Insights and resources for employers and professionals.

VMS vs. MSP: Solutions for Contingent Workforce Management

Contingent work has become more popular than ever in recent years. In fact, 40% or more of the workforce in the United States is made up of contingent workers, including independent contractors, freelancers, temporary staff, and gig workers. Companies are quickly catching onto the many benefits provided by the contingent workforce – and therefore the need for vendor management systems (VMS) and managed service providers (MSP) has gone up.

Staffing vendor management systems and managed service providers are essential when it comes to contingent workforce management. But what do these terms mean, exactly? How are they similar, and how are they different? And most importantly, what does your organization need to successfully manage your contingent workforce?

DAHL Consulting is a leading staffing managed service provider in Minnesota and the Upper Midwest, and we’re here to help you with your contingent workforce needs. Read on to learn more about VMS and MSP in contingent staffing and the benefits of each.

What is a VMS in Contingent Staffing?

What is a vendor management system? A VMS is a centralized, cloud-based software application that allows organizations to consolidate their preferred staffing vendors. It follows the lifecycle of contingent workers end-to-end, while also providing tracking and reporting metrics to help you make data-driven strategic decisions when it comes to staffing. People like hiring managers, HR professionals, and on-site managers use a staffing vendor management system to find, manage, and share information about an organization’s contingent workforce.

Benefits of VMS Technology for Contingent Workforce Program

Many companies and organizations benefit from VMS technology. Staffing vendor management systems help companies to oversee their contingent workforce program and make sure they’re getting the most out of their staffing efforts. Essentially, the benefits boil down to visibility, efficiency, and cost-effectiveness.

VMS Technology Offers Greater Visibility into Contingent Workforce Program

One of the great benefits of VMS technology is that it allows your organization to see exactly what’s going on with your contingent labor program. The system will give you both qualitative data (contractor performance, compliance metrics, etc.) and quantitative data (contractor costs, hours worked, etc.), which lets you more accurately predict future needs and solve current problems. You’ll also gain insights into your hiring trends; seasonal periods when demand picks up and you need a larger contingent workforce, for example, or certain market factors that affect your hiring needs.

Improve Staffing Vendor Relationships

VMS technology helps to consolidate invoicing, reducing the amount of time spent managing and reconciling individual invoices. This allows vendors to be paid faster. This is just one example of the way that a VMS improves the relationships your company enjoys with your staffing vendors – by improving efficiency through automating certain tasks, and reducing time spent on laborious administrative work, you’re keeping everyone happy.

Reduce Contingent Staffing Costs with VMS Technology

Remember: A VMS gives you the ability to see the entirety of your contingent workforce solutions from a bird’s-eye view. That lets you identify instances of over-spending or rogue spending – when one contractor is charging a lot more than another for the same service, for example. Plus, with the analytics a VMS gives you, you’re able to see all your financial data in one convenient spot, giving you the ability to precisely track and analyze contingent labor spend. This is important for budgeting purposes as you move forward with your contingent workforce.

What is an MSP in Staffing? 

We’ve learned what a vendor management system is and what kind of benefits it offers to organizations. So, what exactly is a managed service provider (MSP)? While VMS is a software system you can use to automate your contingent workforce program, an MSP is a service that takes over all responsibilities associated with a contingent workforce. And yes, an MSP can utilize a VMS themselves as a part of this service.

A managed staffing services program handles all areas of your contingent workforce, including temporary employees, freelancers, independent contractors, and others. From supplying contingent talent and reviewing supplier contracts to analyzing metrics for reporting and much more, staffing managed service providers oversee your contingent workforce needs end-to-end.

Benefits of Managed Service Providers for Contingent Staffing

As mentioned above, a managed staffing services program uses VMS technology on a daily basis. So, you will see all the same benefits you would with a VMS when you utilize an MSP. But there are also other great reasons to outsource the management of your contingent workforce to an MSP.

Improve Contingent Worker Quality with a Vendor-Neutral MSP Model

When an MSP provider is themselves a staffing provider, it can be difficult to know whether the MSP actually favors themselves or certain staffing providers over others – at the expense of you, the client. That’s why the vendor-neutral MSP model was developed. DAHL can run the program in a vendor-neutral way and provide reporting, service-level agreements (SLAs), and key performance indicators (KPIs) to ensure the program is meeting – and exceeding – your company’s needs.

What’s the result? Better workers who are more closely aligned with the skill sets and experience you’re looking for. A contingent workforce selected precisely for your organization and its unique needs. The knowledge that your MSP provider is there to oversee contingent workforce management based on your company’s needs, and no one else’s.

Payroll Processing Services

Did you know that an MSP provider can also handle your payroll? Payroll for contingent workers – including paycheck distribution, tax withholding, workers’ compensation, unemployment, reporting, and more – falls under the purview of the managed services provider. That not only makes things a lot easier on you, it ensures that your contingent workforce is paid accurately, on time, and compliantly. Then, your team can focus on what matters: core business objectives and achieving organizational goals.

Compliance & Risk Mitigation

When your organization uses contingent labor, the risks that come with employing these types of workers go up. Liabilities and compliance issues, including worker classification (contractor versus freelancer, for example), credentialing, unemployment and workers’ compensation claims, and more crop up with the use of contingent labor. When you partner with an MSP, these risks are mitigated – you’ll gain access to external experts whose job it is to ensure your organization remains compliant with all local, regional, national, and even international regulations.

Continued Cost Savings

Just as a VMS helps your organization to control costs and budget properly, an MSP is a cost-effective solution for your contingent workforce needs, too. Without an MSP, it can be difficult for an organization to control factors like supply chain management, time tracking, and the number of workers if they’re not used to dealing with these issues. Outsourcing your entire contingent workforce needs means you’re shifting the task to a well-equipped partner who knows what they’re doing. You’ll avoid unnecessary spending and be able to budget effectively.

Here’s another way that managed service providers help you save money: They pay close attention to the labor market. That means your MSP is aware of the current rates in your industry. They’ll negotiate the best rates with staffing vendors, helping you bring on the qualified talent you need at the right price.

Partner with Dahl Consulting for High-Volume Staffing Solutions

Looking for contingent workforce management solutions to streamline your business operations? DAHL is the provider to turn to. As a leading staffing MSP in Minnesota and the Upper Midwest, we provide top-tier contingent workers to suit your needs, giving you faster access to qualified talent, improved cost control, detailed analytics, payrolling services, and more. All requests, vendors, workers, timesheets, and employment spend figures are captured, managed, and tracked through our technology – that lets us quickly optimize for cost, efficiency, and compliance.

If you’re ready to learn more about DAHL’s customized workforce management solutions, contact a member of our team today. We look forward to learning more about your organization and your hiring needs.