Meticulous talent selection, precise assessments, solid client relationships — all attributes of a premier staffing firm, right? Right — unless you participate in a Vendor Management System (VMS). The qualities that make your staffing firm great often conflict with VMS models that are frequently designed to limit your competitive advantages.
According to a study by Staffing Industry Analysts, VMS buyers continue to grow and annual spend is estimated at $180 billion globally, with $116 billion in the Americas alone (SIA VMS Global Landscape 2021). What’s more, these VMS staffing opportunities aren’t solely the large enterprise clients as you may think. The mid-market buyer represents almost half the VMS market. Understanding how to maximize the traits that make your staffing company stand out, while working within the parameters of a VMS model, is key to mastering what is now established as business-as-usual.
Investment in VMS and the growth of vendor management is well documented. And what drives its popularity? On the surface, the reasons seem clear: a VMS allows companies to control vendor lists, lower costs and accelerate candidate submissions. What are not so clear to organizations are the tradeoffs: candidates who are not as well-qualified, lower submission-to-hire ratios, increased turnover of mismatched hires — the list goes on and on.
For an industry dedicated to matching the right candidates with the right job opportunities, VMS has been a difficult pill to swallow. Firms that pride themselves on quality searches, in-depth assessments and on-target submissions are wrestling with the downside of working with a VMS, including:
In the best-case scenario, there would be a way to successfully meet the requirements of a VMS while maintaining your commitment to delivering only the most qualified candidates at favorable margins. The good news is that scenario exists today through offshore Recruitment Process Outsourcing (RPO). The offshore RPO solution benefits more than just large, corporate departments. In fact, more and more staffing firms are realizing the value of supplementing their internal recruiting team with offshore support. For staffing firms going after VMS business, the benefits are real. Here are four key points to consider:
Here’s just one example of how supplementing your VMS efforts with offshore RPO can make a difference.
A staffing firm with 15 recruiters wanted to grow its revenue. This company did significant business with a VMS customer and needed to increase submittal volume to retain its relationship and preferred vendor status.
Keeping pace with the number of VMS submittals required was not only challenging, but also taking time away from other client relationships. The firm needed to quickly increase its recruiting resources. However, with margins already squeezed, they didn’t know how to accomplish this in the most cost-effective way.
The firm explored offshore partnership options and selected an 247Hire to supplement its U.S.-based recruiting staff. They began by adding just one offshore recruiter. Once their comfort level increased and they realized the benefits of augmenting their recruitment capabilities, they engaged four more offshore recruiters within the next eight months.
The firm was able to solidify its position as a preferred vendor, meet its client’s expectations and keep costs in line. Of the firm’s 20 recruiters, the five they engaged from the offshore partner accounted for 50 percent of the placements each month and cost only 8.2 percent of the total budget for recruiter expense and compensation.
In the past, many staffing firms have shied away from VMS opportunities. Now, staffing firms come out ahead in a VMS model: by supplementing their traditional recruiting practices through partnering with an offshore RPO that shares the same quality values. Offshore partnerships can open doors for staffing companies to expand their business at new levels. By cost effectively increasing resources, staffing firms can compete— and win.