What's the difference between MSP and VMS
8 December 2021

MSP Vs VMS: What’s the Difference?

3 min read

The transition towards greater use of externally-sourced workers has gained momentum in recent years. As a result, today’s business leaders need to find successful ways to strategically manage their contingent workforce program.

With an increased need to streamline costs, gain program visibility and improve both the quality and speed of hiring top talent, organizations can no longer rely on ad-hoc contingent workforce management methods and fragmented processes across their organization. 

Two popular options to help companies do just that are VMS and MSP solutions.

In this blog we take a look at what both MSP and VMS staffing solutions are, how they apply to your contingent workforce program, what benefits they can bring your organization and how to decide which is the best fit for your business.

Definitive Guide to the Contingent Workforce Download

What is an MSP

A Managed Service Provider (also known as an MSP) is an outsourced provider that manages either all, or part of, your organization's externally-sourced workforce program. They are responsible for the end-to-end management of your contingent workforce, from procurement, to staffing agency management, workforce planning and onboarding.

With significant industry expertise, a Managed Service Provider has in-depth knowledge, specialized processes and advanced technologies that allow them to strategically manage your company’s contingent workforce. 

An MSP brings your business:

  • Best-in-class Expertise for managing the contingent workforce category and staffing agencies.
  • The ability to find quality candidates quickly. 
  • More strategic contingent workforce management processes that reduce rogue spend and improve visibility. 
  • Standardized processes, contracts and rates across your entire company.
  • More time for your internal team to focus on full-time employees and core business functions.

What is a VMS?

A VMS, or Vendor Management System, is a software system that helps businesses facilitate the procurement and management of contingent workers and staffing agencies internally.

Operating as a cloud or internet-based system, a VMS solution ensures organizations are able to automate and centralize the processes around contingent workforce and staffing agency management - such as sourcing, onboarding, time entry, approval and payments. 

The benefits of VMS software include:

  • The ability to monitor and track vendor performance with visibility into metrics such as time-to-fill, time-to-submit and workforce turnover. 
  • The consolidation of all staffing vendors into one centralized platform.
  • Better documentation to ensure compliance.
  • Improved visibility and control over your contingent workforce program.
  • The automation of contingent workforce management processes, leading to greater efficiencies. 

What’s the right option for your business?

When looking for a solution to better manage their contingent workforce program, most companies think that it’s a case of choosing between either a VMS or MSP solution. In fact, there are huge benefits of combining both VMS and MSP solutions.

MSPs and VMS solutions aren’t inherently different. They bring the same visibility, control and process improvements to your organization’s contingent workforce management program. The main difference is that a VMS is typically for internal management, while an MSP is the process of outsourcing your contingent workforce program to a third party.

While you can get great results with either one solution, combining the two, however, can help your business realize the additional benefits that come with a completely strategic contingent workforce management program.

In most cases, an MSP will help your business choose, implement and run the right VMS system based on your company’s own unique externally-sourced workforce requirements. They’ll then help you with the on-going management of your VMS to ensure that you are optimizing the results from both your MSP program and VMS software.

Benefits of combining MSP and VMS Solutions

Seamless integration and data exchange: By combining MSP and VMS solutions, organizations can achieve seamless integration and real-time data exchange between the external management of the program and the internal management processes facilitated by the VMS. This ensures accurate and up-to-date information for better decision-making.

Synergistic optimization: The integration of MSP and VMS allows for synergistic optimization of contingent workforce management. The MSP leverages the capabilities of the VMS to automate and streamline processes, while the VMS benefits from the expertise and strategic guidance of the MSP. Together, they create a comprehensive and efficient solution.

Enhanced visibility and control: Combining MSP and VMS provides enhanced visibility and control over the entire contingent workforce program. The MSP offers strategic oversight, manages vendor relationships, and ensures compliance, while the VMS provides real-time data and analytics, enabling organizations to make informed decisions and monitor program performance.

Streamlined processes and efficiency: The integration of MSP and VMS eliminates redundancies and manual processes, leading to streamlined operations and increased efficiency. This results in faster time-to-fill for job requisitions, reduced administrative burden, and improved productivity for both internal teams and external vendors.

Considerations for choosing the right MSP and VMS Solution

When deciding on an MSP and VMS solution for your contingent workforce program, certain considerations can help you make an informed decision. This section will outline key factors to consider, such as:

Alignment with your business goals: Ensure that the selected MSP and VMS solutions align with your organization's overall strategic objectives and specific contingent workforce management goals. Scalability and flexibility: Assess whether the MSP and VMS solutions can scale with your organization's growth and adapt to changing workforce needs. Consider their ability to accommodate various contingent worker types, locations, and engagement models.

Integration capabilities: Evaluate the integration capabilities of the MSP and VMS solutions. Seamless integration with other systems, such as HRIS or ERP platforms, can enhance data flow and streamline processes.

Technology features and user experience: Examine the features, functionality, and user experience of both the MSP and VMS solutions. User-friendly interfaces, mobile accessibility, and intuitive workflows can improve adoption and overall user satisfaction.

Service and support: Consider the level of support and expertise provided by the MSP and VMS vendor. Look for a partnership that offers responsive customer service, ongoing training, and a collaborative approach to program management.

Interested in learning more about how MSP programs and VMS software can enhance your contingent workforce program? Book a meeting with Contrax today

Definitive Guide to the Contingent Workforce Download

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