66
Projected age of retirement
for current workers.


"facticious"
Data that is false or fabricated.

gold
The best data scientists turn
distilled information into pure gold.

butter
Too much churn and
companies lose the cream.

guatemala
Guatemala has the largest CW
compared to population in Americas.

1 in 3
# of working Americans in
the contingent workforce.


"jobsolete"
As some jobs become out of date,
others emerge.

rope
In a conformity string, we call attributes
that impact cost and availability of
qualified job candidates "pieces of work".

2%
Projected growth office/clerical
staffing 2013.

44%
Companies implementing proper
measures during offboarding.

singapore
Singapore was world's top CW
productivity market 2014.

male
Data Scientist: the most wanted
job by employers on LinkedIn
in 2014.

belgium
Belgium has the highest tax burden in EU.

247:10k
Ratio of robots to employees in Korea,
highest level in the world.

36%
Employers who find paying
freelancers cumbersome.

stars
The big star in our universe is Data Centauri.

40
% of American workforce projected
to be freelance by 2020.

crystalball
Predictive analysis is only as
insightful as the analysts.

sugar2
Data should never be sugar coded.

bow
A good strategy stretches without
changing its basic shape.

19.6wks
Average length of unemployment
of managerial candidates.

17m
# of workers with tenuous
ties to employers.

37
% of senior HR officers identifying
talent management as top HR issue.

questions


To find answers, we formulate questions.
Then question the questions.

< 20
% of private sector workers receiving
employer sponsored health insurance
by 2025.

16%
CW population at average
large company.

france
France has the highest
tax burden in EMEA.

70
% of Fortune 100 who’ve
implemented a VMS.

-1.5m
Shortage of US managers able to
analyze big data and make decisions
based on findings.

£2.6b
Amount NHS spends on
temp staffing.

shamrock
Independent contractors can
be reclassified by Irish courts.

CWS 3.0: August 14, 2013

By Christopher Minnick

Are buyers of contingent labor fed up with the “percent of spend under management” pricing model for MSP and VMS solutions? Here's a look at the state of affairs around pricing models.

The most widely used pricing model for vendor-neutral managed service provider(MSP)  and vendor management solutions (VMS) is to allocate a percentage of the total spend being put through the program (which is sometimes also referred to as a percentage of spend under management). Nearly 65 percent of all vendor-neutral MSP and VMS programs use this pricing model, which is actually less than it was just three years ago (21 percent less in fact). The percentage of spend under management method is simple enough to understand, but is it necessarily the best method because it is the most widely used? I would contend that it is not.

From a VMS perspective, a more traditional software license model — which is paid on a monthly, quarterly or annual basis — almost always results in the best price for companies using the software. For MSPs, meanwhile, gain-share or cost-plus pricing models are sound options. Gain share is when an MSP shares in the demonstrable return-on-investment from its good performance, while with a cost-plus model, the cost of its services are transparent to the client, helping the client to incentivize the MSP and manage its risk. These pricing models are not without their challenges, but they help reduce the uncertainty that comes with the fluctuating transaction volume used in the percentage of spend under management model.

Many MSP and VMS companies have taken to discounting the total estimated spend of a client by upwards of 50 percent in order to determine its price to the client. For example, if a client estimates it has approximately $50 million of in-scope contingent workforce spend, a supplier sets its price expecting that only $25 million will actually be incorporated into the program, and the supplier doesn’t expect to realize the full revenue potential of the account for anywhere from six months to up to a full two years in some cases. The risk and uncertainty of this pricing model likely increases the cost to the client and immediately puts a supplier in a defense mode to manage its resources, rather than investing heavily into a new client program.

As a result, we at Brightfield are developing new pricing models — for VMS only, payrolling services, global MSP services — that ensure the best price for our clients, while minimizing the uncertainty and risk to the suppliers. This is especially important in situations where companies are expanding their contingent workforce programs to countries outside the U.S., where supplier-funded, spend under management models are less prevalent and are looking to include worker classifications beyond temporary agency workers, such as project-based services where a percentage of spend under management pricing model (no matter how small) makes even less sense.  

Nothing stays the same forever. It’s time to rethink your contingent workforce program pricing models.

View on the Staffing Industry Analysts website