Your MSP solved the right problem. In a different era.
When your organization first implemented a managed service provider program, it brought real value. It centralized a fragmented supplier landscape, created process consistency, and gave finance and procurement a clearer line of sight into external workforce spend.
That was then.
Contingent workforce management has since fundamentally changed. According to SIA (Staffing Industry Analysts), the US contingent workforce market exceeded $200 billion in managed spend in 2025, and the complexity driving that spend has grown significantly. Contractors, freelancers, consultants, and statement-of-work talent now support critical functions across technology, AI transformation, operations, finance, and customer delivery. The skills being sourced are harder to find. Compliance requirements are more demanding. The expectations of hiring managers and contingent workers themselves are considerably higher.
Most legacy MSP programs have not kept pace. They were designed around requisition processing and vendor coordination. They were not designed for proactive sourcing strategy, real-time workforce analytics, direct talent pipelines, or the branded hiring experience that drives program adoption rather than undermining it.
The result is a familiar pattern: a contingent workforce program that looks functional on the surface, but is quietly losing ground on cost control, talent quality, and stakeholder trust.
Signs your contingent workforce program has outgrown its MSP
The organizations that come to AMS about program modernization are rarely in crisis. They are in a slower, more frustrating situation: a program delivering diminishing returns, and an MSP that cannot explain why or offer a credible path forward.
Here are some common signs of an underperforming contingent workforce program:
- Limited sourcing innovation. The program is reactive, heavily reliant on the same vendor lists it has used for years. There is no direct sourcing capability, no talent pooling strategy, and no meaningful approach to sourcing high-demand skills in areas like AI, cybersecurity, or specialized engineering.
- Low program adoption. A significant percentage of the contingent workforce is circumventing the managed program entirely. Hiring managers have found faster workarounds, which means unmanaged spend, compliance exposure, and workforce data that cannot be trusted.
- Poor workforce visibility and reporting. The MSP delivers basic vendor metrics but not time-to-fill analytics, quality-of-hire data, diversity reporting, or the market intelligence procurement and talent leaders need to make strategic decisions.
- Outdated technology. The VMS is slow, non-intuitive, and disconnected from the broader HR technology stack. The candidate experience does not reflect the organization’s employer brand. Contingent workers are processed as vendors rather than engaged as talent.
- Stalled improvement. After the first year, incremental value starts to level off. Communications become transactional rather than innovative and strategic.
- High cost from avoidable channels. The same agencies are being used as the default sourcing option because no alternative pipeline exists. Talent becomes repeatable because it’s sourced from the same well again, and again.
If several of these are recognizable, the issue lies beyond simple configuration adjustment or performance management. It is structural and may require a deliberate program redesign.
See how AMS approaches contingent workforce program consulting and diagnostics.
Why workforce visibility is the biggest contingent workforce challenge
Most organizations experiencing these challenges believe the core issue is cost. Rather, it comes down to a case of visibility (or lack thereof).
You cannot optimize contingent labor spend you cannot accurately see. When workforce activity fragments across business units, suppliers, and geographies without centralized governance, gaps accumulate quietly. Different teams engaging suppliers independently, disconnected systems, manual approval workflows, inconsistent onboarding, and surface-level reporting; these are not dramatic failures. They are the slow accumulation of workarounds that, over time, remove meaningful oversight from the people responsible for the program.
In one AMS diagnostic engagement, the team uncovered more than $10 million in contingent workforce savings opportunities, the potential to consolidate 85% of suppliers, and an opportunity to bring an additional 88.6% of the external workforce into the managed program. The organization’s program appeared to be functioning. Beneath that, fragmentation had been building for years.
That pattern, fragmentation well beyond what program owners realize, is consistent across industries and program sizes. It is rarely the result of negligence. It is the result of a contingent workforce program that was not built to maintain visibility as it scaled.
The real contingent labor cost drivers most MSPs do not address
Rate negotiations dominate contingent workforce cost discussions. They matter, but they are rarely the primary driver of long-term cost inefficiency.
The larger cost problems tend to come from off-program hiring, duplicate suppliers, inflated agency markups, rates that drift out of alignment with market benchmarks, and reactive hiring cycles that generate unnecessary spend simply because a proactive sourcing alternative does not exist. Organizations that rely heavily on staffing agencies tend to stay in that model because they have not built alternative talent pipelines. Without direct sourcing capabilities, the cycle repeats with every requisition.
According to Ardent Partners research, organizations that leverage a well-structured MSP program drive up to 65% higher cost savings year-over-year compared to unmanaged approaches. But sustainable contingent labor cost reduction goes further than program structure alone, it requires better supplier governance, stronger workforce analytics, improved workforce planning, and program adoption high enough that the data driving those decisions is actually reliable.
When those elements work together, the results are substantial. For a leading global financial institution, AMS delivered more than $12 million in savings alongside 21.1% savings per placement, with 98% hiring manager satisfaction. For a global hospitality organization, AMS delivered more than $10 million in annual savings, with 25.5% savings per placement and 93% of requisitions filled without agency involvement. Across AMS client programs collectively, that translates to more than $111 million in annual cost savings. Those results do not come from negotiating harder with suppliers. They come from redesigning how the program sources, governs, and operates.
Why program adoption is the most expensive problem you are not measuring
If your hiring managers have found a way around your contingent workforce program, they are not being difficult. They are responding rationally to a program that is not working for them.
Slow approvals, difficult systems, inconsistent candidate quality, sourcing teams that cannot move at the pace hiring requires, each creates a rational incentive to go off-program. The downstream effects compound quickly: unmanaged contingent spend, inconsistent onboarding, fragmented workforce data, and compliance exposure that grows every time a worker is engaged outside the governance structure.
Stricter enforcement does not fix this. A better program experience does.
This is why branded program design – hiring workflows that reflect the organization’s employer value proposition, intuitive technology, and sourcing quality that earns hiring managers’ trust, is increasingly central to what next-generation contingent workforce management delivers. For a leading UK-focused bank, AMS managed more than 15,000 SOWs, impacted £1 billion in workforce spend, and delivered £40 million in savings and cost avoidance across 17 countries. That level of adoption does not come from compliance enforcement. It comes from a program that is genuinely better than any available workaround.
What next-generation contingent workforce management looks like
The phrase “next-generation MSP” has grown in recent years within the contingent hiring space. It describes a structural shift that several organizations are looking for: from transactional vendor management to talent-centric, experience-driven, insight-led workforce partnership.
In practical terms, that means several things that most legacy contingent workforce programs do not currently offer:
- Proactive sourcing strategy, not reactive vendor coordination. Role-by-role sourcing insights, direct sourcing pipelines, strategic supplier networks, and access to niche channels for high-demand skills, all before a requisition reaches a staffing agency.
- Real workforce intelligence. Benchmarked rate data, time-to-fill analytics, quality-of-hire reporting, diversity of candidate slate, predictive demand forecasting, and compliance risk identification. The kind of contingent workforce analytics that allow procurement and talent leaders to optimize the program rather than simply monitor it.
- Technology that works. AMS partners with more than 300 workforce technology vendors and has delivered more than 1,000 client implementations, with ethical AI capabilities built into program design. For Deloitte, AMS manages 700 helpdesk queries per month, 12 active integrations, and 120 system changes annually, the operational depth required to keep a complex, evolving technology environment running effectively.
- Certified expertise, not generalist administration. AMS programs are run by CIPS and CCWP-certified procurement and talent specialists. Recognized as a Star Performer in the Everest Group PEAK Report for Contingent Workforce Management, AMS also brings 15 consecutive years of leadership in the Everest RPO PEAK Matrix to every engagement.
- Independence from staffing agency ownership. AMS operates without conflicts of interest from staffing agency ownership. Sourcing decisions are made in the client’s interest, not in service of filling the MSP’s own agency pipeline – a meaningful distinction when redesigning supplier strategy.
- Scalability when it counts. Following COVID-19, AMS rapidly scaled to 225 resources for a leading airline company to fill more than 21,000 contingent and permanent roles. Scalable program design, backed by 12 global capability centers, means workforce demand can be met quickly when business conditions require it.
Learn more about AMS Contingent Workforce Solutions.
Next-generation MSP is a natural shift toward a Total Talent approach. It requires more than just a switch in tools or suppliers, but realigning how an organization think about work, talent and workforce strategy. Often, the first step is a thorough diagnostic of the existing program to understand where the gaps are, and which issue should be prioritized for the greatest impact in the near and long-term.
Direct sourcing: from contingent workforce differentiator to standard strategy
Organizations with heavy agency dependency tend to remain in that cycle because they have not built an alternative. Every role that goes to an agency is a role that did not leverage the organization’s employer brand, did not build a reusable talent pool, and did not generate the candidate data that improves sourcing performance over time.
AMS branded direct sourcing changes that. By leveraging the client’s employer value proposition, AMS builds client-owned talent pools that reduce agency reliance, improve candidate quality, accelerate hiring speed, and create more consistent contingent workforce experiences , including for contractors and freelancers who increasingly choose their engagements based on how organizations treat them.
According to Ardent Partners and Future of Work Exchange research, nearly 70% of businesses now have some elements of direct sourcing in place, yet only 11% have a full end-to-end program running. For most organizations, the majority of the value direct sourcing can deliver remains unrealized. As program adoption continues to grow, direct sourcing capability is increasingly what separates next-generation programs from those still operating on legacy models.
Services procurement: the workforce visibility gap that keeps growing
Many organizations manage contingent labor and services procurement through entirely separate processes. The result is a growing visibility gap across statement-of-work engagements, project-based consulting spend, outsourced services, and supplier accountability. This exact gap will expand in proportion to how much SoW spend is increasing.
Integrating services procurement into a unified contingent workforce management strategy, managed by CIPS-certified professionals, improves spend visibility, supplier governance, workforce tracking, and compliance oversight across the full external workforce.
The Public Sector Resourcing program in the UK illustrates the scale of what becomes possible: more than 100,000 roles filled, $540 million in savings since launch in 2018, and a proprietary talent pool of more than 40,000 individuals.
The case for evolving your contingent workforce management strategy
Organizations are discovering that legacy contingent workforce programs are not meeting today’s business needs. Evolving the program is crucial because business outcomes directly depend on the speed, quality, and diversity of talent sourcing. Leading organizations that have done this are seeing greater workforce visibility, dramatic cost savings, and improved program experiences that earn higher adoption.
Legacy MSP programs that are not evolving will keep producing the same outcomes: rising contingent labor costs, inconsistent workforce quality, growing unmanaged spend, and compliance exposure that accumulates quietly. These issues propagate over time and dull an organization’s competitive edge to attract high quality talent.
Getting it right starts with an honest assessment of where the gaps are. AMS works with organizations through consulting diagnostics, next-generation MSP design, branded direct sourcing, services procurement, and insourced VMO support , tailored to each client’s specific maturity, priorities, and workforce strategy. With $2.3 billion in MSP spend under management, $1.1 billion in services procurement spend, and 40,000 workers under management globally, AMS brings the scale, expertise, and track record to deliver change that lasts.
Ready to assess where your contingent workforce program stands? Speak with an AMS expert to identify opportunities to improve visibility, control, and cost-efficiency across your external workforce.
Frequently asked questions
Contingent workforce management is the strategic process of sourcing, governing, and optimizing external workers , including contractors, freelancers, temporary workers, consultants, and statement-of-work engagements. It combines workforce visibility, supplier governance, compliance management, analytics, and sourcing strategy to improve cost control and hiring outcomes across the non-permanent workforce.
A next-generation MSP moves beyond transactional vendor management to deliver workforce analytics, proactive direct sourcing, branded candidate experiences, compliance management, and talent acquisition expertise aligned with the organization’s broader workforce strategy. It functions as a strategic talent partner rather than an administrative vendor coordinator.
Key indicators include low program adoption, limited sourcing innovation, poor workforce visibility, outdated technology, flat cost performance year over year, and an MSP that is maintaining operations rather than driving continuous improvement. A structured diagnostic is the most reliable way to quantify the scale of those gaps.
Key indicators include low program adoption, limited sourcing innovation, poor workforce visibility, outdated technology, flat cost performance year over year, and an MSP that is maintaining operations rather than driving continuous improvement. A structured diagnostic is the most reliable way to quantify the scale of those gaps.
