Glossary
Managed Service Provider (MSP)
A Managed Service Provider (MSP) is a company that runs a client's contingent-workforce program end-to-end on the client's behalf. The MSP manages vendor relationships, runs the VMS, oversees compliance, and reports on program performance. MSPs typically charge 3-5% of contingent spend as a markup. For programs below roughly $1M in annual contingent spend, the MSP markup often exceeds the cost of self-management.
What MSPs typically provide
- Vendor management — onboarding, performance scorecards, relationship ownership
- Requisition intake — receiving hiring requests, posting to the VMS
- Compliance oversight — ensuring classifications, insurance, and documentation meet requirements
- Reporting — monthly or quarterly spend reports, program KPIs
- Single point of contact — the hiring client deals with one party, not dozens of staffing vendors
When an MSP makes sense
- Contingent spend is $2M+ per year and the markup cost is outweighed by saved internal labor
- Your internal team has no bandwidth or expertise to run a vendor program
- You need a single accountable party for program outcomes
- Your industry or regulatory context requires a vendor with deep expertise
When self-management wins
- Contingent spend is below roughly $1M per year (MSP markup disproportionately expensive)
- You have or can hire a program owner internally
- You want direct vendor relationships (not intermediated through an MSP)
- You want flexibility to add capabilities (EOR, contractor management, free ATS) outside what a traditional MSP handles
Engage's VMS module is the self-managed alternative — same capabilities an MSP provides, without the markup.