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The specific, measurable hard dollars saved via the implementation of a Managed Services program, include:
Rate Management
The use of competitive bidding and rate management through a rate card process will help clients pay a lower average hourly billing rate.
- Standardized Rate Cards – Rates are developed by position title, level and geographic location
- Reverse Auction – Vendors can see the rates that have been submitted for competitive candidates and choose to meet or beat the price
- Historical Reporting – Track rates of returning or renewing consultants
- Exception Reporting – Track consultants that are identified as out of the acceptable rate ranges for renegotiation or replacement
- Individual Rate Negotiations on the client behalf by experienced Managed Services Provider recruiters, who are knowledgeable in current skill availability, rate trends, and projected future demands
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Discounts
- Volume Discount – The volume discount is based on the amount billed by each vendor in accordance with a predefined schedule. Typically, it is a tiered schedule that ranges from 0.5% to 2%, and is renewable on a yearly basis. Clients can leverage this discount by reducing the numbers of vendors to a smaller population for spend concentration.
- Early Payment Discount – An early payment discount can be negotiated with the customer, the MSP and the vendor. Typically, the customer can achieve a discount up to 2% if payment is made to the MSP within five days of the submission of the monthly invoice. In turn, the MSP can recover that same discount from the vendor community by making payment within five days of the receipt of funds from the customer.
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Reduced Administrative Staff
Most often the implementation of a Managed Services program allows for some administrative staff to be assigned to other needs. These include recruiters, researchers, and administrative support personnel that are fully or partially involved in the communication of requirements, receipt and distribution of resumes, resolution of duplicate resume submittals, and correction of time and billing errors.
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Reduced Accounting Costs
- Consolidated Invoicing - The process of verifying, approving and processing multiple invoices each month is costly. Industry analysts have estimated that it costs a company at least anywhere from $35 to $100 to process each invoice. Consolidated invoicing gives customers the opportunity to process one invoice for all technical services received from multiple vendors and reduce the accounts payable costs associated. For example, a company using 50 suppliers that bill weekly would accumulate 2,600 invoices annually. With a Managed Services program, they would reduce their annual invoices to 12, resulting in a dramatic reduction in Accounts Payable costs and improved cash flow.
- Reduced Accounting Labor- Each different company that supplies contract staffing represents a vendor. With manual processes, each vendor has a unique contract, unique billing and time reporting cycle, disparate time card formats, and different processes for company contact. With Managed Services, clients benefit from a single contract and a single point of contact. Accounting-related costs associated with labor, rent, computers, benefits, insurance and error correction all may be reduced.
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