Technology to manage your contingent workforce

Table of Contents

How contingent workforce programs have changed

Twenty years ago, contingent workforce program owners' primary concern was to minimize the cost of external labor provided by temporary staffing agencies, often called “staffing vendors.” To control these costs, businesses adopted a new technology known as vendor management systems (VMS).

These VMS solutions automated the process of sourcing and managing temporary staff, from distributing job requisitions to suppliers to sourcing, onboarding, timecard management, invoicing, and payment.

Over time, more categories of contingent labor were added to these transactional systems, but their primary focus remained on filling requisitions for temporary staff and contractors and controlling staffing spend.

Today’s extended workforce programs are much more strategic. While cost control is still important, their primary focus today is to deliver the talent their organizations need to achieve specific outcomes.

In addition to controlling contingent workforce costs, providing visibility, and ensuring regulatory and policy compliance, companies need functionality to support better staffing decisions and total workforce optimization strategies.

Lifecycle program support

Another factor that separates VMS providers is their approach to product support. For organizations that prefer a “one-and-done” implementation, there are VMS providers who will install a system and leave it to their customers or managed services providers (MSPs) to tailor the application to their needs. Other VMS providers offer solutions that can be configured to meet today’s requirements and then provide ongoing support to ensure that their solutions meet the client’s changing needs throughout the program’s lifecycle.

These differences in philosophy are among the many reasons it is important to ask the right questions when evaluating VMS providers. In addition to reviewing each system’s core functionality, you should ask the providers for key differentiators such as their integrations experience, global support and localization capabilities, the breadth and depth of anonymized transactional and industry data they share with clients, and their approach to customer service. You will also want to assess the provider’s business model, its history, and its commitment to innovation.

This document can help you in your assessment, so that you can determine how well the providers you evaluate can meet your organization’s needs.

Demonstrated performance – proven capability, usability, and configurability, substantiated by customers and/or independent industry analysts
Analytics and reporting – powerful, convenient, and flexible capabilities to turn program data into strategic insight
Lifecycle service – the ability to see your entire extended workforce – all labor categories – anytime, in real-time
Real-time visibility – of your total workforce by classification, organization structure, location and more
Robust end-to-end services procurement solution – from sourcing to invoicing – of statement of work (SOW)-based contracts
Data security – because all the cost-saving potential of contingent workforce management technology cannot make up for lost, stolen, or compromised personal, supplier, and company data
Direct sourcing capability – a system that helps create your own private talent pool, so you can source the best talent faster and more cost-effectively
Global capabilities and experience – beyond translation and currency conversion, the ability to provide full localization, including comprehensive tax and invoicing functionality to support regional needs and government specifications
Continuous innovation based on deep industry expertise – to keep you at the forefront of technology and anticipate market changes
Customer-centric culture – look for a technology provider whose corporate values match your own, with an emphasis on transparency, collaboration, creativity, and accountability

Company background

The first step toward selecting a VMS is to understand the company behind it. This includes the company’s history, financial strength, and corporate philosophy. The questions below can help you determine where each provider’s experience and capabilities rank relative to its competitors and in its congruence with your needs.

What does ownership and corporate structure look like for your company?
What is your management team’s experience in this industry?
How many years have you been with your company?
What executive turnover (c-suite level) has your company experienced in the last 3-5 years?

Program model support

Some businesses choose to manage their contingent workforce programs internally while others prefer to use one or more MSP. Whichever program model you choose, your technology must be capable of supporting that model and switching models as necessary as your program matures. Questions you should ask include:

What makes your technology the best solution for an internally managed program?
How does your technology support programs run by an MSP or by multiple MSPs?
Can you support programs managed by a combination of MSPs and PMOs?
What are some examples of clients that use MSPs and clients that are internally managed?
How would workflows differ depending on the model used?

Product portfolio

The five primary reasons for implementing a VMS are to gain visibility over your extended workforce, reduce costs, ensure compliance, improve the performance of suppliers and contractors, and increase operational efficiency. When choosing a technology provider, it’s important to understand how — and how well — each key element of the solution works.

A respected analyst firm conducted an in-depth analysis of the VMS technology market and asked each provider to provide a detailed demonstration of their technology. We recommend that you review this and other industry reports that provide independent third-party assessments of the state of the contingent workforce market and compare the differences between technology providers and their product portfolios.

You should also ask the providers directly about their products. Below are some of the areas you should consider.

Contingent staffing

Automate the creation and distribution of requisitions within your organization for review and approval, and for distribution externally to suppliers. A well-designed automation solution should simplify this process for the user and encourage easy adoption.

It should be able to distribute requisitions smoothly and efficiently and allow for the “tiering” of suppliers, so that preferred suppliers receive the requisitions first, followed by distribution to lower-tiered suppliers. Configurable application of business rules to this tiering process can make this process more flexible and useful for your organization.

In addition to sourcing candidates through traditional suppliers, many companies now source candidates directly from private (or “preferred”) talent pools. This allows you to attract candidates with higher pay rates and lower bill rates, lowering your cost of talent by an estimated 10 to 35%.

Direct sourcing can also reduce the time required to fill positions and significantly expand your access to quality talent. You should ask potential technology suppliers about the sourcing options they offer, including whether they have the capability to source talent directly.

Candidate selection, hiring, and onboarding

The VMS should make reviewing candidates quick and easy. From AI-powered request generation to resume screening, skills proximity scoring, candidate matching, and interview question generation, your VMS should make it easy to find talent with the right fit for each assignment.

Your VMS should also facilitate rate negotiations and automate onboarding to ensure compliance with both regulatory and organizational requirements. If you intend to manage your contingent workforce internationally, your technology should be able to accommodate differences in hiring practices and employment regulations in multiple countries while maintaining organizational consistency in accordance with company policy.

Timekeeping and invoicing

A VMS should provide support for multiple time entry models to ensure that all time is categorized easily, efficiently, and correctly. This includes the ability to capture hours, time in and time out periods, break time, daily units, or flexible units for non-standard types of work. In the case of global programs, it should also ensure that complex billing rates, such as shift allowances, overtime, holiday rates, and more, are correctly calculated and managed.

It must be able to calculate invoicing data accurately and make this data readily available to the users in your organization who require it.

If a MSP is involved, the technology you choose should be able to generate the necessary invoice(s) depending on your contractual and payment flows.

For global programs, the technology should be able to generate invoices in accordance with applicable local laws, regulations, and taxation requirements, in the appropriate currency, without the intervention of a local MSP. In an ideal situation, the technology should offer two complementary options for international programs:

Services procurement

The VMS should help you source, negotiate, procure, and manage statement of work (SOW)-based contracts and project-based initiatives. Each service engagement is different, so your technology must allow for various levels of configuration.

Your services procurement solution should include scalable functionality to give you a centralized view of the entire process, from competitive bidding, sourcing and SOW negotiation to engagement management, invoicing, and payment.

To support competitive bidding, your technology should gather information from suppliers to aggregate, evaluate, and competitively source the best supplier(s) to meet your needs.

The technology should help you collaboratively build and document SOW terms with real-time visibility into changes using system alerts, notifications, activity streams, and redlining throughout all phases of an SOW negotiation.

After awarding the contract, the technology’s project tracking capability should allow for easy management of all engagements across all project types. With this functionality, you can manage deliverables, pay milestones, view time worked and expenses, and track and onboard/offboard resources.

The technology should also alleviate your administrative burden by providing an intuitive and simple user interface for time and expense submission and management.

Embedded decision support tools

In addition to automating sourcing, procurement, and management processes, a full-featured VMS will include interactive decision support tools to assist users and help ensure adherence to company standards. By guiding users to the right decisions, these tools can help mitigate risk, ensure proper contractor classification, and enforce company policies and procedures. For example, by asking a series of client-defined questions, a well-designed decision support tool will help users determine whether a particular requisition involves a traditional staffing engagement or a more complex consulting engagement and then route them directly to the appropriate procurement workflow.

Interactive tools can make technology easier and more productive by guiding hiring managers at key decision points throughout the procurement and contract labor management process. You should ask prospective technology providers to demonstrate the tools incorporated in their system. These tools should also connect with functions outside the VMS to guide users to other systems when required (e.g., Applicant Tracking Systems or eProcurement Systems).

Analytics and business intelligence

Actionable reporting drives behaviors that enable your company to meet its program improvement goals. Your VMS should give you complete visibility of your entire extended workforce with program statistics and metrics related to quality, costs, compliance, and process efficiency.

The best visual analytics tools make it easier than ever to instantly isolate trends, identify optimization opportunities, and uncover anomalies in real-time with an AI-enabled visualization suite. With these tools, you will be able to monitor and analyze:

Report generation

You will need to report your program’s activities to stakeholders. Your technology should make it easy to access the reports you need and these reports should be fully configurable to your business needs.

A user-friendly VMS should include a library of standard reports plus robust report-building functionality that makes it easy to create custom reports providing the insight required for better business decisions. That functionality should include features like:

“Auto-complete” that finds the field you want to insert into the report as soon as you begin to type.
“Real-time preview” that lets you see your data as you build your report.
“Drag and drop filter creation” to make building complex reports simple and intuitive.
Field labels that can be quickly changed on the fly to save you time.
Conditional formatting that can be used to draw attention to important data.
Math functions that allow you to create custom formulas and calculations to enhance your report.

Data security

What would you do if vital confidential data, including Personally Identifiable Information (PII) or other sensitive personal, supplier, and company information was lost, stolen, or compromised? Not all VMSs are equally secure. You should ask potential technology providers whether their security systems and procedures are ISO 27001 certified, whether they are regularly audited according to SSAE18/ISAE3402 standards, and whether they have successfully completed Service Organization Control (SOC) examinations, SOC 1 and SOC 2, established by the American Institute of Certified Public Accountants (AICPA).

You should ask whether they operate under a Zero Trust security framework and the Principle of Least Privilege. Ask when and how they use data encryption and ask about their anti-malware protection, intrusion prevention systems, application security testing, backup and fault recovery procedures, and disaster recovery plans.

You may also want to consider the physical location of your data and the level of security each technology provider offers at their data centers. If your company has European operations, you should inquire whether the provider can host your data in Europe, closer to your operations and covered by European data protection and privacy laws.

Implementation and integration

Because each company's requirements are unique, each VMS implementation requires a degree of configuration to conform to these requirements.

This results in a system that is intuitive to learn and easy to use. You should ask potential providers who will be responsible for configuring the system to your requirements: the provider, an MSP, or your program office. If this is your first contingent workforce management technology solution, you should also ask what kind of readiness assessment process each provider uses to ensure that you have a clear understanding of the resources, internal controls, and change management processes you will need to facilitate the implementation.

Ask about schedules and timelines, and how the provider intends to ensure timely and trouble-free implementation. You should also ask them how they provide comprehensive post-deployment support.

A key element of any technology is its integration with your other enterprise applications. Your VMS should integrate seamlessly with your enterprise software applications — your finance, HR, contract management, procurement, ERP, portfolio management, and other systems — whether they’re on-premises or in the cloud.

Ask about the availability and cost of both standard and custom integrations and the effect of both on implementation timelines. Which applications have they integrated with and what data formats do they regularly use in handling record transfers. The technology provider should be able to provide specific examples that parallel your situation.

Customer service

Most VMS providers offer basic service and support for their systems. For some providers, this consists essentially of “help desk” and “break-fix” support.

Other providers augment these with higher levels of service, at the top of which is the provision of named resources for both operational and strategic account support. These resources, in turn, should be backed by technical teams with specialized skills and responsibilities and who are dedicated solely to customer support.

Some VMS providers also offer strategic consulting based on broad experience and deep understanding of industry best practices. This can include:

Program office development
Sourcing optimization strategy development
Job taxonomy development
Rate card development
Technical and business process assessment
Process efficiency analysis
Supply chain management
Advanced analytical support
Program scorecard development

You should ask about the support services provided to all clients and any additional services that may be available.

Questions for your first meeting with a technology provider

Develop a list of questions for potential VMS providers that apply specifically to your organization’s extended workforce sourcing and management program requirements. The questions below can give you a starting point for your list and help evaluate the relative strengths of technology providers and their solutions.

What capabilities does your analytics and visualization toolkit include?
How extensive are the standard reports and custom report-building capabilities you offer?
Who provides strategic and operational lifecycle service for your extended workforce solution - you or your MSP partners?
Must we use an MSP, or can we manage our own program internally using your VMS?
Can I see my entire global extended workforce in a single instance of your platform?
Does your SOW solution allow customization of expense types and fixed amounts per supplier?
Can I source talent directly from your platform, using my own preferred talent pool?
What are your global resources and capabilities? How extensive are your technical, operational, strategic, and support resources in Europe? In Asia? Elsewhere?
What innovations have you introduced into your products and the industry in the last 20 years? Ten years? Three years?
Do you have referenceable customers I can speak with about the performance and reliability of your products and services?

Contingent workforce management programs tend to mature over time. They begin with certain limited and specific objectives. When they achieve these goals and demonstrate their value to the organization, they are often given more scope and responsibility.