Navigating the Future of Contingent Workforce Management: VMS and MSP Trends Unveiled
In a rapidly evolving landscape of contingent workforce management, organisations are facing new challenges and opportunities in leveraging Vendor Management Systems (VMS) and Managed Service Providers (MSP). In a webinar hosted by the Staffing Industry Analysts (SIA), Senior Director of Contingent Workforce Strategies, Stephen M Clancy, Chief Procurement Officer at Kantar, Steve Day, and Joao Martires, Chief Operating Officer of YunoJuno, delved into the evolving trends, challenges, and strategies surrounding VMS and MSP solutions.
The Changing Composition of the Workforce
One of the key trends highlighted in the webinar was the growing proportion of non-employee talent within organisations. According to the research presented, the percentage of non-employees in a typical large organisation has risen significantly over the years, from 13% in 2011 to 22% today, and is projected to reach 27% within the next 10 years.
This shift has profound implications for how organisations manage their talent. The webinar participants noted that the engagement of this diverse workforce, which includes temporary workers, independent contractors, freelancers, consultants, (and even robots!) requires a more nuanced and adaptable approach to contingent workforce management.
Steve Day, Chief Procurement Officer, emphasised the importance of understanding where these non-employee workers are based, as there are growing concerns around labour residency and the associated tax implications. Additionally, there is a greater focus on ensuring fair treatment and benefits for these contingent workers, moving away from the "digital data workforce" model that has faced criticism in recent years.
VMS and MSP Adoption Trends
The webinar highlighted that VMS adoption has plateaued at around 80% in recent years, indicating widespread acceptance of this technology. MSP adoption, while not as high, remains steady at 65-67%. These figures suggest that both VMS and MSP solutions have become integral parts of contingent workforce management strategies for many organisations.
However, the participants emphasised that the role of VMS is evolving beyond simply being a technology platform. VMS is now becoming a more integral part of an organisation's overall IT ecosystem, with growing integrations with ERPs, direct sourcing technologies, and internal systems. This integration enables greater data-driven decision-making, process automation, and workforce visibility.
Joao highlighted the importance of these VMS and MSP solutions in providing a seamless user experience for both clients and workers. He drew parallels to the consumer-centric approach of platforms like Amazon and Apple, emphasising the need for contingent workforce management platforms to deliver a similar level of intuitiveness and responsiveness.
Enhancing the MSP Value Proposition
Alongside the increasing VMS adoption, the webinar also explored the evolving role of MSPs. The current penetration rate of MSP solutions stands at around 65-67%, with some fluctuations between the Americas and EMEA regions.
The panelists highlighted that MSPs are now focused on building proprietary workforce intelligence platforms, which integrate data from various sources to provide enhanced visibility and control for their clients. Additionally, MSPs are leveraging AI and automation to streamline processes, while also dedicating resources to market insights and diversity initiatives.
Steve Day emphasised the importance of MSPs moving beyond just cost optimisation and focusing more on user experience, process automation, and aligning with an organisation's future skill needs. He cautioned against the tendency to view MSPs solely as a means to squeeze margins, stressing the need for a more holistic approach that considers the overall value these solutions can provide.
Joao further elaborated on the role of MSPs in enabling direct sourcing capabilities, which have seen a significant increase in recent years, growing from 1% to 10% in just two years. He highlighted how MSPs can leverage their access to historical worker data and performance insights to curate talent pools and facilitate direct engagement between organisations and workers.
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Key Trends in VMS Evolution
- Integration with enterprise systems: VMS platforms are increasingly integrating with ERPs, direct sourcing technologies, and internal systems, creating a more cohesive technology stack.
- AI-driven decision making: Artificial Intelligence is being leveraged to drive decisions around timing, rates, and locations, enhancing efficiency and accuracy.
- Remote talent engagement: Innovative solutions are emerging to address the challenges of engaging and managing remote temporary talent.
- Workforce integration: There's a growing emphasis on integrating contingent workforce management technologies with overall workforce management systems.
MSP Landscape Trends
- Proprietary workforce intelligence platforms: MSPs are developing their own platforms to enhance visibility and control for stakeholders.
- Enhanced market insights: MSPs are leveraging data to provide more comprehensive market intelligence to clients.
- AI and automation: proprietary technologies incorporating AI for matching and screening are becoming more prevalent.
- Direct sourcing partnerships: MSPs are either developing their own direct sourcing methodologies or partnering with established platforms.
- Diversity initiatives: There's an increased focus on enhancing diversity within contingent workforce programmes.
- Expanded spend management expertise: MSPs are broadening their capabilities in areas such as Statement of Work (SOW) management.
Challenges and Opportunities
The webinar highlighted several key challenges, including the need for better integration between VMS and other enterprise systems, the importance of forecasting future skill needs, and the critical role of user experience in attracting and retaining talent.
Interestingly, Net Promoter Scores (NPS) for both VMS and MSP solutions have consistently been negative, indicating a disconnect between client expectations and service delivery. This presents an opportunity for providers to revolutionise their value proposition and align more closely with client needs.
Managing the Evolution
To effectively navigate this evolving landscape, the experts recommended:
- Strengthening knowledge pipelines to stay informed about emerging options.
- Reimagining contingent workforce programme strategies to align with changing regulatory landscapes.
- Carefully evaluating AI and automation opportunities, balancing innovation with practical implementation.
- Leveraging partnerships to accelerate adoption of new technologies and enhance competitive advantage.
- Focusing on user experience for both internal stakeholders and contingent workers.
- Running pilot programmes to test new technologies and partnerships before full-scale implementation.
As the contingent workforce continues to grow in significance, the webinar highlighted the evolving role of VMS and MSP solutions in enabling organisations to effectively manage this dynamic talent landscape. By embracing a more strategic and user-centric approach, organisations can unlock the full potential of these technologies and position themselves for success in the future of work.
Key Takeaways:
- The proportion of non-employee talent in organisations is steadily increasing, reaching an estimated 27% within the next 10 years.
- VMS technology has become widely adopted, but its role is evolving to become a more integral part of an organisation's IT ecosystem.
- MSPs are enhancing their value proposition by building proprietary workforce intelligence platforms and leveraging AI and automation.
- Successful navigation of the VMS and MSP landscape requires a focus on integration, user experience, data-driven decision-making, selective adoption of emerging technologies, and a collaborative ecosystem approach.
- Piloting and iterating on new strategies and solutions can help organisations mitigate risks and ensure sustainable implementation.
By staying attuned to these trends and proactively addressing the challenges, organisations can effectively leverage VMS and MSP solutions to manage their increasingly dynamic contingent workforce.
| Aspect | Employee | Independent Contractor |
|---|---|---|
| Control and supervision | Direct control over how, when, and where to work | Freedom to set their own schedules and methods |
| Payment | Regular wages; taxes withheld by employer | Paid per project; responsible for their own taxes |
| Benefits | Health insurance, retirment plans, paid leave | Must arrange their own benefits |
| Termination | Often requires notice and may include severance | Can usually be terminated at any time without benefits |
| Tools and equipment | Provided by the employer | Typically use their own tools |
