VMS/MSP Primer

business agreementSeventy-Five. That’s the percentage of Fortune 1000 corporations, in a recent survey, that either are currently, or plan to manage their contingent labor spend through a VMS platform and/or with an MSP. The fact is the trend toward VMS/MSP in our industry is growing and is not turning back. Whether the percentage is 65 percent or 75 percent or 85 percent, this is the reality.

I spend virtually all of my time with independent staffing entrepreneurs, and the discussion around VMS/MSP is everywhere. The first question(s) inevitably is, “What exactly does it all mean and how does it work?”

A managed service provider/program (MSP) is simply a arrangement where one vendor manages some or all of a client’s (user’s) contingent labor spend. The MSP acts as a “vendor manager,” and these programs may be neutral (where the MSP does not also fill orders), or not, with the MSP also filling some or all of the staffing requisitions itself. The vendor management system (VMS) is the software platform used by the MSP (or in some non-outsourced cases, the corporate client themselves) to manage the activity with the suppliers.

PREMIUM RESEARCH: 2012 VMS/MSP Differentiators Report

Once you get ‘what’ it is, the next question is always, “How can I, as a small to midsize firm, thrive (survive?) in this eminent world?” There are certainly challenges, chief among them, tighter margins, increased pressure for rapid delivery, potential “disintermediation” of your client relationships, legal and liability questions, and added operational and technical complexity.

We can tell you from first-hand experience, however, that there absolutely is room for the independent firm to succeed in this market. We have several clients that are not only surviving, but are building highly effective growth strategies around making this trend work for their business. The fact remains that the ability to understand a client’s workforce needs and quickly identify and onboard the right candidates will drive your success. Furthermore, there is actually a great opportunity to leverage your expertise and relationships with clients and MSP providers, thereby increasing your upside when you participate in these programs.

Keep your eyes out for more discussion in this space. In the meantime, we’d love to hear from you. How has your experience been in this new MSP/VMS driven market? How are you altering your business for continued success?

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Adam Stern
Adam Stern is the President, Advance Group of Companies. He has spent the last decade helping small, entrepreneurial firms secure working capital and implement the technology they need to grow.

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