MSP vs VMS: What's the Difference in Contingent Workforce Management?

The future of work is increasingly centered around contingent labor. The number of consultants, freelancers, contractors, temporary workers, and other non-employee roles is rising rapidly. This makes their management essential, but a common question is what is the difference between a Managed Service Provider and a Vendor Management System?

Contingent Workers offer incredible benefits for your company. They help you reduce costs, find diverse and highly-skilled workers even when your industry is experiencing a skills shortage, and they give your organization the flexibility it needs to shift quickly depending on new projects or business goals.

But to gain these benefits you must manage your contingent workforce correctly. That's where a key question is asked: Managed Service Provider Vs Vendor Management System?

The growing use of the contingent workforce means you can no longer rely on manual management methods

The increased use of contingent workers means it’s no longer feasible for your organization to continue managing them, as well as the vendors you use to source and engage them, with manual and time-consuming spreadsheets, in-house databases or SharePoint-like websites

These manual processes of managing your non-employee workforce and vendor management relationships are inefficient and lead to a range of hidden costs and waste time for your business.

Failure to automate and centralize how you manage your non-employee workforce will lead your business to overpaying staffing vendors, wasting time on inefficient processes, lacking visibility into your contingent workforce, as well as many other things that impact your bottom line.

Thankfully, alongside the growth of the contingent workforce is a growing suite of supporting technologies and outsourced experts that can help your business attract, engage and manage non-employee workers and manage your relationships with the vendors you use to source them.

What is a Managed Service Provider (MSP)?

A managed service provider is the practice of outsourcing the responsibility for your organization’s entire contingent workforce management program. From setting up the program, interacting with vendors, hiring, contracting, onboarding, offboarding, billing and much more.

An MSP is a third-party which takes over the responsibility of your external workforce management completely from your company’s HR and procurement teams.

What is a Vendor Management System (VMS)?

A vendor management system is a cloud-based technology that acts as a mechanism for your business to procure and manage your non-employee workforce. It supports your company in structuring and optimizing every process related to contingent workforce management.

A VMS solution will consolidate your entire contingent workforce management strategy into one centralized location. This includes everything from vendor relationships and performance, to every process concerning the sourcing, hiring, tracking and invoicing for temporary workers.

To learn more, you can read:

MSP, VMS or Both?

It's important to recognize that an MSP and a VMS are not inherently different solutions; instead, they offer different methods for managing your contingent workforce program. Using a VMS internally streamlines the management process, while an MSP manages it externally, freeing up your internal resources to concentrate on other tasks.

MSPs need a VMS to manage your Contingent Workforce

For larger companies, it's common to have a managed service provider. This provider utilizes a vendor management system to oversee your contingent workforce on your behalf. In the current landscape, some MSPs have established partnerships with a VMS, while in other cases, clients may have their own VMS that the MSP collaborates with. Many organizations benefit from an MSP's extensive VMS expertise, which can also provide access to additional talent pools essential for agile growth and strategic consulting.

MSP & VMS Partnerships

While many companies employ an MSP and a VMS together to get the full benefit of outsourcing. Outsourcing your contingent workforce management program to an MSP, in many cases, can have a lot of benefits but can also be a larger undertaking.

Organizations that want to continue to manage the actual hiring of contractors in-house may opt to use just a VMS solution to automate and centralize their external workforce management processes. A VMS will collect requisitions from managers, automate transactions, facilitate onboarding and consolidate your vendors in one location. A VMS stores all of this data (and much more) to support each stage of your non-employee workforce management process.

These optimized processes lead to improved visibility into your contingent workforce, increased efficiencies, consolidation of vendors, better reporting and analytics of vendor relationships, as well as increased cost savings.

To learn more, you can read: MSP vs VMS How do They Work Together?

Take the Next Step with Conexis VMS

Conexis is an award-winning VMS tailored specifically for mid-market contingent workforce programs. Leveraging the latest technology, Conexis delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored service you require. Conexis delivers enterprise level software - without the enterprise level complexity and cost.

Learn more about our Company and why organizations Choose Conexis VMS.

Whether you are looking to change your VMS solution, or just getting started, we are here to help. Contact Us for a Free No-Obligation Consultation to discuss your workforce challenges (and get immediate actionable insights). See how easy Conexis is to use by taking a quick 2 minute Self-Guided Tour, or Book a Personal Demo Today!