RECRUITMENT INTERNATIONAL December 2009

The End of the Road for MSP’s?                                

“Like it or not MSP’s are here to stay.”

How often have you heard a recruiter say that or something similar in the last couple of years? 

Regular reader’s of this column will know that I disagree.  There have been lots of MSP’s in the past (although they were not called MSP’s) and they have one thing in common, they all failed.  Why should the current clutch be any different to their predecessors?  The answer is that they are not and the chinks in their armour are beginning to show.

Firstly, their raison d'être is to provide high volumes of staff at low margins. When volume is the driving factor, it is often quality that suffers and many clients now source some of their staff directly from agencies on full margins to ensure that they get the quality they need.  In the past the failure to supply good staff was often the downfall of MSPs; agencies will always keep their best staff for the high margin assignments

Secondly, finance companies are becoming very wary of providing factoring arrangements for agencies that supply staff through MSP’s.  This is because many MSP’s are insisting on “pay when paid” clauses in their agreements with their supplier agencies and these clauses make it difficult or even impossible for factoring companies to collect money owed to them.  Many agencies that cannot factor their debts will have to turn down work through MSP’s.  Some MSP’s are trying to get around this by offering finance direct to agencies.  The problem is that this finance tends to be very expensive.  Agencies can’t pay high interest rates for their money when their gross margins are rock bottom.

Finally, MSP’s attract clients by offerings low margins and simplified administration; clients get one invoice for all the temps they use, not a separate invoice from each agency.   In response, some agencies have grouped together so that clients who use them receive one joint invoice.  Also, some of the payroll service companies are now offering the same service to the agencies that use them.

History tells us that MSP’s enjoy a honeymoon period when they first appear. Clients are overwhelmed by the apparent savings and efficiencies they offer and rapidly conclude that they offer an  indispensible service.  However, over time the disadvantages begin to show.

Only time will tell whether the current MSP’s will suffer the same fate as their predecessors.

Social Networking – a trap for the wary

My children now tell me that you cannot possibly conduct your personal or business life effectively unless you are on Facebook, Twitter and LinkedIn, not to mention sites with more intriguing names like QuickFlirt and Looplove. 

Well I have resisted the dubious attractions of the latter sites, but like many others, I have now felt the need to register on sites like Facebook and LinkedIn.

These sites are undoubtedly a rapid way to contact lots of people and they are a logical development in the information revolution.  But, and it is a very big but, I do wonder if they are yet another nail in the coffin of traditional communication.  I fear we are creating a generation of young people who will rarely communicate with others face to face.

LinkedIn is a great tool for business, but users need to be aware that there is open access to the site.  Bosses, competitors, even “nosey parkers” can learn a lot about your business activities and contacts just by looking at your LinkedIn site.  It is wise to remember that you should never post anything on a social or business networking site that you would not want to see published in the pages of this magazine (or the News of the World for that matter).

Invest in a generator

If you have experienced a power cut at work lately you will be aware how quickly your business ceases to function when the lights go out.

Why not buy a little insurance and ensure that you can go on making money whilst your competitors are sitting in the dark.  Buy an electricity generator.  You can purchase a 2 kilowatt petrol generator for less than three hundred pounds.  You will need to fiddle around when the electricity supply fails and it may not power everything in the office.  But it will keep the essentials running.  At the other end of the market for £4,000 upwards you can buy a major diesel generator that cuts in automatically if the power fails and provides enough electricity to run electric heating, all your office equipment and all your neighbours’ as well, if you are feeling generous.

We are being warned that there will be a power crisis in the country in coming years.  Can you really afford not to have some insurance in case the lights go out?