Managing contingent workforce: A focus on MSP cost-saving strategies

How MSPs streamline contingent workforce management

Many organisations are turning to contingent labour to manage workforce expenditure and introduce greater flexibility in resource planning.

However, managing a contingent workforce presents unique challenges. Juggling multiple suppliers, contracts, and budgets can be daunting for internal talent acquisition teams and hiring managers.

That’s why many companies choose to partner with a Managed Service Provider. An MSP can streamline contingent workforce management, reduce costs, and ensure compliance—freeing up your team to focus on strategic priorities.

Let’s take a closer look at how organisations can reduce costs while managing their contingent workforce through an MSP.

MSP cost-saving strategies

To successfully identify savings opportunities, companies must understand their internal processes, evaluate current workforce strengths and weaknesses, and recognise areas of improvement when it comes to the sourcing and management of contingent labour. Here are a few ways that an MSP can help to quickly source, secure, and manage contingent workers while realising significant cost savings.

Supplier optimisation

An MSP can deliver immediate time and cost savings by streamlining contingent workforce operations. Through a centralised Vendor Management System (VMS), an MSP handles payroll, taxes, analytics, compliance, and more—eliminating the need for multiple contracts and bringing consistency to the supply chain.

All suppliers operate under unified contract terms, rules of engagement, and service levels. MSPs benchmark rates, qualify candidates, and leverage supplier relationships to negotiate optimal terms. They embed fair and consistent engagement rules into supplier agreements and conduct ongoing performance assessments to drive continuous improvement.

MSPs also extract and analyse data from scorecards, surveys, reports, and audits to compare benchmarks across categories and negotiate volume pricing. This enables them to optimise spend with high-performing suppliers, manage underperforming vendors, and hold agencies accountable to KPIs and SLAs.

Process improvement and risk mitigation

An MSP heavily automates manual tasks like payroll processing and onboarding, which in turn delivers a more efficient operation and ultimately reduces costs. Since an MSP programme manages all aspects of the workforce process—including payroll, compliance, classification, and recruiting—businesses don’t need to invest in standalone services or staff members dedicated solely to these tasks.

Automating aspects of your external workforce process can reduce costs and eliminate processing errors caused by outdated and manual actions. Because an MSP provides comprehensive analytics and reporting capabilities, businesses can access real-time data via live dashboards that keep them abreast of day-to-day workforce activities. These insights help organisations stay better informed about their external workforce community, make smarter decisions regarding future workforce needs, and focus on core business activities.

Companies are turning to MSPs to avoid costly fines due to misclassified workers, rogue spend, and non-compliance with employment law. Using a VMS supports tracking, auditing, and overall visibility of the recruitment process—minimising exposure to non-compliant workforce practices.

Reducing overspend with an MSP

An experienced MSP can assess all contingent labour costs and deliver structure and governance to avoid overspending and help drive savings. Through advisory support, an MSP can uncover hidden expenses related to the recruitment and onboarding of external workers. This type of strategic consultation enables businesses to more accurately evaluate contingent labour costs and identify long-term savings opportunities.

MSPs stay ahead of the talent game by leveraging the latest industry insights to help companies make informed decisions. This includes understanding current hiring trends, keeping pace with technological advancements, and staying up to date with market intelligence. By offering this added value, MSPs become trusted strategic advisors in the evolving world of work.

Partnering with an MSP means gaining an experienced and knowledgeable ally to help source the most competitive worker rates. MSPs negotiate rates and discounts on your behalf to ensure optimal value for your external workforce spend. Their expertise in managing contracts through agency suppliers can unlock benefits such as tenure reductions and volume-based discounts.

Final takeaways

If you’re looking for a competitive edge in managing your contingent workforce—reducing labour costs without sacrificing quality—investing in an effective MSP programme can be the answer.

At Pontoon, we work with mid to large organisations to create a tactical roadmap for hiring contingent labour through a structured methodology and strong programme governance. We collaborate with our MSP clients to define their strategic workforce ambitions, assess their current risk profile, identify process improvement opportunities, and pinpoint areas where cost savings can be delivered.