The land of VMS opportunity
The emergence of the VMS market began almost 25 years ago – a lot has changed since then! What is now available to the market, are robust and proven technologies, and aim to continuously develop alongside the market needs.
Research from the SIA estimated that in 2018 the global VMS market was at around $170bn spend under management, with the UK market responsible for around $12bn – which leaves a massive gap from a spend perspective between the US and the UK. Irrespective of spend, it would be fair to argue that the UK market has proven to be the most mature market in Europe. Organisations are used to working with multiple suppliers in a tiered model, and outsourcing (parts of) HR services is a common process. Across both the UK and the US, the mid-size market (UK £15M-£75M, US $60M-$80M spend per annum) has become harder to develop due to inflexible programs and technology, combined with relatively high costs. We tend to believe that especially organisations in the mid-size market demand more flexibility of their MSP and VMS partners, whereas from a services or technology perspective this flexibility typically isn’t offered due to the lack of earnings potential.
However there still remains a large number of organisations looking to procure VMS technology for the first time, or those that are migrating to a new VMS provider in order to reduce technological constraints of legacy systems. Whilst traditional VMS technology has focussed towards the contingent worker market – the recent ambitions within the market has demanded technology vendors to provide a more holistic overview of the workforce – in order to place a single lens across permanent, non-permanent, contingent and SOW workers. The desire within the market to increase its percentage of, and ability to directly source talent makes giving oversight to all of these talent populations all the more important. With this is mind, it is worth understanding that the traditional constructs of worker type are being slowly dismantled – the reality is that sourcing is a mechanism in order to get work done – and thus worker type really doesn’t matter. The emphasis has moved away from ‘should we hire a permanent or a contingent worker’, to ‘who has the right skills to get the work done’. The challenge that buyers now face is how to incorporate this ambition to their future workforce strategy with the constraints of legacy and incumbent systems. This shines an even greater importance on organisations adopting a technology strategy that incorporates flexible and agile systems at its core.
There also remains an ambition within the market for organisations to enable the self-management of their programmes internally – and so it is important that they consider whether the technology allows for such, whether this is something their MSP can and will support, and how this impacts their contractual realities with their partners. For the first time, we see a higher percentage of organisations contracting directly with their VMS partners in order to facilitate this change further down the line.
What is increasingly clear, is that that oversight into talent, and creating cost-cutting mechanisms is no longer enough – and the customer is rightly demanding more from their technology partners. Rather, as buyers become more mature and sophisticated, the expectations of contingent workforce programmes, and the technology that underpins these programmes has expanded into areas spanning analytics, strategic workforce planning, and a way to better align the corporate and strategic objectives of the organisation. Specifically, in relation to Strategic Workforce Planning it should allow them to develop a holistic, long-term and proactive approach to strategically assessing and accessing all multiple forms of talent engagement Add the impending doom of IR35 – and it is clear to see the added expectation of VMS vendors and MSP’s and other service providers will be mission critical for their customer base.
What are the drivers for organisations to procure VMS technology?
There are a diverse number of reasons for organisations to require VMS technologies – and they should all be prioritised as part of the procurement process to ensure they select the right VMS partner. These needs can be to increase visibility across multiple worker types and to provide a centralised platform for integrating contingent workforce data and SOW spend. We have also seen multiple examples where these technologies are used to completely automate the onboarding and offboarding process. For others it is more focussed around compliance and risk mitigation, and to streamline processes to draw upon a greater level of operational efficiency.
As organisations find themselves further along the maturity roadmap of Contingent Workforce & Total Talent Management – their needs to leverage new talent populations, and to facilitate direct sourcing models becomes more prominent. By enabling a holistic overview to all of their talent populations, and by creating a mechanism for direct sourcing – organisations can expect greater redeployment of talent, and more utilisation across their alumni and known talent populations. It is also common for organisations to look to their MSP and VMS partners to help consolidate technology and process as a means of driving cost management and cost reductions.
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