In this article, we discuss the benefits of working with a diverse MSP to manage your growing contingent workforce spend in 2022.
What is a diverse MSP?
In the world of contingent workforce management, a Managed Service Provider (MSP) refers to how businesses outsource services like staffing vendor management, job postings, compliance, business administration, and management responsibilities to a third party. An MSP is commonly used by businesses with large contingent workforce needs including large corporations, non-profit organizations, and government departments. The right MSP can deliver solutions to decrease the workload of hiring and managing contingent talent in your business. This gives the executive team and hiring managers more time to focus on more significant tasks to grow the organization.
Contingent Workforce MSPs represent a portion of a massive trend towards service provider outsourcing. In 2019 the broader market was valued at $185.98 billion and is expected to rise substantially to $356.24 billion by 2025. This figure shows that there has become a greater interest in finding the right partner to perform business functions considered non-core to growth and customer experience.
A diverse MSP describes a supplier business run by people from a diverse background, often staffed by a diverse workforce. A diverse MSP achieves all an MSP does while contributing toward diversity spend. This means you get more bang for your buck.
Understanding the importance of Tier-one and Tier-two diverse spend
Diverse spend is the amount of money spent solely on diverse-owned suppliers. It is important for organizations to have a multi-tier diverse spend, which includes both tier-one and tier-two being procured from a diverse supplier.
Tier-one (also known as prime suppliers) covers businesses that directly sell products and services to businesses. In contrast, tier-two suppliers are those organizations that provision services for your tier-one vendor. You can imagine, working with a diverse MSP—one that encourages the selection of diverse suppliers with its supply chain—is the best way to gain maximum reward for organizing your contingent workforce spend.
The benefits of choosing a diverse MSP:
One clear benefit of using diverse MSPs comes in the form of spend economies. A study by the Hackett Group claimed that “20% of spending directed toward diverse suppliers delivers at least 10% to 15% of annual sales”. In addition to this, the Hackett Group also found that 10% of sales come with supplier diversity requirements. This shows that you may be losing money as a result of not having a diverse supplier. Furthermore, a study by Drive Research claims that highly inclusive companies are more likely to reach their financial goals by up to 120%. Hence, organizations should work with a diverse MSP to collect these financial benefits, and obtain clients/customers they may not have previously as a result of the clear diversity in your business.
Working with a diverse supplier can impact productivity in your organization for the better. Interestingly a study showed that teams who had geographical diversity, gender diversity, race diversity, and as well as an age gap of at least 20 years, were recorded as making better business decisions. This is supported by the diverse talent pool found by a staffing MSP.
3. Competitive Advantage
78 percent of respondents in a Deloitte study believe that diversity and inclusion is a competitive advantage.
It’s one thing to talk about the ‘traditional’ diversity and inclusion goals, but to be truly diverse means it has to happen in all areas of your organization. It demonstrates to customers that diversity is a part of your company culture and is often very appealing to prospective customers. For them, it shows that you put your money where your mouth is and that you mean what you say.
Using a diverse MSP is one method of improving your company’s reputation. It provides your organization with a one-up when deciding between you and a competitor. In addition to this, it also provides you with more options. A study shows that 70% of diverse companies are more likely to capture new markets.
4. A More Diverse Talent Pool
Using a diverse MSP brings the ability to better match your talent demographic to that of the diverse communities that the MSP clients operate in. By tapping into their diverse supplier partners, MSPs attract more talent in the long run, offer different perspectives which could provide greater insight, increased productivity, and more. MSPs can create a more diverse talent pool as a result of where they obtain their talent from. For example, a diverse MSP will also be looking to find talent in areas where there is a multitude of different cultures. Allowing your business to have a talent with different life experiences, which could give the business ideas that they did not previously think of.
Overall having a diverse Managed Service Provider, like Workspend, can provide a multitude of benefits for your business.
For example, 100% of the spend running through the Workspend MSP program qualifies as tier-one diverse. Moreover, 50% of our supplier partners are diverse, meaning that our diverse supplier partners bring our clients higher tier-two diverse spend. By using Workspend as your MSP, you will be showing to your customers/clients that you are invested in diversity and making a change for the better.
Ultimately, by partnering with a diverse MSP, your organization will see productivity increase and an improvement in your company’s reputation, not to mention the financial benefits. It’s in every organization’s best interest to embrace diversity in its workers and suppliers.