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These Are the 3 Biggest Trends in Workforce Innovation

Keeping up with the changing world requires constant innovation — and this includes hiring. Evolving technology, the shifting generational makeup of the workforce, and a candidate-centric market[...]

February 18, 2020

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Strong MSP and Supplier Partnerships Conquer SOW Chaos

Last week, I wrote about the exciting opportunities available through a well-managed and organized Statement of Work (SOW) program. Despite being somewhat underdeveloped and misunderstood, as industry experts observe, SOW contracting is definitely one of the fastest growing segments of the contingent workforce. In a period of less than four years, SOW growth has surged. According to some estimates, nearly three-quarters of contingent talent are working under an SOW engagement in the United States alone. Analysts predict this trend to rise exponentially over the next decade. In fact, managing SOW services has become the top priority for 80 percent of clients engaged in MSP/VMS programs. The demand for SOW services is putting new pressures on organizations to enhance their capabilities.

SOW arrangements infuse virtually every internal function of businesses today, yet many clients try to push these services out of their contingent labor programs, deeming them too complicated. While some professional SOW categories bring intricacies beyond Time and Materials, they inevitably weave themselves into the MSP/VMS program -- leaving those teams to wrestle with a hodgepodge of categories, processes, maverick spend and suppliers who push back for control.

Given the rise of the gig economy and work that’s becoming increasingly project-based, SOW engagements will undeniably influence next-generation staffing models and shape the nature of the modern workforce. Yet to run efficiently, heightened levels of collaboration and visibility must exist. That’s why it’s essential for MSPs and SOW staffing suppliers to form tight, communicative partnerships.

The Challenges of SOW Engagements

Capturing this lucrative and competitive piece of the market poses some challenges. The SOW services category can be complex. It’s a notorious hiding place for rogue spend and misclassification. Traditional staffing firms have trouble finding the highly skilled talent needed, at the right time and right price. Some vendors classify agency temps as SOW consultants to inflate the rates -- outside the view of MSPs and company decision makers. And others rely on the same processes and HR technologies they use for temp placements.

SOW suppliers aren’t just filling open positions for ongoing work. They specialize in placing specific (often niche) categories of highly skilled talent. They also provide a greater degree of direction, and they own the delivery risk. Because SOW staffing firms tend to operate more independently than traditional staff augmentation providers, they require a sophisticated, high-touch strategy -- especially when rolled into an MSP/VMS program.

MSP and SOW Supplier Partnerships Are Critical to Success

For MSPs, this specialized and historically autonomous supplier population can present unique trials to overcome. First of all, SOW suppliers may be unfamiliar to MSPs that are just starting to manage SOW engagements. MSPs spend years sourcing top performing staffing partners and cultivating those relationships. They have developed a keen understanding of their partners’ capabilities, quality, performance standards and costs.

However, the existing supply base may not have the experience or resources to handle the deeply specialized roles demanded by an SOW project. That’s why it’s imperative for MSPs and SOW suppliers to work in concert, harmonize, communicate and form meaningful relationships. Otherwise, the program can suffer as sacrifices occur in visibility and control, mitigating contractual risk and misclassification, competitive sourcing, and reporting and analytics.

To create a thriving engagement, MSPs and SOW suppliers may need to step out of their comfort zones. SOW suppliers will have to consider relinquishing a small amount of control and direct access to hiring managers. MSPs may have to forgo relying on familiar staffing partners to source a new crop of suppliers through formal bidding processes. Contracts, too, will differ as both parties have a strong stake in the terms and conditions of the actual statement of work. Yet in reality, these small compromises can yield tremendous results for everyone involved.

Program Benefits from Collaboration

When MSPs and SOW suppliers orchestrate their efforts, program results are optimized. Clients realize amazing ROI on projects, MSPs tap into a powerful new spend category, and leading SOW suppliers reap the rewards of increased volume through preferred tiering and consolidation.

  • Visibility: greater insight to services procurement and spend.
  • Compliance: a robust bench of pre-qualified supplier partners, SOW conformity, risk prevention, timely approval processes, effective onboarding, diligent screening and properly classified workers.
  • Spend: volume pricing leveraged with top tier SOW suppliers, greater opportunities and incentives for SOW suppliers in future projects, strategic negotiations and delivery savings, and established rate cards tied to output and budgets.
  • Service: more accurate supplier invoicing and payments, greater opportunities to identify and utilize SOW suppliers with stellar past performance, enhanced project management, improved cycle times, and clear monitoring of budgets and timelines.

How MSPs and SOW Suppliers Can Partner for Success

  • MSPs and SOW suppliers align and integrate into the program as partners, not opponents.
  • SOW suppliers work in tandem with MSPs to centralize visibility for all project-related activities and rein in maverick spend from procurement purchases made by internal client managers.
  • MSPs and SOW suppliers both have input when drafting the statement of work template, ensuring conformity and clarity over the SOW scope, clauses, deliverables, budgets, timelines, performance expectations, rates, negotiation cycle times, etc.
  • MSPs help suppliers by investing time in preparing the VMS to expedite reporting, electronic budget approvals, deliverables, invoicing and SOW amendments.
  • SOW suppliers help MSPs by committing to utilize the VMS instead of their own systems (ERPs, PO platforms, etc.). This ensures consistency in communications and transparency into milestones, budget adherence, rates, schedules and more.
  • MSPs streamline costs and incentivize SOW suppliers by identifying misclassified or diluted services spend across the organization, and then consolidating it with strategic SOW staffing partners.
  • SOW suppliers help MSPs mitigate risks by validating the proper classification of contractors and freelancers. They can further support these efforts by organizing compliant and comprehensive onboarding initiatives for all talent involved in the project -- even remote workers, who may have access to systems or intellectual property.
  • Established SOW suppliers have a great deal of influence with client project managers and buyers. MSPs can forge rewarding partnerships by remaining sensitive to this when establishing expectations, performance standards and the consequences of policy deviations with SOW suppliers. They can continue to nurture the relationship by advocating on the SOW supplier’s behalf and extending opportunities to support new projects with other clients.

Strength in Unity

Regardless of the program type, MSPs provide a crucial level of visibility, administrative oversight, performance monitoring, reporting and compliance. For clients, that translates into significant savings, higher quality service, more effective rate and contract negotiations, competitive bidding processes, and greater control over project timelines.

Proven SOW suppliers have demonstrated records of procuring high caliber talent, delivering timely and exemplary results, controlling risks, developing contracts, assuming greater involvement in directing talent, providing program management expertise, and offering unique tools and resources to ensure success. If one brings the combined strengths of MSPs and SOW suppliers to bear in a close partnership, the SOW engagement will soar.

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