In today's business landscape, diversity spend goals remain a critical focus for many large enterprises. Within this context, contingent labor and spend managed through Managed Service Providers (MSPs) are prime targets, primarily due to the substantial expenditure on contingent labor and the availability of numerous diverse staffing suppliers.

The Dual Motivations of Supplier Diversity

When examining diverse supplier spend, we identify two primary motivations for implementing a robust supplier diversity strategy:

1. Corporate Social Responsibility: This approach supports smaller, diverse firms by providing opportunities to compete with larger, more established companies that possess extensive footprints and advanced technology. From a societal perspective, this is fundamentally the right course of action.
2. Business Advantages: Organizations benefit from a diverse supplier strategy by gaining business from diverse communities, who represent potential customers. Furthermore, in today's competitive talent market, an organization's employer brand is a valuable asset, often enhanced by a commitment to diversity.

Rethinking MSP Diversity Strategies

In the MSP arena, some client organizations may consider engaging a diverse MSP to bolster their diversity spend by classifying all expenditures through the MSP as diverse. However, this approach, while superficially appealing, falls short when evaluated against the aforementioned motivations.

Consider a program with a 2.5% MSP fee and $100 million in spend. The actual diverse spend amounts to only $2.5 million, assuming none of the participating suppliers are diverse. This strategy fails to maximize the potential impact of diversity initiatives.

A More Effective Approach

A superior strategy to address diversity objectives is to focus on the spend directed toward suppliers rather than the MSP itself. In this scenario, achieving just 2.5% diverse supplier participation would yield the same result as the previous example. However, targeting a more ambitious and realistic percentage can produce significantly better outcomes, potentially exceeding 20% or $20 million in diverse spend. Some programs even achieve diverse supplier spend rates of over 80%.

Moreover, this approach typically distributes spend across a larger number of suppliers, extending beyond a single MSP company and thereby amplifying the impact of the diversity initiative.

Emphasizing Workforce Diversity

At Eastridge MSP, we also prioritize the diverse composition of the actual workforce, recognizing that this is where the majority of labor dollars are allocated. We collaborate closely with suppliers to ensure that the diversity of the workforce aligns with local demographic patterns. This strategy, combined with a comprehensive supplier diversity program, yields the optimal return on investment for the two motivations outlined above.

We are committed to partnering closely with our clients to develop and implement strategies that foster diversity growth within MSP programs. By focusing on supplier diversity, workforce composition, and strategic partnerships, we aim to create meaningful impact and drive sustainable change in the contingent labor ecosystem.