SIA 2012 VMS MSP Landscape Report

Produced By:

Confidential: Not for distribution 2012 Crain Communications Inc

Bryan T. Pea VP, Contingent Workforce Strategies and Research [email protected]

Tony Gregoire Senior Research Analyst [email protected]

2012 VMS and MSP Supplier Competitive Landscape

ii | 2012 VMS and MSP Supplier Competitive Landscape

Confidential: Not for distribution | 2012 Crain Communications Inc | www.staffingindustry.com

For CWS Council Internal Use Only

Copyrighted MaterialWe encourage you to share this report internally within your organization. However, it is forbidden to share this report outside of your company. Your companys use of this report precludes distribution of its contents, in whole or in part, to other companies or individuals outside your organization in any form electronic, written or verbal without the express written consent of Staffing Industry Analysts. It is your organizations responsibility to maintain and protect the confidentiality of this report.

About Staffing Industry AnalystsStaffing Industry Analysts is the global advisor on contingent work. Known for its independent and objective insights, the companys proprietary research, award-winning content, data, support tools, publications and executive conferences provide a competitive edge to decision makers who supply and buy temporary staffing. In addition to temporary staffing, Staffing Industry Analysts also covers related staffing service sectors. Founded in 1989 and acquired by Crain Communications Inc. in 2008, the company is headquartered in Mountain View, California, with offices in London, England.

For more information: www.staffingindustry.com

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Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1VMS/MSP Bifurcation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .3Spend Under Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5VMS & MSP Spend Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .8M&A Activity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9VMS & MSP Market Trends and Supplier Comparisons . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10Temporary & Contract Staffing Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .16SOW (Statement of Work) Services . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27Outsourced Service Contracts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .31Market Segmentation: Client Size and Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34Funding Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41Pricing Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42Geography . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43Appendix A: Survey Respondent Profiles . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .110Appendix B: Known VMS/MSP Organizations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 147

Graphs Figure 1. 2011 VMS/MSP Spend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .5 Figure 2. 2011 VMS and MSP Spend by Worker Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .6 Figure 3. 2011 VMS and MSP Spend by Worker Classification and Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .7 Figure 4. 2011 MSP Spend by Worker Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .10 Figure 5. 2011 and 2010 Spend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 6. 2011/2010 Growth in MSP Spend by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .12 Figure 7. 2011 and 2010 MSP Spend by Platform Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Figure 8. 2011/2010 Growth in MSP Spend by Platform Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .13 Figure 9. 2011 VMS Spend by Worker Classification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .14 Figure 10. 2011 and 2010 VMS Spend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Figure 11. 2011/2010 Growth in VMS Spend by Company . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .15 Figure 12. 2011 VMS Temp/contract Spend by Platform Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .17 Figure 13. 2011 and 2010 VMS Temp/contract Spend . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .18 Figure 14. 2011 MSP Temp/contract Spend by Platform Type . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .19 Figure 15. 2011 MSP Temp/contract Spend by Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 16. 2011 and 2010 MSP Temp/contract Spend by Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Figure 17. 2011/2010 Growth in MSP Temp/contract Spend by Model . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .21 Figure 18. 2011 Vendor-neutral MSP Temp/contract Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 19. 2011 Hybrid MSP Temp/contract Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 20. 2011 Master Supplier MSP Temp/contract Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24

Contents

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Contents (cont.)

Graphs (cont.) Figure 21. 2011 MSP Assignments by Skill Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 22. 2011 MSP Spend by Skill Category . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 Figure 23. 2011 MSP Temp/contract Spend Healthcare . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 Figure 24. 2011 SOW VMS Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 25. 2011 and 2010 SOW MSP Spend. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 Figure 26. 2011 SOW MSP Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30 Figure 27. 2011 Outsourced VMS Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 28. 2011 Outsourced MSP Spend by Platform . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 29. VMS Accounts by Program Spend Range . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 30. MSP Accounts by Program Spend Range . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36 Figure 31. VMS Accounts by Program Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38 Figure 32. MSP Accounts by Program Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 Figure 33. VMS Client Size and Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Figure 34. MSP Client Size and Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40 Figure 35. MSP Funding Source . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .41 Figure 36. MSP Pricing Method . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42 Figure 37. Mix of MSP Spend by Country Largest 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 43 Figure 38. Mix of MSP Temp/contract Spend by Country Largest 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 44 Figures 39-54. Regional VMS and MSP Program Count . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 45-60 Figure 55. 2011 MSP Program Count by Country Largest 15 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .61 Figure 56. 2011 VMS Program Count by Country Largest 16 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65 Figures 57-126. 2011 VMS and MSP Spend by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 71-109

Tables Table 1. 2011 and 2012 YTD Acquisitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .9 Table 2. MSP Program Count by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 62-64 Table 3. VMS Program Count by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 66-68 Table 4. MSP Internal Employee Count by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69 Table 5. VMS Internal Employee Count by Country . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 69

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Definition of Terms

Throughout this report, a number of terms have been used that have specialized meaning. While these terms are commonly used, they are often used differently. Accordingly, it was vital to insist that all participating suppliers in this report conform to these definitions. We spent time with each supplier to ensure all terms were being used consistently with the following definitions.

Assignment is a task or duty being performed by a contingent worker (i.e. a requisition for a temporary worker, each on-boarded consultant associated with a SOW or outsourced engagement). Change orders, such as extensions, do not count as separate assignments. A requisition for two temporary workers would count as two assignments.

Client is a company for which managed contingent workforce program services or a vendor management system is provided under an individual contract. Only when there are separate contracts with different business units or divisions of a client company should you count these units or divisions as separate clients.

Hybrid Program uses the blending of different sourcing model attributes to manage a contingent workforce program. Typically, a hybrid program includes elements of vendor-neutral and master supplier programs. For example, one provider may act as the master supplier for light industrial positions while IT positions are competitively bid using a vendor-neutral model across a number of different vendors.

Independent Contractor is an individual who performs services for a client company, but unlike an employee is free to perform the services as he or she sees fit. The client company generally does not have the right to direct or control the independent contractors work. (Also referred to as sole-proprietors, self-incorporated individuals, freelancers, consultants, and 1099s in the U.S.) Please refer to the temporary & contract staffing services definition to understand how to handle scenarios where an individual is working under a contract for service in certain countries (e.g. the U.K.).

Managed Service Provider (MSP) is a company that takes on primary responsibility for managing an organizations contingent workforce program. An MSP may or may not be independent of a staffing supplier. Typical responsibilities of an MSP include overall program management, reporting and tracking, supplier selection and management, order distribution, and consolidated billing across program suppliers.

Master Supplier is a staffing supplier that takes overall responsibility for providing a client with temporary and contract staffing services. In a master supplier program, all orders will usually go first to the master supplier to either be filled by the master supplier or distributed to a secondary tier of suppliers. Sometimes a master supplier will not only provide a significant portion of the temporary staff working at the employers site but will also manage an organizations contingent workforce program.

Office/clerical Occupations This category includes secretaries, general office clerks, typists, word processing operators, telemarketers, cashiers, product demonstrators, data-entry jobs requiring no professional training, and other related office occupations. This category is also referred to as clerical/admin.

Outsourced Service Contracts are a form of outsourcing whereby services are provided by an organization that has expertise in operating a specific function. The firm contracts with the client not just to provide and supervise staff (as in temporary staffing), but to take on full operational responsibilities for performing the function generally peripheral to the clients core business on an ongoing basis (e.g. call center operations, IT help desk operations, food services, janitorial services, guard services, facilities management, lawn care services, etc.). Operations of this type may or may not be on client premises.

Payrolling The provision of temporary workers to a client where the workers have been recruited (possibly interviewed, tested and approved) by the client but become employees of a payrolling services company.

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Definition of Terms (cont.)

Professional Occupations This category includes occupations such as information technology, engineering, accounting and finance, legal, marketing, management, and other skilled occupations.

Program is a client-specific instance based on geography. For example, if you have an active contract with client x in the U.S. and the U.K., that would be two programs. If you have light industrial in the U.S. and IT in the U.S., that is still one program.

Spend Range is the range of total spend under management across temporary & contract staffing services, SOW/project-based services, and outsourced service contracts during a given calendar year.

Spend Under Management is the approximate amount of spend that was actually invoiced by suppliers for work performed during the given calendar year. This does not include spend that has been identified, but not yet rolled into the program.

Statement of Work (SOW) worker in contrast to a temporary worker assigned by an agency, is usually given a regular, consistent salary by his or her employer and continues to receive this salary when off project assignments (i.e. benched resource). A statement of work is a document that captures the work products and services including, but not limited to, the work activities, deliverables and timeline to be supplied under a contract or as part of a project.

Temporary & Contract Staffing Services are provided by staffing firms that recruit candidates (often referred to as temps or contractors or agency workers) for temporary assignments within client organizations. Skills offered by temporary and contract staffing services companies span the enterprise from administrative positions to high-end technical and professional roles. Where sensible according to regional law (i.e. in the U.S.), agency workers are employees of the staffing agency, but typically without promise of continued employment beyond the current engagement. We recognize that in certain countries (e.g. the U.K.), many

recruiting and staffing firms do not employ individuals under a contract of service, rather they are engaged under a contract for services, meaning that they are self-employed individuals and not employed by the recruiting and staffing provider.

Vendor Management System (VMS) is an Internet-enabled contingent worker sourcing and billing application that enables a company to procure and manage a wide range of contingent workers and services in accordance with client business rules. Typical features of a VMS include supplier profiling, requisition or order creation and distribution, candidate submissions, on- and off-boarding, time and expense keeping, vouchering, consolidated billing and reporting.

vii | 2012 VMS and MSP Supplier Competitive Landscape



As in previous years, the data and analysis included in this report are based largely on the results of an electronic survey of MSP and VMS providers. We invited more than 100 suppliers, ranging from large multi-national staffing suppliers with MSP subsidiaries to niche software and service suppliers in the United States, Europe and other regions. They were asked to provide detailed information regarding their company, funding models, customer segments, and VMS and/or MSP offerings. A total of 36 suppliers 28 MSP providers and 25 VMS suppliers (several participants provide both VMS and MSP services) provided 2011 data for this report. While we are still striving for 100% participation, we are confident that we have the most complete overview of the MSP and VMS market anywhere.

Continuing the aggressive trend set forth in last years report, this years effort collected data with a high degree of granularity. Additionally, more attention was given to understanding how the buying community validated submission accuracy. These continued improvements were largely the result of suggestions coming from CWS Council members and the participating supplier community. The additional rigor, while time-consuming for all parties involved, has contributed to a far richer illustration of how suppliers differ with respect to industry focus, customer size, solution maturity, contingent worker classification, skill coverage, sourcing model type, geographic coverage, and solution capability.

In order to collect data from the various suppliers occupying the contingent workforce management market, a common set of definitions and assumptions has to be created and enforced. Establishing a common understanding remains complicated because our landscape survey was sent to a broad set of suppliers, some with language barriers to overcome. While great pains have been taken in verifying and cross-referencing to the extent practical, the data have been self-reported by the suppliers through an electronic survey. Survey questions and their corresponding responses were reviewed in detail with each participating supplier via telephone interviews, e-mail, and web conferencing to ensure mutual review.

Results of our landscape study will be released this year in three separate reports. (2012 VMS/MSP Competitive Landscape, 2012 VMS/MSP Service Differentiators, and 2012 VMS/MSP Customer Experience). This report is the first of the series.

How to Use This InformationThis report can be used by Contingent Workforce program owners and stakeholders to:

Understand how a given supplier is positioned in the market

Create a short list of prospective providers

Identify the predominant model(s) being used

Confirm veracity of supplier statements

Identify strengths and weaknesses of certain suppliers versus peers

Infer trends about the evolution of contingent workforce management

Establish base requirements for an eventual RFx initiative

Research Methodology and Overview

1 | 2012 VMS and MSP Supplier Competitive Landscape



Introduction

While 2011 was another year of surging growth in the global Vendor Management Systems (VMS) and Managed Service Provider (MSP) market, it was also a year of increased expectations for VMS/MSP suppliers. The very evolution and increasing sophistication of the contingent workforce management field that has helped to drive this surge is also separating the wheat from the chaff, particularly in the VMS market, as suppliers must meet higher standards and more complex requirements. Some large VMS providers grew by more than 50%. Other large VMS providers declined.

The rewards have been great for those able to meet such standards. Not only is an increasing share of temporary staffing spend going through VMS/MSP, but the temporary staffing market continues to grow substantially as well. We estimate 9% global growth in temporary staffing for 2011, partly driven by 14% growth in the U.S., the worlds largest staffing market. This years landscape study accounts for $91.9 billion in global VMS spend and $62.5 billion in MSP spend. For this report, we have accounted for all spend from the bottom up, company by company. We believe this is the most comprehensive report you will find on the VMS/MSP marketplace.

While the U.S. economic recovery has certainly been short of robust, hovering around an uninspiring 2% GDP growth, such a backdrop has been conducive to the temporary staffing market. As companies must meet increasing demand, but remain reluctant to hire permanent employees, the U.S. temporary penetration rate (share of total employment made up by temporary services) has increased from 1.34% in June 2009 to 1.87% in May 2012, according to the U.S. Bureau of Labor Statistics.

Although the European staffing market is not expanding at the pace seen in the U.S., an increasing share of temporary staffing spend is being absorbed by VMS/MSP in this market. We are starting to see large gains in emerging markets such as India. Also noteworthy, VMS/MSP is still not very prevalent in Japan, the worlds second-largest temporary staffing market, partly because of restrictive dispatch laws.

Looking beyond temporary staffing, VMS/MSP continues to make great strides in incorporating Statement of Work (SOW) consulting into programs, more than 20% growth in 2011 by our estimates. In last years study, it appeared that the surge in VMS spend was not shared by its MSP counterpart. Companies increasingly appeared to be managing SOW internally as MSP suppliers seemed challenged to clearly articulate a game-changing value proposition. In this years study, however, we saw increasing traction of MSP in SOW, as several providers grew substantially in this area. There is still a gap between VMS and MSP, but it does not appear to be widening anymore based on the data received.

At the same time, it is important to note that often SOW management does not service as many components of the contingent work cycle that are typically addressed in temp/contract management. More often, the MSP manages portions of the SOW process. For example, the MSP may be tasked with on-boarding, off-boarding and milestone management and payment but might not service the RFP creation or vendor selection. Also, a number of larger SOW implementations are based on the buyers assumption that the MSP will help get the program organized and set up a governing structure but will be less involved on an ongoing basis. In such arrangements, we have seen great success.

The idea is that the MSP is able to flexibly build a statement of work solution that matches unique requirements of each client. It is this ability to be flexible and provide on-demand resources to support this important category that defines success for a number of the providers. For those buyers who are considering incorporating SOW into their CW programs, it is important to have a clear idea of the near, mid, and long-term strategies and how to deploy an MSP in this politically sensitive category.

Key contingent workforce management trends since the beginning of 2011 include:




M&A: The elephants in the market. 2012 has kicked off with a bang with two major acquisitions in procurement-driven VMS; IBMs acquisition of Emptoris and SAPs announced plan to acquire Ariba. In addition, consolidation in the contingent workforce market has continued with large buys over the past year such as Randstad purchasing SFN Group, parent company of SourceRight Solutions, and ZeroChaos acquiring WorkforceLogic.

Global expansion. The word global is often overused, but we nevertheless see contingent workforce programs expanding their geographical footprint. A global solution is not a standardized solution but one that takes into account the idiosyncrasies, laws and culture of each country. For example, a supplier-funded pricing model is the most common model in the U.S., but might not be appropriate in another country. The amount of the fee varies substantially by region as well. As companies expand their scope to various regions, some are choosing to have different MSPs run various regions while deploying a unified VMS strategy globally.

Regarding emerging markets, VMS/MSP has made significant strides in India, China, and Brazil. In 2011, MSP spend rose 93% in India, which now ranks third behind only the U.S. and the U.K. in terms of MSP spend. China grew 20% and is now the twelfth largest market. In last years survey, all of the MSPs combined reported less than $5 million of spend in Brazil. This year, the total rose to $59 million. The growth in several emerging markets is connected to the growth in SOW as the majority of spend in India and China, for example, is through SOW.

Total Talent Management. Our term for the convergence of recruitment process outsourcing (RPO) and MSP and the integration of contingents more closely into core HR strategy, total talent management is still in its infancy. However, there are companies actively pursuing a strategy in which there would be more integration between MSP (managing recruitment of contingent labor) and RPO (managing recruitment of

internal employees). Such integration would affect both the VMS (the tool used for recruitment of contingent labor) and the applicant tracking system (the tool used in recruitment of internal employees). In this context, our definition of RPO is based on the provider being responsible for recruiting internal employees only, acknowledging that some markets outside the U.S. have a broader definition.

Growth in mid-market and in mega-programs. Given the extent of adoption that has already taken place among large buyers, particularly in the U.S., it makes sense that more suppliers might be lowering their floor and more actively pursuing smaller clients. On the other end of the spectrum, we are seeing an increase in the very largest of programs. In our landscape study, there were 40 clients with a reported VMS spend of more than $300 million for 2011, 9 of them with a maturity of less than 18 months. Additionally, we have seen some very large deals in early 2012 which should drive spend in next years report, both inside and outside the U.S.

Vendor-neutral, hybrid, and master supplier. Neutrality has beneficial applications in many program structures, but an increasing number of clients are realizing it is no longer the only possible MSP solution, as evidenced by the trend of hybrid models. In 2011, there was a small shift from master supplier to hybrid models. The share of temp/contract spend going through the hybrid MSP model rose slightly from 13% to 14% as the master supplier share ticked down from 22% to 20%. The share of vendor-neutral stayed at approximately 65%.

Disparity in the marketplace. While we continue to see large gains in total MSP and VMS spend in the marketplace, we have also noticed an increasing amount of disparity among the various providers, especially with VMS. Some companies experienced explosive growth in 2011 while others remained flat, or declined. This trend speaks to the growing sophistication of both buyers and suppliers to clearly articulate and deliver the appropriate service and solution.

Introduction (cont.)




VMS/MSP Bifurcation

Originally, VMS and MSP contingent workforce management (CWM) solution components were sold by the same entity as two parts of a single solution. Over time, the VMS and MSP markets fragmented in response to market pressure. Some MSP firms that did not want to take on the cost and complexity of becoming a technology provider instead took a VMS-agnostic stance, preferring to work with multiple VMS providers. Others chose to develop or sustain their own VMS brand and offer it solely or as one of its offerings along with third-party software. This report therefore treats VMS and MSP as separate markets, acknowledging there is still a substantial degree of overlap.

Data for MSP companies was grouped by program technology type. Companies may have spend under management under more than one scenario:

Own VMS: The company provides its MSP services in conjunction with its own, proprietary VMS. While some companies clearly co-promote their VMS technology along with their MSP services, others choose not to.

Third-party VMS: The company provides its MSP services in conjunction with a third-party VMS provider. The third-party VMS may have been selected directly by the client independent of the MSP provider, or may have partnered with the MSP provider.

Other Technology: In some cases, the company provides its MSP services in conjunction with the clients existing infrastructure. In other cases, the company provides MSP services in conjunction with its own technology, but the technology is not robust enough to be classified as a VMS.

Data for VMS companies was grouped by the source of CW management program resources. Companies may have spend under management under more than one scenario:

Own MSP: The company provides its proprietary VMS in conjunction with its own MSP services.

Third-party MSP: The company provides its proprietary VMS in conjunction with a third-party MSP, which manages a clients CW program. The third-party MSP may have been selected by the client independent of the VMS technology or may have partnered with the VMS company.

Clients Resources: The company provides its proprietary VMS while a client manages the CW program completely internally rather than use a managed service provider.

To a VMS provider, having a central, scalable technology platform that can adapt with a multinational corporations evolving workforce strategy is the core marketing message. To a pure MSP supplier, the VMS is merely a tool; the strategy, and execution of said strategy, is the core marketing message. Providers that agree with both sides of this equation make a compelling case for having a unified strategy inclusive of both technology and service. At the same time, there has been traction in the market toward selecting and evaluating VMS technology independent of the MSP provider. Notwithstanding, there are a number of integrated providers those providers who offer both a service and technology who are making investments in their VMS and making inroads, especially in mid-market deals. While there will always be a place for providers that provide one-stop shopping, we continue to see significant growth among independent VMS providers such as Fieldglass and IQNavigator.

VMS/MSP suppliers fall into one of the three following categories. Within these categories are subcategories based on staffing company affiliation:

Offer VMS/MSP Jointly

And is owned by a staffing company (e.g. Agile-1, TAPFIN/Econometrix,

Beeline)

And is independent from any staffing affiliation (e.g. ZeroChaos)




VMS/MSP Bifurcation (cont.)

Offer VMS Only

And is owned by a staffing company (e.g. Provade)

And is independent from any staffing affiliation (e.g. Fieldglass)

Offer MSP Only

And is owned by a staffing company (e.g. Allegis Group Services,

KellyOCG)

We should also note that some companies with separate MSP/VMS brands reported their brands separately. (Adecco is the parent company of Adecco Solutions and Beeline. Allegis is the parent company of Allegis Group Services and Aerotek. Volt Information Sciences is the parent company of Volt Consulting Group and Consol. Hays is the parent company of both the Hays MSP and the 3 Story Software VMS. Finally, Contingent Workforce Solutions and SimplicityVMS are both owned by the same company.)




Spend Under Management

Contingent workforce spend running through a CWM solution is said to be under management. Spend under management through a VMS provider, an MSP provider, or both, is how we represent the size of the VMS/MSP market. Though it is a useful measure of the market share of a given MSP or VMS company, spend is not necessarily an indication of quality or reliability and this report should not be misinterpreted as a ranking of the best suppliers. Based on our most recent landscape study, we can say with confidence that in 2011, the global VMS/MSP market surpassed $100 billion. It should also be noted that any reference to 2011 spend refers to actual spend in 2011, with no adjustments such as annualizing spend from contracts won over the course of 2011. Furthermore, unless noted otherwise, all spend throughout the report is global.

Total 2011 VMS spend among respondents to our landscape study was $91.9 billion. There were four companies (Ariba, Contract-Central, Emptoris, and Peoplefluent) that responded to last years study, but did not respond this year. For those companies, we used their 2010 spend as a proxy for 2011 spend.

Total 2011 MSP spend among respondents was $62.5 billion. There was one provider (Advantage xPO) for which we used 2010 as a proxy for 2011. Of the $62.5 billion in MSP spend, $7.7 billion did not go through a VMS provider. Adding the $7.7 billion piece to the $91.9 billion in VMS spend, we come to approximately $100 billion in VMS/MSP spend accounted for in our landscape study. Also taking into account spend of providers that have never participated in our study would bring our total market estimate to well over $100 billion.

Figure 1 illustrates 2011 VMS spend segmented by spend going through the VMS providers own MSP (own), spend through a third-party MSP (3rd party), spend through other resources such as the clients internally run program (other), and spend through which no detail was provided in the survey response (no detail). MSP spend is segmented by spend through the MSP providers own VMS (own), through a third-party VMS (3rd party), and through something other than a VMS provider such as a clients internal technology or a technology that would not qualify as a full-blown VMS (other).

Figure 1. 2011 VMS/MSP Spend

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120

VMS MSP VMS/MSP

$ B

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Other

No Detail

3rd Party

Own




Spend Under Management (cont.)

Figure 2 shows MSP and VMS spend by delivery model. Among those companies included in our study, temp/contract made up $57.5 billion of VMS spend, SOW $25.6 billion, and outsourced $8.7 billion. Temp/contract made up $49.8 billion of MSP spend, SOW $11.5 billion, and outsourced

$1.3 billion. In last years report, we placed a great deal of emphasis on the substantial gap in SOW spend between MSP and VMS, suggesting MSP might be getting left behind in this growing market. While Figure 2 illustrates that the gap still exists, it does not appear to be widening.

Figure 2. 2011 VMS and MSP Spend by Worker Classification

SOW

Outsourced

Temp/Contract

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Spend Under Management (cont.)

Figure 3 further illustrates the gap in SOW spend between VMS and MSP. As highlighted by the oval in the figure, a substantial piece of VMS SOW spend is in the other resources category, meaning it is internally managed rather than run by a managed service provider. However, the gap no longer appears to be widening, as some MSPs may be gaining traction in this market. As noted previously, SOW engagements may not service all of the components we typically see serviced in temp/contract.

Figure 3. 2011 VMS and MSP Spend by Worker Classification and Platform

SOW

Outsourced

Temp/Contract

0 5

10 15 20 25 30 35

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MSP VMS




VMS & MSP Spend Leaders

Total VMS Spend in Study $91.9 billionTotal MSP Spend in Study $62.5 billion

Total VMS

Fieldglass $21.5 billion

Total MSP

Adecco Solutions $8.6 billion

VMS Total Temp/contract

Fieldglass $13.6 billionIQNavigator $9.8 billionBeeline $5.5 billion

MSP Total Temp/contract

TAPFIN $5.9 billionAdecco Solutions $5.4 billionRandstad Sourceright $5.0 billion

MSP Temp/contract Vendor-Neutral

Allegis Group Services $4.0 billionAdecco Solutions $3.7 billionIQNavigator $3.0 billion

MSP Temp/contract Hybrid

TAPFIN $1.9 billionHays $1.5 billionKellyOCG $1.1 billion

VMS SOW

Fieldglass $6.0 billionPeoplefluent* $4.1 billionIQNavigator $3.5 billion

MSP SOW

Adecco Solutions $3.2 billionAllegis Group $2.0 billionPRO Unlimited $1.4 billion

*2010 spend

Values on this page represent global 2011 spend under management converted to U.S. dollars. Please note that the largest supplier is not necessarily synonymous with the best supplier. Companies will need to choose the providers that are most appropriate for them, by taking into account which providers best fit their culture, and which offer features and services that best match requirements. For more information on features and services, please refer to our VMS/MSP Service Differentiators report which will be published later this year.




M&A Activity

IBM and business software giant SAP are both now large players in the VMS space, as part of acquisitions with a much broader scope than contingent labor. In May, SAP announced plans to buy Ariba, with a planned close in the third quarter of this year. Despite having a large VMS offering for contingent labor, that piece is but a small portion of its overall business as a provider of cloud-based solutions for spend management. We believe SAPs interest in Ariba, as well as IBMs acquisition of Emptoris, had more to do with the broader offerings of the targets than with contingent labor specifically. Nevertheless, it will be interesting to watch what these two elephants do with their new contingent labor solutions.

In addition to Germany-based SAP, two other European businesses have gone shopping in the U.S., with Randstad acquiring SFN Group, the parent of SourceRight Solutions, and Hays acquiring 3 Story Software. The 3 Story Software VMS has experienced enormous growth in spend, partly by leveraging Hayss large, established presence in Europe.

Four years after announcing the opening of offices in Denmark and the U.K. as part of an international expansion, ZeroChaos acquired Sweden-based Madeo Sourcing Group, substantially increasing the companys presence in several countries, particularly in Northern Europe. With that transaction, and its even larger acquisition of WorkforceLogic, ZeroChaos is now one of the ten largest providers in both VMS and MSP. Finally, Provade now has diversity status, after being acquired by Pinnacle Technical Resources, a minority-owned company.

Table 1. 2011 and 2012 YTD Acquisitions

Date Acquisitor Acquisition

3Q 2012 (Planned) SAP Ariba

February 2012 IBM Emptoris

January 2012 ZeroChaos WorkforceLogic

October 2011 Pinnacle Technical Resources Provade

September 2011 Netive VMS BrightboxHR

July 2011 Randstad SFN Group (SourceRight Solutions)

July 2011 ZeroChaos Madeo Sourcing Group

May 2011 Hays 3 Story Software




MSPThe quantitative comparisons of VMS/MSP suppliers presented in this report are primarily broken down according to three contingent worker classifications:

1. Temporary & Contract Staffing Services (which, for the purposes of this report, includes agency temps, contractors, 1099/independent contractors, and payrolled workers).

2. SOW/project-based Services (project-based service consultants)

3. Outsourced Service Contracts

VMS & MSP Market Trends and Supplier Comparisons

Figure 4. 2011 MSP Spend by Worker Classification

SOW

Temp/Contract

Outsourced

$0 $3,000,000,000 $6,000,000,000 $9,000,000,000

Contingent WF Sol. Cross Country Populus Group

Elevated Resources USG People

AMN Healthcare Yoh

Acro Service Corp. Work Nexus

DCR Workforce CDI

Aerotek MSX International

nextSource Advantage xPO*

Bartech Impellam Group

Volt Consulting Group Hays

Agile-1 ZeroChaos

PRO Unlimited IQNavigator

KellyOCG Beeline

Randstad Sourceright Allegis Group

TAPFIN Adecco Solutions

*2010 Spend*2010 Spend




VMS & MSP Market Trends and Supplier Comparisons (cont.)

Total MSP spend grew 29% among those in our study, from $48.6 billion in 2010 to $62.5 billion in 2011. Growth was driven by all three worker classifications (temp/contract, SOW, outsourced). Growth was also driven both by new client acquisition and by expansion of existing clients.

Figure 5. 2011 and 2010 MSP Spend

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70

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Though the MSP market continues to surge, Figure 6 illustrates the disparity in growth among respondents. Each respondent is represented by a dot on the graph, and the dot is placed based on the companys 2011/2010 growth. As you can see from the wide range of growth/decline, while the MSP market is growing, it is also evolving, and there have been substantial changes in market share for a number of providers. We expect this pattern to continue into 2012 as some providers struggle to adjust delivery and pricing strategies to match the demand of todays more educated buyers. It should also be noted that the dots representing growth over 20% are not just small companies growing from a low base. We are seeing 20%+ growth from a number of large providers.

Figure 6. 2011/2010 Growth in MSP Spend by Company

-20%

0%

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60%

80%

100%

120%

140%





Figures 7 and 8 show growth in MSP spend by platform type. Though spend in all three arrangements is growing, 3rd party VMS is growing at the fastest rate and is now the largest of the three platform types in terms of total spend. The increasing share of 3rd party VMS could be driven by new clients or increased deal size.

Figure 7. 2011 and 2010 MSP Spend by Platform Type

3rd Party VMS

Other Technology

Own VMS

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70

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Figure 8. 2011/2010 Growth in MSP Spend by Platform Type

0% 5% 10% 15% 20% 25% 30% 35% 40%

3rd Party VMS

Other Technology

Own VMS

Total MSP





VMSThe quantitative comparisons of VMS/MSP suppliers presented in this report are primarily broken down according to three contingent worker classifications:

1. Temporary & Contract Staffing Services (which, for the purposes of this report, includes agency temps, contractors, 1099/independent contractors, and payrolled workers).

2. SOW/project-based Services (project-based service consultants)

3. Outsourced Service Contracts

Figure 9. 2011 VMS Spend by Worker Classification

SOW

Temp/Contract

Outsourced

$0 $5,000,000,000 $10,000,000,000 $15,000,000,000 $20,000,000,000 $25,000,000,000

SimplicityVMSContract-Central*

Elevated ResourcesUSG People

AMN HealthcareYoh

Acro Service Corp.Work Nexus

DCR WorkforceCDI

Netive VMSLumesse

3 Story SoftwareMSX International

nextSourceConsol

EconometrixImpellam Group

ProvadePIXID

Agile-1ZeroChaos

PRO UnlimitedAriba*

Peoplefluent*Beeline

Emptoris*IQNavigator

Fieldglass

*2010 Spend





Total VMS spend grew 22% among those in our study, from $75 billion to $92 billion. Growth was driven primarily by temp/contract and SOW spend.

Though the VMS market continues to surge, Figure 11 illustrates the disparity in growth among respondents. As with MSP, the rising tide is not lifting all boats. It should also be noted that the dots above the 20% growth line are not just small companies growing from a low base. We are seeing 20%+ growth from a number of large providers. One company reported growth of 433% (from a relatively small 2010 base), off the scale of Figure 11.

Figure 10. 2011 and 2010 VMS Spend

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Figure 11. 2011/2010 Growth in VMS Spend by Company

-40%

-20%

0%

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100%




Temporary and contract staffing services are provided by staffing firms that recruit candidates for temporary or fixed-duration assignments within client organizations. Staffing Industry Analysts estimates that companies spent approximately $365 billion on temporary staffing services across the globe during 2011 ($91 billion in the U.S.). In the large global temporary staffing market, there is room for an increasing share of temporary staffing spend

to go through VMS/MSP, particularly outside the U.S. Over the past two years, the VMS/MSP market has had the dual benefit of gaining an increased presence in the global temporary staffing market, coupled with the growth in the global temporary staffing market itself (9% global growth by our estimates, 14% growth in the U.S.)

Temporary & Contract Staffing Services




Temp/contract VMSThe following graph lists each VMS providers 2011 temp/contract spend segmented by program type, and illustrates how some of the largest providers have a substantial amount of spend managed internally by the client.

Temporary & Contract Staffing Services (cont.)

Figure 12. 2011 VMS Temp/contract Spend by Platform Type

3rd Party MSP

Own MSP

Other Resources

No Detail

$0 $3,000,000,000 $6,000,000,000 $9,000,000,000 $12,000,000,000 $15,000,000,000

SimplicityVMS Contract Central*


AMN Healthcare Yoh

Work Nexus Acro Service Corp.

DCR Workforce CDI

Netive VMS Lumesse

3 Story Software MSX International

nextSource Econometrix

Consol Provade

Impellam Group Ariba*

PRO Unlimited Agile-1

PIXID ZeroChaos

Peoplefluent* Emptoris*

Beeline IQNavigator

Fieldglass

*2010 Spend





Temp/contract VMS spend in our study increased 22%, from $47.5 billion to $57.5 billion. Growth was driven by an increase of clients (including those with large programs) as well as increased spend among current clients. As with overall VMS spend, we are seeing a large disparity in growth among the various providers.

Figure 13. 2011 and 2010 VMS Temp/contract Spend

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Temp/contract MSPIn the following graph, we list MSPs by 2011 temp/contract spend. For the purposes of this survey, temp/contract is a bit broader than temporary staffing, as it also includes payrolling, the provision of temporary workers to a client where the workers have been identified or recruited (possibly interviewed, tested and approved) by the client but become employees of a payrolling services company. Under this broader categorization, 14% of reported temp/contract MSP spend was in payrolling, rather than spend for

assignments sourced through a temporary staffing agency. (15% of reported temp/contract VMS spend was in payrolling).

The five largest providers in the figure do not have much spend through a VMS of their own. Indeed, some VMS programs that were born out of a staffing company were often removed from the market entirely like Adeccos Workcard. At the same time, TAPFIN does have its own VMS, Econometrix, which it actively promotes as appropriate, but it more often partners with third-party providers such as Fieldglass and IQNavigator.

Figure 14. 2011 MSP Temp/contract Spend by Platform Type

3rd Party VMS

Own VMS

Other Technology

$0 $2,000,000,000 $4,000,000,000 $6,000,000,000



AMN Healthcare Yoh


DCR Workforce Advantage xPO*

CDI Aerotek

nextSource MSX International

Bartech PRO Unlimited

Impellam Group Agile-1


ZeroChaos Beeline

IQNavigator KellyOCG

Allegis Group Randstad Sourceright

Adecco Solutions TAPFIN

*2010 Spend





While aggregate spend under management is a useful indicator of overall scale and scope when evaluating MSP suppliers, the competitive landscape must be broken down further by sourcing model to accurately compare suppliers against cohorts. As discussed previously, the three sourcing model types used in this report are vendor-neutral MSP, master supplier, and hybrid MSP.

Figure 15. 2011 MSP Temp/contract Spend by Model

Hybrid

Vendor-neutral

Master Supplier

$0 $2,000,000,000 $4,000,000,000 $6,000,000,000



AMN Healthcare Yoh


DCR Workforce Advantage xPO*

CDI Aerotek


Bartech PRO Unlimited

Impellam Group Agile-1


ZeroChaos Beeline

IQNavigator KellyOCG

Allegis Group Randstad Sourceright

Adecco Solutions TAPFIN

*2010 Spend





Total temp/contract spend in our study increased 22% from $40.8 billion in 2010 to $49.8 billion in 2011. The vendor-neutral and hybrid models have taken a larger share of temp/contract spend. As illustrated in the following figures, vendor neutral and hybrid spend is growing at a faster pace than master supplier spend. Although master supplier spend increased

11%, its share of the market ticked down a bit. It is also notable that, in last years study, buyers generally gave master suppliers a lower net promoter score than hybrid and vendor-neutral providers. Nevertheless, there are arrangements in which a master supplier model makes the most sense.

Figure 16. 2011 and 2010 MSP Temp/contract Spend by Model

Master Supplier

Hybrid

Vendor-neutral

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Figure 17. 2011/2010 Growth in MSP Temp/contract Spend by Model

Hybrid

0% 5% 10% 15% 20% 25% 30% 35%

Master Supplier

Vendor-neutral

Total Temp/contract





Vendor-neutral MSPAs defined previously in this report, vendor neutrality in contingent workforce programs is where all (or a pre-defined set of ) vendors are (i) given an equal opportunity to fill each order, and/or (ii) selected for each order based on the same criteria. It is quite possible for a VMS/MSP that is owned or otherwise affiliated with a staffing company to run a successful vendor-neutral program. The success and growth of such MSP business demonstrates as much. For example, most MSPs are willing to forfeit or severely limit their right to fill positions, entirely or as specified, if requested.

It should be noted that there is a camp of staunch vendor-neutral purists who insist that only programs where the MSP contributes literally 0% to filling requisitions are indeed vendor-neutral. The following figure lists providers with vendor-neutral spend.

In our survey, we asked MSPs for the share of their vendor-neutral spend in which they (or their parent company) were also the staffing supplier. Among respondents, the 25th percentile, median, and 75th percentile were 0%, 4%, and 10%, respectively.

Figure 18. 2011 Vendor-neutral MSP Temp/contract Spend by Platform

3rd Party VMS

Own VMS

Other Technology

$0 $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000

AMN Healthcare Contingent WF Sol.

USG People Populus Group

Elevated Resources Acro Service Corp.

Work Nexus DCR Workforce

Hays nextSource

MSX International KellyOCG

Volt Consulting Group Randstad Sourceright

Impellam Group Bartech

PRO Unlimited Agile-1

ZeroChaos Beeline TAPFIN

IQNavigator Adecco Solutions

Allegis Group





Hybrid MSPThe hybrid model, a strategy that involves blending different sourcing model attributes, has quickly emerged from 9% of temp/contract MSP spend in 2009 to 14% in 2011. Typically, a hybrid program includes vendor-neutral elements as well as master supplier elements. For example, buyers might engage a single provider to act as a master supplier for its light industrial job requisitions while having multiple providers competitively bid on IT positions. In addition, a provider may choose a master supplier for a particular geography but choose to deploy the same provider in a neutral capacity for another. As the market evolves and more buyers question

the necessity of vendor neutrality in every situation (light industrial deployments, for example, where operational integration and speed may be more important) hybrid models are gaining significant traction. The following figure lists providers with hybrid spend.

We asked respondents for the percentage of spend through the hybrid model in which they were the primary staffing supplier. The 25th percentile, median, and 75th percentile were 33%, 46%, and 61%, respectively. As expected, the percentages are generally higher than in the vendor-neutral model and lower than in the master supplier model.

Figure 19. 2011 Hybrid MSP Temp/contract Spend by Platform

3rd Party VMS

Own VMS

Other Technology

$0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000

Populus Group Allegis Group

USG People Beeline Bartech

Impellam Group DCR Workforce


Volt Consulting Group Adecco Solutions

Randstad Sourceright KellyOCG

Hays TAPFIN





Master Supplier MSPThe following graph lists providers with master supplier spend. The largest providers regarding the master supplier model have a well known global footprint and strong brand recognition. It is also notable that a majority of the master supplier spend in the following graph does not go through a VMS supplier. Arguably, a portion of this spend could likely be classified as vendor-on-premise or primary supplier.

We asked respondents for the percentage of master supplier spend in which they were the primary staffing supplier. The 25th percentile, median, and 75th percentile were 62%, 81%, and 90%, respectively. The maximum was 95%; all companies in the study subcontracted orders to some degree.

Figure 20. 2011 Master Supplier MSP Temp/contract Spend by Platform

3rd Party VMS

Own VMS

Other Technology

$0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000

Populus Group Bartech

Work Nexus USG People

Cross Country Acro Service Corp.

Hays AMN Healthcare

Yoh CDI

Impellam Group Volt Consulting Group

Adecco Solutions Aerotek TAPFIN

KellyOCG Randstad Sourceright





MSP by SkillIn our report, we asked for spend and assignments segmented by four skill categories (industrial, office/clerical, healthcare, and professional). The following pie charts are global representations. As explained later in the report, the skill mix can vary substantially by country. One interesting

finding is the substantial share of industrial assignments, which argues against the long-held belief that MSP/VMS does not work as well with industrial occupations. While the majority of assignments reported were in commercial skills (industrial and office/clerical), the majority of spend was in professional skills (as professional assignments generally have higher bill rates and longer tenure).

Figure 21. 2011 MSP Assignments by Skill Category

Healthcare 2%

Industrial 38%

Office/Clerical 24%

Professional 36%

Figure 22. 2011 MSP Spend by Skill Category

Healthcare 3%

Industrial 15%

Office/Clerical

16% Professional 66%




Most companies had a presence in the industrial, office/clerical, and professional skill groups. AMN Healthcare and Cross Country, pure players in healthcare, are notable exceptions.

The healthcare skill group has some unique characteristics. We typically see a greater share of master supplier spend in healthcare than in overall temp/contract, despite the relatively high prevalence of skill shortages. We are seeing an increasing amount of spend in this area, with a large number

of small wins as the landscape of hospitals and other healthcare buyers is highly fragmented. Increased MSP adoption could result in a greater feel of partnership between the buyer and the supplier which may alleviate the relative aversion healthcare buyers have shown historically to the use of workers supplied by agencies.

Figure 23 lists MSP providers by their temp/contract spend in healthcare. Randstad was the largest globally. AMN was the largest in the U.S.


Figure 23. 2011 MSP Temp/contract Spend - Healthcare

U.S.

Outside U.S.

$0 $100,000,000 $200,000,000 $300,000,000

Impellam Group DCR Workforce

MSX International Yoh

Bartech Aerotek Beeline

KellyOCG Adecco Solutions

Hays IQNavigator

Volt Consulting Group nextSource

Cross Country AMN Healthcare

TAPFIN Randstad Sourceright




The inclusion of SOW services within contingent workforce management programs continues to surge. Indeed, in our recent survey of CW buyers, 56% of respondents noted they now include SOW workers in their CW programs, and an additional 31% are considering doing so within two years. The rapid growth of integrating SOW spend into programs is likely fueled by client

initiatives addressing cost reduction, worker-classification compliance, and on/off-boarding of all non-employees. Results from our survey also indicate that buyers who have incorporated SOW into their programs generally give their suppliers higher net promoter scores.

SOW (Statement of Work) Services




SOW VMSGiven the advantages of bringing SOW under CW programs, VMS spend in this area continues to grow at a rapid pace. Total spend accounted for in our study reached $26 billion in 2011. We estimate that the overall market grew between 20% and 30% in 2011. Several large respondents grew by more than 40% (in some cases, much more). While we still see a substantial amount of VMS spend through other (client) resources, SOW spend through MSPs appears to be gaining traction.

VMS involvement in many SOW engagements is primarily focused on addressing tactical and logistical concerns such as on-boarding, off-boarding, milestone management and the like, as opposed to broader strategic RFx activities or supplier selection. However, we expect a change over time as several VMS providers are making significant investments in their SOW capabilities. This dynamic is addressed in more detail in our VMS/MSP Service Differentiators Report.

SOW (Statement of Work) Services (cont.)

Figure 24. 2011 SOW VMS Spend by Platform

$0 $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

SimplicityVMS Acro Service Corp.

Impellam Group Work Nexus

DCR Workforce CDI

Consol nextSource ZeroChaos Econometrix

Agile-1 Provade

PRO Unlimited Beeline Ariba*

Emptoris* IQNavigator

Peoplefluent* Fieldglass

3rd Party MSP

Own MSP

Other Resources

No Detail

*2010 Spend




SOW MSPIn last years study, MSP spend in SOW was growing but did not appear to be keeping pace with VMS spend, even though VMS already had a larger presence in SOW. We noted in our report the potential reluctance of clients to cede operational control to third parties given internal political sensitivities and operational constraints. However, the advantages of an

appropriate SOW solution might be enough to overcome such challenges, as this year we are starting to see more convincing traction in SOW. MSP spend accounted for in our study increased 64% from $7.0 billion to $11.5 billion, driven by growth in companies such as Adecco Solutions and Allegis Group Services which have been able to develop SOW solutions that could be customized and tailored to fit the unique requirements of the SOW buyer.


Figure 25. 2011 and 2010 SOW MSP Spend

0

2

4

6

8

10

12

2011 2010

$ B

illio

n





Figure 26. 2011 SOW MSP Spend by Platform

3rd Party VMS

Own VMS

Other Technology

$0 $500,000,000 $1,000,000,000 $1,500,000,000 $2,000,000,000 $2,500,000,000 $3,000,000,000 $3,500,000,000

Contingent WF Sol. Acro Service Corp.

Yoh Impellam Group

Work Nexus DCR Workforce

Randstad Sourceright CDI

Hays Bartech

Volt Consulting Group KellyOCG

nextSource ZeroChaos

TAPFIN Agile-1

IQNavigator Advantage xPO*

Beeline PRO Unlimited Allegis Group

Adecco Solutions

*2010 Spend




Of the three worker classifications surveyed, outsourced service contracts continue to see the slowest adoption into contingent workforce programs. When asked, many CW program managers state a desire to integrate all non-employees under one program umbrella, but we continue to see that very few can successfully realize it, for any number of reasons. For those that do, though, the goal of incorporating outsourced workers into a program often has less to do with cost savings generated from competitive bidding and more to do with process compliance, worker visibility and risk mitigation. Worker visibility is an important issue, with implications to finance, security, and health and safety. Many VMS solutions rightly see this

integrated workforce as the next frontier in program management, and as such are making significant investments in their infrastructure to support the eventual wider adoption.

CW program owners face similar on/off-boarding challenges with outsourced services workers as they do with other contingent workers, however. In the case of outsourced service providers, on/off-boarding is more likely to be handled by an employee of the supplier than by a client engagement manager or project manager.

Outsourced Service Contracts




Outsourced VMSApproximately $9 billion of VMS spend in this area is accounted for in our study, most of it managed internally rather than by a managed service provider. The following figure lists VMS providers by 2011 spend in outsourced service.

Outsourced Service Contracts (cont.)

Figure 27. 2011 Outsourced VMS Spend by Platform

$0 $1,000,000,000 $2,000,000,000 $3,000,000,000 $4,000,000,000

Agile-1

PRO Unlimited

Work Nexus

Provade

Impellam Group

IQNavigator

Beeline

Fieldglass

Emptoris*

3rd Party MSP

Own MSP

Other Resources

*2010 Spend




Outsourced Service Contracts (cont.)

Outsourced MSPMSP spend in outsourced services grew 64%, from $0.8 billion to $1.3 billion in 2011, but we are still dealing with small numbers here. The following graph lists MSPs by 2011 outsourced service spend.

Figure 28. 2011 Outsourced MSP Spend by Platform

3rd Party VMS

Own VMS

Other Technology

$0 $200,000,000 $400,000,000 $600,000,000 $800,000,000

Agile-1

Yoh

Volt Consulting Group

Randstad Sourceright

Advantage xPO*

KellyOCG

PRO Unlimited

Work Nexus

Allegis Group

Impellam Group

Beeline

*2010 Spend




Staffing Industry Analysts segments client size into five buckets (clients with less than $10 million in spend under management, $10m-$50m, $50m-$100m, $100m-$300m, and greater than $300m). Each of these spend ranges imply differences in service delivery models and business opportunities. However, the market is expanding at both ends of this spectrum. The sub-$20 million market is increasingly finding traction among players seeking to specialize in thinner, one-to-many, delivery models. At the other end of the spectrum, the number of very large programs is also increasing as companies include additional sources of spend (e.g. multinational program expansion, inclusion of SOW consultants). In fact, our study now accounts for 40 VMS clients and 20 MSP clients with spend greater than $300 million.

Along with skill mix, culture, and regional footprint, program size is a critical factor when selecting VMS and MSP partners and in terms of structuring the program team, software requirements, program pricing and financial risk. Buyers with larger programs (greater than $100 million) should take measures to ensure that a supplier has the experience, resources and infrastructure to support similar programs. Buyers with smaller programs often find it difficult to get sufficient attention and resources from suppliers that also handle much larger clients.

As in previous years, many pure-play neutral MSP and VMS providers continue to tell us that they dont pursue business if there is less than $10 million in spend because it is hard to make money. Buyers with smaller programs that are committed to vendor neutrality should take measures to ensure that a supplier commits quality program resources throughout the life of the contract (not just during the sales process) with clear service-level agreements and penalties for non-performance.

There are many instances where an MSP may make a concerted market push into smaller programs. One is legacy vendor-on-premise programs, now fashioned into hybrid and master supplier programs. Another, and more interesting, breed is the list of suppliers that target small programs, acting as master supplier for specific skill sets such as engineering or IT. Other forward-looking providers see contingent work spend at these companies as an entry point into offering more profitable services such as recruitment process outsourcing. By leveraging these other categories, companies should be able to gain the attention of a wider range of providers.

Market Segmentation: Client Size




Client Size VMSThe following graph lists the spend range mix by the VMS providers, with the overall mix in the Total row at the bottom. While suppliers typically do not talk about their smaller accounts as much, there is a significant amount of activity in the sub-$10m range. Indeed, 54% of all clients are in that spend range.

Market Segmentation: Client Size (cont.)

Figure 29. VMS Accounts by Program Spend Range

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

Total ZeroChaos

Yoh Work Nexus USG People

Econometrix SimplicityVMS

Provade PRO Unlimited

PIXID nextSource Netive VMS

MSX International Lumesse

IQNavigator Impellam Group

Fieldglass Elevated Resources

DCR Workforce Consol

CDI Beeline

AMN Healthcare Agile-1

Acro Service Corp. 3 Story Software

$300M




Client Size MSPThe following graph lists the spend range mix by MSP. As illustrated in the Total row at the bottom, 60% of accounts were in the sub-$10m spend range. This high concentration is most likely attributed to the heavy concentration of master supplier or hybrid MSP relationships. No matter how small, those programs still require implementation and account

management attention. There are many staffing companies with programs in the smaller spend ranges. Indeed, a $10 million account means an appreciable amount of revenue and margin to a staffing provider that also may be providing MSP services as a master supplier or hybrid MSP. A large portion of these smaller clients may be more appropriately classified as vendor-on-premise or primary supplier arrangements.

Market Segmentation: Client Size (cont.)

Figure 30. MSP Accounts by Program Spend Range

$300M

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

Total ZeroChaos

Yoh Work Nexus

Volt Consulting Group USG People


PRO Unlimited Populus Group


KellyOCG IQNavigator

Impellam Group Hays

Elevated Resources DCR Workforce Cross Country

Contingent WF Sol. CDI

Beeline Bartech

AMN Healthcare Allegis Group

Agile-1 Aerotek

Adecco Solutions Acro Service Corp.




We ask respondents to report program maturity for VMS and MSP separately, enabling us to differentiate maturity by deployment type. Respondents were asked to segment their accounts by four categories (6 years). Suppliers with a large percentage of new client wins may possess competitive differentiators that companies

are finding desirable, but that may also present risk. Having a number of new clients could put a strain on the suppliers infrastructure and resources. (This is especially problematic when implementation resources are overburdened and not giving full focus to program strategy and optimal configuration.)

Market Segmentation: Client Maturity




Client Maturity VMSThe following graph lists VMS providers by their maturity mix. We also note the overall mix of clients in the Total row at the bottom. Clients with a maturity of less than 18 months make up roughly one-third of the total.

Market Segmentation: Client Maturity (cont.)

Figure 31. VMS Accounts by Program Maturity

6 years

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

Total ZeroChaos

Yoh Work Nexus USG People Econometrix

SimplicityVMS Provade

PRO Unlimited PIXID

nextSource Netive VMS

MSX International Lumesse

IQNavigator Impellam Group

Fieldglass Elevated Resources

DCR Workforce Consol

CDI Beeline

AMN Healthcare Agile-1

Acro Service Corp. 3 Story Software




Client Maturity MSPThe following graph lists MSPs by their maturity mix. The overall client mix is almost in even quarters among the four maturity groups. The overall share of clients with a maturity of less than 18 months increased from 20% in last years survey to 25% this year, which could be attributed to an increase clients that are new to the MSP space or clients that have changed MSPs. (We saw quite a bit of the latter in 2011).

Market Segmentation: Client Maturity (cont.)

Figure 32. MSP Accounts by Program Maturity

6 years

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

Total ZeroChaos

Yoh Work Nexus

Volt Consulting Group USG People


PRO Unlimited Populus Group


SIA 2012 VMS MSP Landscape Report

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