Vendor Management Systems Positive Impact on Contingent Workforce Programs

This blog post was written by Zenith Talent CEO Sunil Bagai. It is the first in a two-part series. Read the second post here.

Technology enabling people processes

The concept of engaging Managed Service Providers (MSPs) to oversee the onsite contingent workforce came in the late 1980s and gained steam around the mid-1990s. During that same time, automated Vendor Management Systems (VMS) propelled and enabled the MSP model. By 2002, there were over 50 VMS solution providers. The software was web-based, so stakeholders -- client hiring managers, VMS staff and suppliers -- could access their respective portals from a simple browser with access to the Internet.

By 2007, according to research performed at the time by the Aberdeen Group, 72 percent of U.S. companies had established a singular program for managing contract labor and professional services sourcing through outsourced workforce solutions providers. By 2013, Staffing Industry Analysts (SIA) valued the global staffing market at $404 billion.

Other industry data suggest that well over 70 percent of large corporations rely on VMS platforms to support their contingent labor programs. That’s a higher percentage than those who depend on MSPs.

Overcoming misperceptions

There can be little doubt that a VMS offers hiring managers and MSPs an amazing amount of control over contingent talent usage, strengthened by complete transparency into program performance, spend and cost containment initiatives. Yet, what about staffing suppliers? Throughout the years, many staffing firms have vilified these tools, going into programs kicking and screaming about their perceptions of oppressive constraints, inflexible rate card controls, costs to fund the systems and the fierce competition they drive.

The truth, however, is that a VMS/MSP program can be as beneficial to staffing suppliers as to hiring managers and MSPs. Those staffing firms that have shaped their business models to embrace VMS programs have ultimately transformed into more efficient and lucrative organizations. And it’s not merely the large staffing players that reap the rewards. Smaller and even boutique staffing professionals can realize substantial gains. So how can suppliers benefit from jumping into a VMS program?

  • Money: Access to programs that present opportunities to staff greater volumes and capture higher spend.
  • Big Data: VMS software offers suppliers access to a robust business intelligence and analytics system that can help them drive their businesses.
  • Increased opportunities and process efficiencies: Staffing agencies have the ability to gain access to a broader spectrum of opportunities than they may otherwise have selling directly to clients. They also reap the rewards of fully automated processes.
  • Reduced service costs: Suppliers can spend more time focusing on their talent and less time hunting down requisitions to fill.
  • Enhanced payment processes: A VMS’ automated billing and invoicing system ensures accuracy, prompt payment and reduced administrative overhead.
  • Proactive notifications: Automated notifications keep suppliers current on pending actions, new requisitions, interview requests, offers and negotiations, and timekeeping (timesheet entry and approvals).