Why MSPs Aren’t Just for Big Banks: A Smarter Approach to Contractor Management for Challenger Banks & Scale-Ups

For years, Managed Service Programmes (MSPs) have been associated with large-scale financial institutions. When many people think of them, they often picture big global banks with overflowing contractor populations, complex supply chains and sizeable procurement teams.

And thanks to this, many challenger banks, mid-sized firms, start-ups and scale-ups have dismissed MSPs as something that’s simply not relevant to them saying things like “we’re too small“, “we don’t have enough contractors” or “an MSP would be way too complex and expensive for us“.

They’re common assumptions, we get it. But these days they’re pretty outdated.

The reality is that medium-sized and scaling financial services organisations face many of the same workforce challenges, regulatory obligations and operational risks as their larger counterparts. And actually, having leaner HR, talent acquisition and procurement teams, the impact of those challenges can be felt more acutely.

Whether you’re engaging 15 contractors or 150, you still need robust governance, compliant processes, clear audit trails and good visibility of your contingent workforce. All things an MSP can deliver without the cost, complexity or scale once associated with enterprise programmes.

In this blog, we’ll explore why MSPs have evolved beyond the enterprise market, the challenges facing smaller financial services organisations today and how an MSP can help create greater visibility, control and value across your contingent workforce.

Let’s get started!

Small Contractor Population, Big Challenges

The financial services landscape has shifted significantly in recent years.

Organisations are operating in an environment that’s heavily regulated, fast-moving and increasingly resource constrained.

There’s been a shift towards total workforce strategies as organisations seek better visibility across all worker types, not just their permanent employees. The result is often additional pressure on HR, talent acquisition and procurement teams who are already balancing competing priorities and just trying to get on top of the BAU!

Not only that but many mid-sized firms looking to grow are facing extra challenges like:

• Increased pressure and scrutiny on contingent workforce spend
• Growing expectations for real-time workforce data and reporting
• Limited visibility across departments and hiring teams
• Fragmented contractor engagement models as they scale
• Inconsistent governance, compliance processes and operational controls

And even with a relatively small contractor population, these challenges can compound quickly. As contractor populations grow across different departments, a lack of uniformity can emerge. Maybe there’s different suppliers charging different margins, contractors performing similar roles being paid at different rates, varying contract terms and even inconsistent compliance standards. When you combine this with differing approaches to IR35 governance, you’ve got yourself a stressful combination of internal confusion, unnecessary cost and (most worryingly) increased organisational risk.

But it doesn’t need to be like this.

Four Ways MSPs Transform Contractor Management

1. Regulatory Governance and IR35 Compliance

For many mid-sized financial services organisations, IR35 remains one of the biggest risk areas in their contingent workforces. Without dedicated compliance or contractor management teams, many challenger banks and scale-ups can find it difficult to apply consistent governance controls across every engagement.

This alongside fragmented processes and poor record-keeping can expose businesses to financial penalties, reputational damage and increased regulatory scrutiny.

A well-designed MSP helps by introducing:

• Standardised IR35 assessment processes.
• Embedded governance frameworks and consolidated operating procedures.
• Improved operational efficiency through auditable processes.
• Reduced risk through specialist oversight and governance controls.

This is something we’ve seen work well in practice. For many of our clients, we’ve used an MSP to establish, implement and own robust governance frameworks that help embed IR35 processes, standardise vetting practices and strengthen supplier controls. The result is a fully auditable, risk-controlled model that provides confidence for both hiring managers and leadership teams.

2. Reducing Administrative Burden

Contractor administration often places a significant strain on already overstretched internal teams.

When you’re already spinning plates, having to then vet and onboard contractors, deal with offboarding, manage supplier coordination and then handle rate management can quickly become ridiculously time-consuming and horribly inconsistent.

An MSP sorts all this out. For organisations without large HR, procurement and compliance teams, an MSP creates a centralised operating model with clear ownership and accountability that delivers:

• Streamlined workflows and contractor lifecycle processes.
• Consistent business engagement and experiences for hiring managers as well as contractors and suppliers.
• Reduced administrative workload.
• A single point of contact throughout the contractor lifecycle.

3. Driving Cost Efficiency

For growing organisations where budgets are under close scrutiny, controlling contingent workforce spend becomes increasingly important as contractor populations expand. And without visibility and control, contingent workforce spend can quickly spiral.

When you’re dealing with rate inconsistencies, a growing supplier list, random hiring and a lack of market benchmarking organisations often end up paying different rates for similar skills while incurring unnecessary extra costs (which can have a serious impact on budgets over time).

An MSP helps control costs through:

• Specialist direct sourcing strategies.
• Supplier rationalisation while retaining access to critical skills and capabilities.
• Rate card standardisation.
• Targeted cost-management initiatives.
• Improved spend visibility and reporting.
• Reduced process inefficiencies and administrative costs.

This is something we always focus our approach on. When implementing an MSP, our goal is to create an optimised commercial structure that scales in line with demand, all while maintaining control of spend, which will give organisations complete visibility of where and how their budget is being used. Plus, for many organisations, the savings made through improved supplier management, direct sourcing and spend visibility even help offset the cost of the MSP itself.

4. Workforce Data and Visibility

If you cannot quickly answer questions such as:

• How many contractors do we currently have?
• Which suppliers are we using?
• Where does contingent workforce spend sit?
• Which engagements represent the greatest compliance risk?

Then you might not just have an issue with reporting. There could be an operating model problem too. For smaller financial services organisations, where workforce data is often spread across spreadsheets, emails and multiple systems, achieving a single source of truth can be particularly challenging.

This lack of visibility is often one of the clearest reasons organisations begin exploring MSP solutions for the first time, as they look for benefits like:

• Full workforce visibility across contractor populations, spend and risk.
• Real-time workforce dashboards.
• Contractor population tracking.
• IR35 status visibility.
• Spend and cost analysis.
• Improved forecasting and workforce planning.

It’s only once you have reliable data that you can start identifying opportunities to improve processes, strengthen compliance and reduce costs.

Taking Contractor Management to the Next Level

One of the biggest misconceptions among challenger banks and growing financial services organisations is that an MSP will replace their internal talent acquisition team or limit access to specialist expertise.

But in reality, the opposite is true.

A successful MSP only works to enhance internal capability rather than replacing it, giving organisations access to:

• Pre-vetted specialist suppliers.
• Deeper financial services talent expertise.
• Supplier performance management.
• Wider but carefully controlled talent pools.
• More consistent hiring outcomes.

This isn’t just theory. More than 80% of Sanderson’s MSP clients are implementing an MSP for the first time, demonstrating that managed workforce solutions aren’t just for mature enterprise organisations. Not only that, but we currently have 28 live MSP services, and more than 60% of these are supporting financial services organisations.

A Strategic Opportunity for Growing Financial Services Organisations

Whether you manage 20 contractors or 200, the underlying challenges are remarkably similar.

You still need governance. You still need compliance. You still need visibility of workforce spend, supplier performance and risk. The reality is that smaller contractor populations don’t remove these challenges, they simply leave fewer internal resources available to manage them. An MSP can solve these challenges as an embedded workforce partnership focused on long-term success.

The question is no longer whether you’re big enough for an MSP. It’s whether you can afford not to have one.

So, if you’re working in a challenger bank, scale-up or smaller scale financial services organisation while managing contractors across multiple teams and relying on fragmented processes to keep everything under control, now is the time to reassess your approach.

Get in touch with our MSP team today to discover how a scalable MSP solution can help you gain greater control, drive efficiency and create a stronger foundation for future growth.