Managing Temporary Labor with MSP and VMS

by Staff Writer


There’s been a hefty demand for temporary labor in today’s workforce.  In fact, according to Global Human Resources Employment Services’ 2013 study, “The temporary staffing segment was the market's most lucrative in 2012, with total revenues of $327.6 billion, equivalent to 48.1% of the market's overall value.”

Even Peter Capplli’s Classifying Work in the New Economy notes, “Alternatives to traditional employment, such as independent contracting, temporary help, and ‘vendors on premises,’ now account for as much as 20 percent of the individuals doing economic work in the United States.”

So where did this demand stem from? First, the cost of hiring increased. Then, employers turned to temporary staffing to help ease the hiring costs.  

This influx in temporary staff demand has left companies scrambling to find new hires. Many companies have been juggling multiple staffing agencies to ensure they have the right contingent workers in the right roles—which is a lot of work and talent for a company to effectively manage.

Managed Service Provider (MSP) 

A Managed Service Provider (MSP) provides overall management of contingent or temporary labor. A partner, supplier or outside third-party agency will come in and manage all the temporary labor and/or contingent employees. Their job is to get this talent onsite and working for the company as quickly and efficiently as possible. 

"An MSP would come in and set up a program (typically onsite). One person or representative of the MSP would manage all of the orders that are coming through the organization for temporary labor. That person would be the funnel/control point for hiring and managing the HR functions of all contingent projects," explained Matt Rivera, Yoh's Vice President of Marketing and Communications, in a recent interview with Lamees Abourahma, Executive Director for the Recruitment Process Outsourcing Association.

MSPs started to crop up about 20 years ago, starting in the late 90s. Many companies were going outside of the organization to look for temporary labor and using multiple staffing suppliers. Mid to large-sized companies were using upwards of 50-100 staffing agencies to help them find temporary staff. It was an overwhelming amount of work to manage and this task usually fell on the company's internal procurement or HR departments. The need was clear: companies had to find one single vendor to do everything related to temporary labor.

Fast-forward to today and using an MSP means the provider will deal with multiple suppliers and vendors—regardless of whether they're looking to fill blue-collar/clerical positions or high-level IT/engineering openings.

Who can benefit from using an MSP?

Any company or business—large, medium or small—that needs help managing temporary labor can use an MSP to greatly streamline efforts. Outsourcing this job will enable a company’s HR team to focus on the internal mission and goals of the company.

Vendor Management System (VMS)

Directly related to MSP, a Vendor Managed System (VMS) is the technology which manages the tasks of an MSP. Most VMS technology is online, in the cloud—it's completely virtual and you won’t need to install anything in order to use or access it.

Examples of what an VMS system manages include:

  • Labor orders
  • Tracking (interviews, on-boarding, etc.)
  • Resumes
  • Reporting
  • Time-cards
  • Billing and payment

You can also use an MSP in conjunction with a VMS. Through a VMS, an MSP can track orders, performance, and more, while also enabling the company to have real-time insight into when a job is opens/closes, how long it took to fill a job, and which supplier is most successful.

A VMS can also be used to establish a rate-card system, where suppliers have to come in, post resumes and agree to rate the company has set up. VMS also helps with reporting and consolidates all the billing and payment.

MSP came about first, and VMS followed shortly after. Staffing companies created this technology for other companies to allow MSPs to manage the labor coming through the organization.

Who can benefit from using an VMS?

Similar to an MSP, any company or business—large, medium or small—that needs help managing temporary labor would benefit from using a VSP. The great thing about VMS is that if decide to handle temporary labor in-house (without the help of an MSP) this system will help you manage the processes more efficiently.

Closing Remarks 

Organizations vary in their talent needs, and talent solutions vary accordingly. Organizations with need for temporary labor, and contract multiple providers, can partner with a Managed Service Provider who act as a single point  of contact to manage all incoming labor through the company, and a Vendor Management System (VMS) is the technology solution that MSP would rely on in coordinating all staffing effort. 

guide to understanding recruitment process outsourcing  

Related articles: 

How to get the best talent in the right roles

Demystifying applicant tracking system for recruitment process 

About Yoh: For over 70 years, Yoh has connected companies with the most highly qualified talent. Explore our staffing solutions and current career opportunities from Yoh

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