managed services provider

Last Updated on September 27, 2021

You’ve been thinking about using a managed services provider (MSP) to help expand your staffing agency. But like with any investment, you don’t want to make a rash decision. Taking the time to do your due diligence in research and asking questions is important to you.

Although there isn’t a “one size fits all” approach to selecting (or not selecting) an MSP, there are some things you should consider before making a decision. Below are some discussions on what an MSP is, how it can fit into your operations, what it can do to help your agency, and some of the pros and cons of using one.

What is an MSP, and How Do They Work?

A managed services provider is an outside organization with expertise in recruiting temporary employees. An MSP manages the entire process for a client or a series of clients. The MSP is in charge of raising awareness of temporary positions within local labor markets.

People who work for an MSP also are charged with receiving applications, screening those applications against employer requirements, interviewing candidates, and hiring them on behalf of organizations.

An MSP works as an intermediary between staffing firms and clients. MSPs connect staffing firms that have pools of temporary workers with employers that need them. For instance, many retailers need to ramp up their in-store staff during the holidays. Some may take charge of their own hiring efforts, but many also rely on staffing agencies and MSPs to find temporary workers.

MSPs may use vendor management systems or VMS to work with clients and staffing firms. A VMS consists of technology and tech applications.


Unlike an MSP, a VMS does not include a human component. Vendor management systems are simply a set of online interfaces or applications that allow staffing agencies and employers to communicate with each other. A VMS can send job openings and requirements to several staffing agencies at once.

Vendor management systems also use analytics to determine which staffing agencies are sending over the most qualified candidates. These systems also track the success rate and performance of various staffing agencies. It is a way of gaining an unbiased, data-driven perspective of which firms are helping clients meet their temporary staffing goals.

In contrast, an MSP is based on human intervention and management. An MSP doesn’t necessarily take the place of a VMS, but it does not rely on technology to manage the recruitment process. Managed service providers have in-depth knowledge and expertise on how to recruit and manage temporary workers for assignments.

How Can an MSP Help Staffing Agencies Operate and Grow?

An MSP can help staffing agencies operate and grow by exposing them to more opportunities. Managed service providers can also make the process of finding and matching candidates more efficient. As MSPs serve as intermediaries, they can help clarify job openings, requirements, and employers’ minimum and preferred qualifications.

MSPs can use VMS software to sort through the number of openings different employers have. A staffing agency no longer has to do this by themselves or devote staff that spends hours on finding out whether positions are available. Staffing agencies that are just starting out and do not have a lot of established relationships with employers can get their foot in the door with an MSP.

During periods of high volume, MSPs can make staffing agencies more efficient. Similar to other businesses, staffing firms are limited by the number of employees and the knowledge and those employees’ expertise. Budgets may also restrict the resources staffing firms can acquire.

An MSP can bring in knowledge, expertise, manpower, and resources that growing staffing agencies don’t have yet. These advantages can help them compete with larger staffing agencies and those agencies with established histories of success with employers. An MSP can even form as a branch of an established staffing firm, giving other firms access to some of that expertise.

Pros and Cons of Companies Using an MSP

Companies that use an MSP are handing over control of their staffing and outreach efforts to a vendor. Organizations may lose some of the benefits that come with 100% control, such as complete oversight when it comes to quality and decision-making. While there are ways to monitor quality and establish processes for a vendor to follow, an MSP will ultimately manage critical aspects of your agency’s operations.

When a staffing firm doesn’t have the time or the resources to manage everything, an MSP can be a godsend. They can offer knowledge and insights your staffing firm can learn from, especially if you eventually want to do what an MSP does on your own. An MSP can also expand your reach, both in terms of employees you can recruit and employers with which you can connect.