In the past, these workers were managed using manual methods but the growing contingent workforce has created the need for automation and centralization. This has given rise to two dominant solutions:
Managed Service Provider (MSP)
Vendor Management System (VMS)
What is a managed service provider?
An MSP is a third-party service that helps organizations manage their contingent workforce by providing a centralized system for sourcing, recruiting and managing contingent workers. It involves managing the entire program from start to finish or specific parts of it - including recruitment, onboarding, scheduling, and timesheets.
What is a vendor management system?
VMS is a software platform used to manage your contingent workforce strategy, from hiring and invoicing to keeping track of vendors and their activities. A VMS also enables organizations to centrally manage vendors, staff and their contracts, and allows you to monitor everything in real-time.
This software will improve visibility into the workforce, create efficiencies, streamline processes, consolidate vendors and reduce costs.
So, which is the right choice for your company’s contingent workforce program?
When it comes to making the decision between a Vendor Management System or a Managed Service Provider, it’s incredibly important to understand that it’s not a competition. In fact, it’s beneficial to have them both working together.
A Vendor Management System should be the backbone of your contingent workforce processes, consolidation, data, analytics, time approval and invoicing, while an MSP should be the expertise used to manage those operations - ensuring you are receiving maximum ROI from your program.
Typically, a business will choose a Vendor Management System to underpin their contingent workforce program, and then decide whether it makes sense to manage that in-house or outsource the program to an MSP to maximize return on investment.
If you’re a small company with few contingent workers, and no real ambition to engage more contingent workers in the future, a VMS may be all you need. If your business has a larger and more complex contingent workforce, an MSP may be needed to ensure you have visibility and control over your program.
A Vendor Management System is almost always used in conjunction with a Managed Service Provider solution for the best results.