MSP Contract Renewal
Ten Essential Considerations When Renewing Your Managed Service Provider (MSP) Contract
1. The Evolving Landscape: Times have changed, as have labour and technology.
Nimble Global - Best Practice: The contract renewal should consider these shifts as 'Real Innovation’ opportunities, looking at new workforce trends and emerging technologies beyond the traditional Vendor Management System (VMS), including advancements in HRIS – Applicant Tracking Systems (ATS), skills management tools, direct sourcing tools, talent pools, and Independent Contractor (IC)/Freelancer compliance systems, each with significant Artificial Intelligence (AI) capabilities.
2. Fragmented Operations: National or global MSP providers often suffer from disjointed operations and conflicting profit & loss objectives, causing long-term management and supply chain issues.
Nimble Global - Best Practice: Opt for a single global system with multiple regional or local MSPs, robust local supply chain connections, and an understanding of your business's nuances.
3. Examine the Ethical Separation Between MSP and Parent Company: If your MSP is part of a larger conglomerate, especially one related to staffing, scrutinise their ethical boundaries.
Nimble Global - Best Practice: Insist on clearly defined roles and responsibilities in the commercial agreement. You may even leverage the collective services of the MSP and parent company’s staffing entities for better pricing.
4. Conflict of Financial Priorities: An MSP that acts as a supplier can have conflicting financial priorities that may hurt the client and supply base. The vendor-neutral claim is no longer adequate or appropriate in today’s global economy.
Nimble Global - Demand transparent financial arrangements and require external third-party audits to ensure equitable treatment for all suppliers.
5. Industry "Awards-for-Pay": Such 'Pay-to-play' awards can distort the quality perception of an MSP.
Nimble Global - Best Practice: Steer clear of making contract decisions based on such accolades. Always corroborate any awards with independent reviews or case studies. The most reliable source for an MSP reference is the supply base.
6. Client Rankings: Clients often believe they are a top priority for the MSP, which can change once the MSP acquires a new client.
Nimble Global - Best Practice: Develop service-level agreements prioritising your needs over new MSP client programmes or acquisitions. This should include dedicated time allocation of each resource on the team for your programme.
7. Resource Allocation: Beware of MSPs that divert your dedicated resources to support other clients, commonly known as the 'hula dance shuffle'.
Nimble Global - Best Practice: Include clauses in your contract that explicitly stipulate resource commitment to avoid such scenarios.
8. Consider Lesser-Known MSPs: High-profile MSPs undergoing M&A or new client implementations can often disrupt service and redirect focus and resources away from your programme.
Nimble Global - Best Practice: Sometimes, a start-up or lesser-known MSP can offer more attention and better cater to your unique needs… they are ‘earning their stripes’ and will do whatever they must to ensure long-term sustainability and client retention.
9. Financial Value: The financial significance of the MSP fee is substantial when considered a Year-On-Year (YOY) revenue source. Does the financial investment align with the service value?
Nimble Global - Best Practice: Consider an in-sourced or hybrid MSP model, which can offer better control over the processes and technology and ensure greater compliance with labour and tax laws.
10. Data Security and Compliance: As data plays a pivotal role in strategic decisions, ensuring that your MSP complies with data protection laws is imperative.
Nimble Global - Best Practice: The MSP must provide documentation confirming compliance with data security standards like ISO 27001, GDPR, and other applicable local regulations. Regularly audit data handling and storage practices and consider a third-party audit for an unbiased evaluation.
These ten essential considerations will better position you to make an informed decision when renewing your MSP contract.