Published : December 12th 2024

How to Start with an MSP and Optimize Your Contingent Workforce

Contingent workers—contractors, freelancers, and temporary staff—are an essential part of how companies manage talent today. Many organizations now rely on flexible workers to handle changing workloads, specialized projects, or seasonal demands. As this approach becomes more common, it’s essential to know how to start with a Managed Service Provider (MSP) to better manage these arrangements. Partnering with an MSP can bring more structure, consistency, and control to your operations.

If you’re new to this concept and looking for guidance on how to start with an MSP, this guide can help. By following the steps below, you’ll learn the fundamentals of MSP implementation and position your team for effective contingent workforce optimization.

1. Understand the MSP’s Role

Before diving into how to start with an MSP, make sure you’re clear about what an MSP does. Essentially, it helps manage outside talent, supplier relationships, costs, and compliance. When done right, this relationship streamlines daily operations so your internal teams can focus on strategic work rather than administrative burdens.

A Deloitte study revealed that nearly half of executives (41%) reported that they are now relying more on contractors, freelancers, and gig workers as part of their overall workforce strategy.

Knowing this upfront makes it easier to guide your MSP implementation toward your specific business needs. Think of it as a foundation: once you understand the MSP’s responsibilities, you’ll be better prepared to shape your contingent workforce optimization efforts.

2. Set Clear Objectives and Define Your Scope

As you figure out how to start with an MSP, clarify what you want out of this partnership. Are you aiming for cost savings, better compliance, stronger supplier performance, or improved talent quality? Pin down these objectives early so both you and your MSP know what you’re working toward.

A Contingent Workforce Assessment, such as a discovery assessment from a provider like Workspend, can help. It gives you a baseline understanding of where you stand now, making your MSP implementation process more data-driven and less guesswork. With clear goals, you set the stage for true contingent workforce optimization.

3. Build a Governance Framework

Building a governance framework is another key step in how to start with an MSP. A clear set of rules, decision-making processes, and responsibilities helps everyone involved stay on track. By having these guidelines established from the start, you reduce miscommunication and ensure that each choice supports your long-term objectives.

This structure also streamlines your MSP selection, making it simpler to identify partners who can meet your standards. The end result is a more stable environment where compliance, cost control, and supplier management don’t become a guessing game.

4. Choose the Right Suppliers and Track Their Performance

Once you’ve set up governance, it’s time to refine your MSP selection process. Don’t just pick suppliers based on price. Consider their reliability, track record, talent pools, and how well they align with your business values. Your aim is to build a supplier network that supports both your short- and long-term goals.

Right from the beginning, track supplier performance with scorecards and metrics. These measurements help you keep an eye on cost, quality, and compliance, key aspects of contingent workforce optimization. Over time, you can adjust your supplier mix, improve outcomes, and keep the entire operation running smoothly.

5. Use the Right Technology and Analytics Tools

When learning how to start with an MSP, technology plays a central role. A Vendor Management System (VMS) or similar platforms give you a single point of control for assignments, billing, and compliance checks. Instead of juggling spreadsheets and emails, you get a clear overview that supports smart decision-making.

Data analytics add another layer of value. By examining performance patterns, you can spot inefficiencies and address them before they cause bigger issues. With tools from experienced providers, such as Workspend WRAP, you can enhance MSP implementation with real-time insights. This keeps your program aligned with your business goals and drives ongoing contingent workforce optimization.

6. Ensure Compliance with Independent Contractors

Compliance is non-negotiable, especially when dealing with independent contractors. As you continue to refine how to start with an MSP, establish solid criteria for who counts as a contractor versus an employee, and keep thorough documentation. Regular audits are essential to avoid misclassifications that can lead to financial penalties.

According to the Economic Policy Institute, studies have found that between 10% and 20% of employers misclassify at least one worker as an independent contractor, contributing to substantial tax revenue losses and financial risks for workers, governments, and compliant employers.

A structured approach to compliance, like those guided by Workspend’s IC Compliance solution, protects your organization’s reputation and financial health. It also supports effective MSP implementation, allowing you to focus on scaling and improving your contingent workforce optimization strategy rather than fixing preventable mistakes.

7. Keep Improving and Communicating

An MSP isn’t a quick fix. Even after you learn how to start with an MSP, you need ongoing communication with stakeholders, suppliers, and internal teams. Schedule regular check-ins to share feedback, review metrics, and stay informed about changes in your market or workforce needs.

This steady dialogue helps you make timely adjustments, whether that’s refining MSP selection criteria, improving supplier performance, or enhancing compliance measures. Over time, consistent communication encourages a culture of continuous improvement, pushing your program closer to true contingent workforce optimization.

8. Measure Success and Adjust Your Strategy

Defining Key Performance Indicators (KPIs) early on is crucial to knowing if your MSP implementation is on track. These benchmarks might focus on cost, compliance, supplier responsiveness, or quality of hires. Regularly review them to see what’s working and where you need changes.

Data-driven decision-making allows you to refine supplier relationships, speed up hiring, and focus on the aspects of how to start with an MSP that matter most. By staying responsive and open to adjustments, you ensure that the entire program keeps moving in the right direction. Over time, this process strengthens your overarching talent acquisition strategy as well.

Conclusion

Starting with an MSP is a strategic step toward contingent workforce optimization. MSPs, such as Workspend, help organizations navigate the complexities of managing external talent by streamlining operations, ensuring compliance, and improving supplier performance. By understanding the MSP’s role, setting clear objectives, building a governance framework, choosing the right suppliers, leveraging technology, ensuring compliance, and maintaining open communication, you establish a foundation for success.

Workspend, an MSP, can enhance this process with its expertise in contingent workforce management, providing both technology solutions and compliance tools. However, the true benefits come from developing a strategic partnership that is focused on long-term optimization and adaptability, helping you to stay agile as your contingent workforce needs evolve.

Ready to build a stronger MSP foundation? Contact Workspend for a discovery assessment today. We’ll help you uncover key insights, solidify compliance, and position your contingent workforce for sustainable, long-term success.