment companies have started applying for and finding a place in a number of CCS frameworks.
Getting into some of these frameworks can usually be a tick in the box exercise. Agencies only apply because they see it as a new route to market.
Often, the service you will receive is a number of contingent labour resources on one contract. And often, that’s all there is to it.
In our view, this is hardly a managed service for practical purposes. Arguably this is only a representation of contingent labour hiring in a different contractual form.
2) Is the breakdown of the service on record or off the record?
We have seen a perceived risk from buyers and service providers alike, in putting a breakdown of the overall managed service cost in the contract.
At Mindful, we believe every contract should be what it is actually about. It should not seek to frame something as different to the intention of and the purpose behind the relationship.
Contracts are written and negotiated to stand up in courts. One that is written with both parties acting in collusion to appear different to the outside world, comes with a high risk of indefensibility in the face of a challenge.
3) Are the managed service provider charges visible to you?
The conventional recruitment agency model of negotiating as high a mark-up as they can get away with is a very damaging and unsustainable model. Often this means, the middleman charges are not declared openly to either the contractor nor the client.
Over time, the cost versus value impact is “felt” by the client and subcontractor. And, this can often mark the end of the relationship.
The most likely alternate option for clients and subcontractors is to commence direct engagement. In our view, the best and sustainable approach to fees is for them to be low, tiered to reflect work done by the managed service provider, and transparent.
4) What KPIs is your MSP managing and reporting on?
Often, a Managed Service Provider would limit its role to running a search, bill and pay service. However, we believe, at the minimum – a client should have sight of its spend profile, burn rate, broken down by functional / service areas, and with intelligent alerts.
Buyers can find it embarrassing to see spend with a Managed Service Provider going up. However, when buyers have sight of the stats, they can do something about it. Subsequently, these may also be necessary for reporting purposes for wider public sector compliance initiatives.
We can help
Mindful have the unique dual experience of running Managing Commercial Services for Government, and also running a compliant Managed Service for client side programme delivery support.
