There was a time when organizations hired freelancers only when they wanted to maintain the output but didn’t want to have people on their payroll because it cost more than they could afford.
That landscape has entirely changed since firms realized that hiring freelancers on a project-to-project basis is also a more efficient way to get certain jobs done.
Trends show that HR departments are looking to hire more and more temporary staff. So, it is helpful to have a conduit to make that happen in a methodical way.
That’s where managed service providers or MSPs come in. That’s how the managed services market, as it is called, has come to be valued at about $185 billion by 2019. With more and more people quitting full-time jobs to become freelancers, this number is only going to go up. So, as they say, there is no time like the present to dip your toes into it and get a taste of the advantages of hiring MSPs. Let’s start from the beginning.
The Inception of Managed Service Providers for Freelancers
MSPs started to be incredibly useful after the 2008 financial crisis when companies had to cut down the budget but did not have the luxury of scaling back on operations.
They figured out that freelancers were the solution to the problem but there were other concerns. Hiring is not an easy task. It takes time and lots of effort in terms of finding the right talent.
They needed a system that would follow up with the freelancers’ schedules, resources and output. And instead of coming up with one themselves, they did the wiser thing by outsourcing it. That’s where MSPs come into the picture.
These service providers manage freelancers in more ways than one. They connect with firms that are looking for talent and look for such individuals, becoming a go-between for the firms and staffing agencies.
Basically, here are some of the things they do:
- Get the job description from managers at the firm.
- Pass on that information to agencies.
- Look at the shortlisted candidates.
- Coordinate the freelancers’ schedules and payments.
- Make note of the agency’s ability to provide the right kind of talent.
Sometimes the agencies themselves act as MSPs and sometimes the firms have a division that is dedicated to coordinating with agencies and acts as the MSPs. But in an ideal world, MSPs should be neutral so that there can be objective evaluation should a problem arise.
If you think this is something you don’t need to get involved with, think again. Freelancing is no longer a small market meant only for specific jobs or industries. It is becoming the norm.
Freelancing: It’s No Longer the Exception
More and more people are choosing to be their own bosses, manage their time the way that works for them instead of an employer and are turning into microentrepreneurs instead of staying as salaried employees their whole life. Thanks to the evolution of technology, there are many more ways to communicate digitally than there were just a few years ago.
With the help of platforms like Slack, Skype and Zoom, you don’t even need to go into the office once a week or so. Everyone can be remote and earn a living.
Social media has also made it possible for people to build portfolios that can be accessed by staffing agencies and companies alike rather easily. This has made it very easy for talented individuals to find opportunities that are more suited to their needs and style.
No more bowing to the will of a tyrannical boss. This also gives everyone the chance to explore their options and get creative without the boundaries of a job description.
With this, more and more individuals are choosing to be freelancers or contract employees or contingent labor. A study by Freelancers Union and Upwork says that:
- 60 percent of those who switched to freelancing did it not out of economic constraints but by choice.
- Half of them said they wouldn’t trade it for a traditional job.
- 82 percent, an overwhelming majority, also said that they believe freelancing is where the future is.
And this is despite obvious pitfalls like lack of benefits and job security. Nevertheless, managers across industries have noticed this turn of the tide and it has forced companies to look at freelancers even when there are no financial constraints. In fact, the Workforce 2020 study showed that 85 percent of respondents are going precisely in that direction.
And with companies having the option of mixing it up in terms of talent, employment opportunities are getting better for freelancers. This has opened up the market for agencies and MSPs too. Since they are not full-time employees, there are a bunch of issues to address. For instance:
- Resources for remote workers
- Payment options
- Intellectual property ownership
- Performance indicators
- Managing and overseeing the progress of their work
All of this can be taken care of by MSPs who have a decent amount of experience handling agencies or a network of freelancers who know how to be fair to both the hiring firm and the agency/contract employee. This means managers at the organization have a big load off their plate.
Advantages of Hiring MSPs for Freelancers
If you are still not sure about the precise benefits of hiring an MSP, here’s what you need to know.
#1 Access to High-Quality Talent from Multiple Platforms
It is important to understand that certain industries require different sets of talent for different projects. With a steady set of employees, you might need a bigger team to be able to achieve that.
But if you reach out to a pool of freelancers for each project, you will have better luck at finding the right kind of talent. This is a time-consuming job for the managers at the firm. But this is exactly what MSPs are here to accommodate.
Firms don’t have to train the individuals, which save money and time. Providers also know how to find them easily because they have access to a network of individuals with diverse skills.
As a manager, pick the right MSP and you can access these highly qualified individuals and get the job done for a lower cost too. You also don’t have to worry about screening them as the MSP will do this on their own and do it well because their reputation and business depends on it. They are committed to excellence not just out of the goodness of their heart. And when they succeed, it is a win-win for all.
#2 Cost Reduction
When it comes to costs, MSPs can get the job done more efficiently at a lower cost because of the economies of the scale of service delivery, for starters. They also don’t have to deal with the costs of infrastructure and overheads because this is a shared burden among clients.
This logic has proved particularly helpful for small businesses which find it hard to find, let’s say, IT professionals to keep their operations afloat. Outsourcing the job saves time and also makes monthly costs predictable which makes hiring an MSP to do the job for you a smart move.
#3 Disaster Recovery
Managing data, backup operations and preventing loss is not everyone’s cup of tea. These are tasks that should be left up to capable professionals. And in today’s world, this is not optional either.
No matter the industry, you are going to have to do this. And in this context, it is important to remember that about 70 percent of companies that suffer data loss go out of business in just about two years after the incident.
Data also plays a key role not just in security and compliance with governmental and industry-related regulation but it is also a critical part of continuity in operations. These are critical areas and the management of the metadata should be left up to skilled individuals.
These changes are causing the IT industry to grow thanks to the advancements in technology. Whether it is protecting your data from security threats or helping your employees who are not tech-savvy do their job efficiently without hindrances on a daily basis, you need IT professionals who can keep up with the trends and keep your firm up to date.
In-house operators might not be able to do that as efficiently as freelancers because their reputation depends on the efficiency of your operations. Now, managing them is another layer of responsibility for the organization. But once you hand it over to an MSP, you can rest easy.
#4 Boosting Retention
We know that no one stays with an organization if they are not happy. That is true for agencies and MSPs too. Matching the right firm with the right individual takes time and effort. But MSPs have to be good at managing both and getting the hiring right most of the time because it is their neck on the line. Otherwise, the firm does not come back to them and neither does the talent.
While the projects are temporary jobs, the provider can be successful only if they hit the bullseye. This is what motivates them to make sure your assignments are successful.
For that reason, they constantly work on their onboarding programs and managers have a better shot at repeatedly finding good talent. MSPs are always working on creating practices that they can repeat so that it is not a task each time they have to find talent for a specific job description.
They like to maintain a set of clients whose needs can be fulfilled by repeating these practices. This means managers can also stop worrying about attrition.
How Do MSPs Do It?
It is obvious to ask yourself how MSPs get the job done in the same amount of time and with the efficiency that matches that of the firm’s HR department if not exceed it. How do they manage efficient coordination with the firm and the freelancer? Well, the approach is two-pronged and this is what it looks like.
Managing the Talent
Every MSP needs a good network of talent or at least a supplier that can provide them with the kind of individuals that their clients are gunning for. Firms have the equivalent of an external talent manager who is a part of the HR department and deals with the MSPs.
Sometimes, what these providers also do is reach out to independent contractors and tell them about the perks of being associated with them. This way, they are not entirely dependent on the agencies to fetch talent for them.
These independent contractors then associate themselves with the providers and get the same representation as they would with a staffing partner. And that is a comfortable place because the providers offer them the benefit of dealing directly with the firms along with giving them the same representation as an agency.
Their practices are standardized, consistent and the operations go smoothly because they are dealing directly with the provider who is also the arbitrator if and when there is a problem.
The providers take care of the admin tasks and perform the onboarding efficiently. They also make sure the communication is regular and essential, meaning there are no unnecessary meetings that waste anyone’s time.
Some of them even have the parameters defined in their contracts. Usually, there is a statement of work document which deals with the freelancer’s hours, performance and payments.
The MSP is also the go-between for the freelancer and the firm. The terms of that engagement are also clearly stated in an agreement. This includes financial aspects like billing structures so that there are no floating variables.
Providers also like to have boundaries in terms of the freelancers’ engagement with the first directly unless it is specifically about the work. This way, they get to control the communication and make sure there are no gaps in that pipeline.
Managing the Projects
At the firm’s end, this is done by the external talent manager. They are meant to coordinate with product managers and team leads to make sure the onboarding, planning and management of contract labor go smoothly.
The providers take care of several projects simultaneously. So, clarity in communication is important to them. They get it done by being the only point of contact between the firm and talent. This makes sure that the collaboration is on point from training (if any) to troubleshooting. They are always in the loop and hence have the ability to avoid risks.
MSPs are also extremely clear throughout the process from things like a job description for a specific project to feedback at the end of it. This way, they remove the burden from team leads and managers of specific departments at the firm.
The Bottom Line
MSPs manage to get all this and more done due to the efficiency in the recruitment pipeline. Lately, social media has proven to be a boon in this regard. Platforms like LinkedIn have proven to be extremely efficient in fetching high-skilled individuals that suit specific needs that companies have for certain projects.
Everyone can access the talent’s skills, experience and portfolios to assess their capabilities. Now, HR departments can also get on it but hiring is not the only thing on their plate.
So, an MSP swoops in and gets the job done within the given time frame. With all these operations becoming entirely digital in the 21st century, MSPs and freelancers are definitely looking at good times ahead.
The question is, will companies successfully capture this market and grow with them? We’ll leave that to the titans of industry to decide.
