Global VMS: One Size Doesn’t Fit All

global risksAs companies attempt to globalize their contingent workforce solutions, they must keep in mind that globalization goes beyond currency, tax and language. Any vendor management system (VMS) worth its salt can handle these aspects of contingent workforce management. Localization absolutely involves the legal constraints and considerations of a country or region for procuring contingent labor, and as businesses start to analyze the companies they work with in different areas of the globe, the real differences rise to the top.

A full understanding of the regional marketplaces and how they are adopting VMS technology is essential to a successful global roll out. Here in North America, the MSP and VMS model is completely accepted and normalized, and we are extremely policy-driven. This is not the case in other regions around the world. For example, although the Netherlands and the United Kingdom were early adopters of VMS technology and process, throughout the rest of Western Europe, adoption has followed more gradually as some countries are resistant to adopt these systems.

Today, Western Europe is where North America was five years ago in terms of technology and process adoption. The APAC region is further behind in VMS adoption and has even less legal formalization. Therefore, a VMS implementation in this area must be even more reactive.

Labor laws and privacy play a significant role in how a VMS will be utilized and the setup required to handle variance. Take Belgium’s new temporary worker regulations as an example. The limitations around one-day contracts must be considered when creating and implementing contingent workforce processes within the VMS. How can you make sure that your VMS technology aligns with their requirements?

When selecting a VMS for a global implementation, you must understand the localization requirements at multiple levels.

  • First, you must completely understand the labor laws, privacy requirements and other significant standards for the country itself.
  • Within each country, there are additional guidelines to consider at the state, province or regional level.
  • Last, review the processes of the companies themselves. Policies can vary from employer to employer within a region. In some countries, companies have the freedom to offer different benefits to their contingent workers, so you might be dealing with differences at that level. In countries newer to VMS, this customer-level variation is often much greater than that driven by the country itself.

In emerging markets like India, Brazil and China, where VMS is just beginning to take hold, policies are a work in progress. Taking your VMS global isn’t a one-size-fits-all model – make sure you fully understand the markets you are attempting to branch into and create a sound methodology to deploy in those areas.

Bottom line – ask the right questions that will enable you to confidently address these unique situations.

Peter Parks
Peter Parks is vice president of product management at Provade, which delivers a vendor management system for global workforce spend management.

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1 comments
David Branch1
David Branch1

Peter, I think you did a great job calling out some of the complexities of rolling out a global VMS. As a technology professional that has worked on globalizing a VMS, I would like to throw in my two cents worth. While I know what you meant when you said, "Western Europe is 5 years behind  the US in technology and process adoption". I would like to help clarify on behalf of my European counterparts who have used technology to solve some very complex issues and are very sensitive to statements like this, that we use frequently on this side of the pond.

 

In my opinion the Europeans are actually much further ahead of using technology in the contingent labor space then we are in America. The reason that this statement will probably shock Americans, is that we are looking at technology to solve a different set of problems. In the US we have the luxury of an unregulated industry when it comes to contingent workers (relative to Europe). Therefore our focus has been mainly around cost cutting and improving access to talent initiatives. The VMS has served us well in that arena in the US.  However, this is contrasty different from Europe where the focus on technology has been around managing compliance. It isn't that they don't want to focus on reducing costs and gaining access to talent faster, it is just that any tool that can bring this to the table  needs to make  the job of compliance easier not more difficult.

 

You have addressed some of these compliance issues in your article but I also wanted to point out it isn't just the laws it is the penalties for non compliance. Many penalties in the US are mere slaps on the wrist where European penalties can be very punitive in nature.

 

I use to think that solving for sales tax in the VMS was a challenging problem, but that was child's play in comparison to some of the benefit calculations (like the metro benefit in France) that is needed to calculate an invoice properly. Not to mention the numerous classifications that dictate many aspects like term limits, pay, benefits, and contracts. Don't even get me started on contract requirements for even temps.

 

There is a reason why the market share of Europe's largest staffing companies dwarf the market share of the US' largest staffing firms.... and it is due to the complexities of compliance. Until the VMS technologies can solve for these issues in a "real" manner, I believe that they will find it difficult to get the market share they have enjoyed in the US.

 

 

 

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