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24 July 2013

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The Emergence of VMS and MSP outside North America

Speaker: John Nurthen, Executive Director, International DevelopmentMatt Norton, Research Analyst

©2013 by Crain Communications Inc. All rights reserved.

*Staffing Market regions are to scale

Global Research Regions

JAPAN

CWS Council Members (partial list)


Contents

• Definitions

• Trends

• What is available?

– VMS Providers by region

– MSP Providers by region

– MSP spend by mix and by skill

• Legal context

– Alternative models


MSP/VMS Definition

• Managed Service Provider (MSP) — A company that takes on primary responsibility for managing an organisation’s contingent workforce program. Typical responsibilities of an MSP include overall program management, reporting and tracking, supplier selection and management, order distribution and often consolidated billing.

• Vendor Management System (VMS) - An Internet-enabled, often Web-based application that acts as a mechanism for business to manage and procure staffing services (temporary help as well as, in some cases, permanent placement services) as well as outside contract or contingent labour. Typical features of a VMS include order distribution, consolidated billing and significant enhancements in reporting.


RPO Definition

• Recruitment Process Outsourcing (RPO) — Partial or full outsourcing of the internal recruitment function to a third-party specialist provider, which serves to provide the necessary skills, activities, tools, technologies, related recruitment supply chain partners and process methodologies to assume the role of the client’s recruiting department by owning and managing its recruitment process and related recruitment supply chain partner relationships. RPO is more commonly used as a method for employers to recruit direct-hire personnel, particularly in the U.S. In Europe, contingent workers will

also be included within the scope in some instances.


Where are Buyers expanding their CW programmes?


Source: Staffing Industry Analysts’ Contingent Buyers Survey 2013

Buying Intentions of North American Firms with 1,000+ employees

Known VMS/MSP Organisations


CompanyHome

Market

Accolo US

Acro Service Corp. US

Adecco Pontoon CH

Aditi US

Advantage xPO JP

Aerotek US

Agile•1 US

Alexander Mann UK

Allegis Group Services US

AMN Healthcare US

Ariba US

Bartech US

Beeline US

Capita Resourcing UK

CDI US

Clover US

Collabrus US

Consul (powered by ProcureStaff Technologies) US

Contingent Workforce Solutions US

Contract-Central US

Cross Country Staffing US

DCR Workforce US

de Poel UK

dotStaff US

Elevated Resources US

Emptoris US

esize NL

Fieldglass US

Gonzalez US

Hays UK

HireGenics US

Impellam Group UK

CompanyHome

Market

IQNavigator US

iSymphony US

KellyOCG US

Lumesse UK

MedAssets Workforce Solutions US

Medefis US

Morson UK

MSX International US

myflex US

Nétive VMS NL

nextSource US

Peoplefluent US

PIXID FR

Populus Group US

PRO Unlimited US

Provade US

Randstad Sourceright NL

Resource Solutions Group UK

RGBSI US

RINGO US

Rullion Solutions UK

S3 US

Shiftwise US

Skillstream UK

Staff Management US

Superior Group/Work Nexus US

TAPFIN/Econometrix US

USG People NL

Volt Consulting Group US

Yoh US

Yurcor US

ZeroChaos US

While all of the these companies were invited to participate in the VMS/MSP Landscape report, not all provided sufficient information to be included in our analysis. Those that did participate are in bold/yellow.


CompanyHome

Market

Accolo US

Acro Service Corp. US

Adecco Pontoon CH

Aditi US

Advantage xPO JP

Aerotek US

Agile•1 US

Alexander Mann UK

Allegis Group Services US

AMN Healthcare US

Ariba US

Bartech US

Beeline US

Capita Resourcing UK

CDI US

Clover US

Collabrus US

Consul (powered by ProcureStaff Technologies) US

Contingent Workforce Solutions US

Contract-Central US

Cross Country Staffing US

DCR Workforce US

de Poel UK

dotStaff US

Elevated Resources US

Emptoris US

esize NL

Fieldglass US

Gonzalez US

Hays UK

HireGenics US

Impellam Group UK

CompanyHome

Market

IQNavigator US

iSymphony US

KellyOCG US

Lumesse UK

MedAssets Workforce Solutions US

Medefis US

Morson UK

MSX International US

myflex US

Nétive VMS NL

nextSource US

Peoplefluent US

PIXID FR

Populus Group US

PRO Unlimited US

Provade US

Randstad Sourceright NL

Resource Solutions Group UK

RGBSI US

RINGO US

Rullion Solutions UK

S3 US

Shiftwise US

Skillstream UK

Staff Management US

Superior Group/Work Nexus US

TAPFIN/Econometrix US

USG People NL

Volt Consulting Group US

Yoh US

Yurcor US

ZeroChaos US

Known VMS/MSP Organisations

Source: Staffing Industry Analysts: MSP/VMS Global Landscape Report, 2013

2012 Spend Under Management

Contract Staffing/Outsourcing

Temporary Staffing


0

20

40

60

80

100

120

VMS MSP VMS/MSP

$ B

illio

n

Own 3rd Party Other Total Spend


VMS/MSP Spend by Geography

Contract Staffing/Outsourcing

Temporary Staffing


US

70%

Outside US

30%

US

67%

Outside US

33%

US Outside US

VMS Spend MSP Spend

VMS Providers by Region – Europe


Rank Country

1 PIXID*

2 Fieldglass

3 Impellam Group

4 IQNavigator

5 ZeroChaos

6 Netive VMS

7 Beeline

8 USG People

9 Hays

10 Provade


*PIXID are solely based in France and account for over 80% of the French market

Recently launched antitrust investigation in

France focused on Adecco, ManpowerGroup

and Randstad relating to “the commonly

used vendor neutral platforms in the

industry and whether these platforms

adversely impact the competitive dynamics

of the industry”.

VMS Providers by Region – Asia/Pacific


Rank Country

1 Fieldglass

2 IQNavigator

3 Beeline

4 PRO Unlimited

5 Provade

6 ZeroChaos

7 Consol

8 DCR Workforce

9 Hays

10 Agile-1


VMS Providers by Region – South America


Rank Country

1 Fieldglass

2 Beeline

3 IQNavigator

4 Agile-1

5 PRO Unlimited



Source: VMS/MSP Landscape Report 2013, Staffing Industry Analysts

Recorded Incidence of MSP Contracts


Less than 10 MSPs

10 to 50 MSPs

51 to 100 MSPs

101 to 500 MSPs

Over 501 MSPs

No MSP Recorded

Recorded Incidence of MSP Contracts

MSP Spend Inside and Outside the US


CW Solutions

iSymphony

USG People

Yoh

AMN Healthcare

Capita Resourcing

CDI

Superior Group

DCR Workforce

Aerotek

MSX International

Hays

Bartech

ZeroChaos

Volt Consulting Group

Impellam Group

PRO Unlimited

IQNavigator

KellyOCG

Randstad Sourceright

Adecco Pontoon

TAPFIN

Allegis Group Services

US

Oustide US

Largest MSP Providers by Region - Europe


Rank Country

1 Randstad Sourceright

2 Adecco Pontoon

3 Impellam Group

4 TAPFIN

5 Kelly OCG

6 ZeroChaos

7 Hays

8 Allegis Group Services

9 PRO Unlimited

10 IQNavigator


Largest MSP Providers by Region – Asia/Pacific


Rank Country

1 Kelly OCG

2 TAPFIN

3 Adecco Pontoon

4 Randstad Sourceright

5 PRO Unlimited

6 Allegis Group Services

7 IQNavigator

8 ZeroChaos

9 Volt Consulting Group

10 Hays



Largest MSP Providers by Region-South America


Rank Country

1 Adecco Pontoon

2 TAPFIN

3 PRO Unlimited

4 ZeroChaos

5 Kelly OCG


MSP Spend by Country

Permanent

Recruitment

35%

Contract Staffing/

Outsourcing

44%

Exec

Recruitment

11%


-

1,000,000,000

2,000,000,000

3,000,000,000

4,000,000,000

5,000,000,000

6,000,000,000

7,000,000,000

8,000,000,000


Mix of MSP Spend by Country

Permanent

Recruitment

35%

Contract Staffing/

Outsourcing

44%

Exec

Recruitment

11%


0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Switzerland

China

India

Belgium

Sweden

Australia

France

Germany

The Netherlands

United Kingdom

Temp/Contract

SOW

Outsourced


2012 MSP Spend by Skill

Permanent

Recruitment

35%

Contract Staffing/

Outsourcing

44%

Exec

Recruitment

11%


21%

16%

31%

32%

MSP Spend by Skill – Outside US

15%

12%

37%

36%

MSP Spend by Skill – US

Country Licensing

Argentina N

Australia Y

Austria Y

Belgium Y

Brazil N

Bulgaria Y

Canada Y

China Y

Czech Republic Y

Denmark*

Egypt Y

Finland N

France Y

Germany Y

Greece Y

Hong Kong China Y

Hungary Y

India Y

Ireland Y

Italy Y

Japan Y

Country Licensing

Kuwait N

Mexico Y

Netherlands N

New Zealan N

Norway Y

Poland Y

Portugal Y

Qatar Y

Romania Y

Russia N

Saudi Arabia Y

Serbia Y

Singapre Y

South Africa Y

Spain Y

Sweden N

Switzerland Y

Turkey Y

United Arab Emirates Y

United Kingdom N

United States N

Y/N

The Issue of Staffing Agency Licensing

•Most countries require that staffing agencies are legally licenced before being allowed to supply temporary workers

•Licensing is fundamental to whether an MSP is allowed to operate as a Principal intermediary– An indication that programme

managers should look more carefully at implications for MSP delivery

– In some markets, any staffing agency supplying staff through an MSP would be in breach of licensing requirements

*Licensing required for provision of healthcare staffing only

Alternative MSP Models

• Principal Model

– Standard model as used in liberal staffing markets such as the US, UK and Netherlands

• Agency Model

– MSP manages local staffing companies on behalf of the end user (and perhaps fills some vacancies itself)

– Second tier staffing companies still have contracts directly with the hirer, but MSP administers those contracts on behalf of end user

• The Margin only Model

– MSP appoints local staffing agencies to source contingent workers– MSP has contracts with individual agencies, but once candidates are

identified, MSP contracts directly with the contingent workers and supplies them to the end user acting as the contractual intermediary



UK Customer

MSP

Staffing Company

Temporary Worker

Independent Contractor

Umbrella Company

Principal MSP Contractual Relationship - UK

Fixed Term Contract (subject to Fixed-term Employees Prevention of Less Favourable Treatment Regulation (2002). PAYE tax and other statutory payment obligations for Customer.

Managed Service Contract.

Sub-contractor Agreement between MSP and Staffing Company

Contract for Services as defined under the Employment Agencies Act (1973) and Conduct of Employment Agencies & Employment Business Regulations (2003) (amended). Agency Workers Regulations (2010) will be applicable from 1 October 2011. PAYE tax and other statutory payment obligations for Staffing Company.

Services supplied under Services Agreement by Limited Company, Sole Supplier or Partnership.

Contract of Employment (subject to the Employment Rights Act (1996). PAYE tax and other statutory payment obligations for Umbrella Company.

Services Contract between Staffing Company and Umbrella Company. Independent Contractors supplied via an Umbrella Company to a Staffing Company will be captured by the Agency Workers Regulations (2010) from 1 October 2011.

Principal MSP Contractual Relationship -

Netherlands



Principal Australian MSP Contractual Relationship

Adapted German MSP Contractual Relationship

Agency

Worker

AÜG Licence

Holder

End User

Business

Non- AÜG

Licence Holder

MSP

Freiberufler

Free Professional

Freiberufler

Free Professional


Adapted French MSP Contractual Relationship

End User

Business

EPS

MSP

Temporary

Work Agency

Agency

WorkerIndependent

Contractor


Adapted Chinese MSP Contractual Relationship

End User

Business

Dispatch

Worker

Dispatch

Company


MSP

MSP providing workforce management consulting and compliance services to the End User under an

‘Agency model’.

Dispatch workers supplied by Dispatch company

Contractual Structures for Multinational

Programmes

• Many international MSPs are governed by global master services agreement with all-pervasive terms and conditions which will apply no matter where the service is provided

– General pricing policy, general services, term/termination, intellectual property, confidentiality and some boilerplate legal clauses

– Within the global master services agreement will be a template for local country agreements setting out what can be agreed locally country by country together with a timetable for roll out

– The global master services agreement will then be supplemented by local country agreements which are each governed by the global agreement

Global Master

Services Agreement

Local Country

Agreement

Local Country

Agreement

Local Country

Agreement

Summary

• There are a number of reasons why MSP and VMS are less prevalent outside the US

– Legal prohibitions

» Agency licensing requirements

» Undue tax and/or employment law risk

– Market structures (consolidation v fragmentation)

– Market maturity/cultural issues

– Relatively low margins (compared to the US)

• But use of MSP and VMS is a global phenomenon and, with appropriate adaptation, solutions can be deployed anywhere

– Growth of these solutions outside the US is significant

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French Contingent Programme ShowcaseHear from insiders about the business culture and the legal aspects that impact the use of

contingent labour in France

23 October 2013

10:00 EST, 15:00 GMT, 16:00h CET


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