VMS/MSP Adoption Insights for Staffing Agencies | DCR Workforce Blog

VMS/MSP Adoption Insights for Staffing Agencies

MSP VMS ProgramAndy Warhol had a point when he said that time does not change things. It is actually we ourselves who change them. When change happens it can prove unsettling, disruptive or downright scary! For some companies, particularly staffing agencies, client adoption of a managed services program (MSP) supported by a vendor management system (VMS) falls into the ‘disruptive’ category – and they view the whole idea with a doubtful, if not negative approach. They become nervous and unsure and would rather avoid than embrace the change, despite recognizing that an MSP/VMS program can offer them a great deal of strategic advantage and improved productivity.

Some issues which make staffing companies wary of change, and full of questions when adopting VMS/MSP:

  • Will it drastically change my current way of functioning?
  • How much will this cost me? With the client impose a supplier-funded model in which my mark-up is reduced in order to pay for the MSP/VMS?
  • Will I have to re-build all my existing client relationships, while the hard-won personal relationship with the customer will be lost?
  • Will I be forced to compete against the MSP who is supposedly driving the program, yet in reality is using it to promote the interests of its own staffing divisions?
  • Will the third party MSP make me lose all insight into client needs and requirements?
  • Will my proprietary data lose its exclusivity, with others being able to appropriate it?
  • Will I still be able to deliver high quality candidates, with a quick turnaround time?
  • Will some of these excellent candidates be absorbed on a full time basis, with little advanced warning and limited input from me?
  • Will my business grow or reduce? Will I have opportunity to expand the range of services I am providing to this client?
  • Will I be able to master this entirely new VMS software quickly and benefit from its adoption?
  • Will the VMS hound me for more and more data or will it help me gain insights into my performance and improve it in accuracy, time taken or any other aspect?

Of course, the above is an illustrative list and not an exhaustive one. MSP/VMS programs have become commonplace, and most staffing agencies grudgingly acknowledge that this is now a standard way of doing business. However, when staffing agencies harbor such fears, adopting a VMS/MSP for managing contingent workers becomes more difficult. But, the good news is that none of these concerns need to hold a staffing agency back from taking advantage of the additional benefits that the program can offer in terms of control, transparency into additional opportunities, and reduced administrative effort.

They can always deal with these and other concerns through a proactive approach at the outset:

  • Encourage the client to select a vendor-neutral provider of VMS/MSP services. This will ensure that increased business opportunity is driven solely by performance. In addition, the MSP will be motivated to take steps to improve your likelihood of success.
  • When notified of the new program, meet with the client and MSP to voice and address all concerns.
  • In negotiating contract modifications with the client or a new contract with the MSP, clearly identify terms and conditions, performance measures and processes, rates and mark-ups, policies regarding the conversion of workers to payroll rates or to permanent employees, and any other factors that could affect your business.
  • If adjustments to pay rates, mark-ups or bill rates are required, reach clear agreement on the timeframe in which this will happen.
  • Clearly stipulate the plans for VMS training, and ongoing training and technical support.
  • Have the VMS provider specify and demonstrate to you the information that will be made available to you on demand through dashboards and reports.
  • Ensure that the MSP, client and you agree on a standard procedure for addressing issues with your contractors or your performance.
  • Clarify when you will be paid, and by whom.
  • Ask the MSP to specify the value that they will bring to you. Will they offer briefings on upcoming staffing needs, market data, coaching sessions, the ability to provide services to their other clients, or any other value-added services?
  • Determine the requirements distribution system. If a tiered system will be used, what tier will you be placed in? What types of positions are you deemed qualified to fill? How can you move to a higher tier? How often is the tier structure reviewed?

VMS/MSP programs offer clients industry best practices for managing non-employee recruitment, onboarding, documentation and compliance, financial administration, and more. By establishing a strong partnership with the MSP/VMS provider(s), you can be better prepared to meet customer expectations and increase business opportunities. In a well-managed contingent workforce program, high performing staffing agencies should be confident of a level playing field in which all suppliers complete for business under the same rules, and the best are rewarded with business success.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.