Flourishing Outside the VMS/MSP Circle

Want to get away? No, I’m not talking about a free trip to Hawaii. But for some suppliers what I’m about to suggest might be just as welcome..

I am talking about getting away from the VMS/MSP space: building a staffing firm that succeeds outside of it.

There are those who have done it and lived to tell the tale.  But before you start down the path, here are some things to consider that can work for or against you depending on your staffing model.  

Speed. The VMS is all about speed coupled with low cost. Unless you can really bring together a large group of recruiters to deliver tons of résumés quickly, you are at a disadvantage.

Consultative Approach. Companies that favor the high-touch, high-value method — providing industry information and being more consultative —do better in a non VMS/MSP environment.

Domain Expertise. Boutique staffing firms or those in a niche market with specific industry know-how can command high margins that will be lost in a VMS world.

Economies of Scale.  Boutique firms not catering to the VMS/MSP tend to be smaller firms that specialize in one or two niches, often not competing with the national staffing agencies. Staffing firms that cater to a VMS/MSP tend to be lower-cost operations but with larger economies of scale.

Time Commitment.  In a non-VMS space, many staffing firms spend oodles of time managing client and consultant expectations. This is part of the service offered that allows the firm to charge higher margins.

Veteran Recruiters. Non-VMS companies have recruiters with star power who match the client with the best candidate available. These professionals are paid highly, quite different from the VMS paradigm where an off-shore recruiting model is the one of choice and recruiters are paid less.

Direct Contact. In a VMS setting, many staffing firms cannot contact the hiring managers directly. This can be anathema to non-VMS firms that like to engage and want to have some influence in the sales process.

At the end of the day, one model is not better than another. It’s all about what your core competency is and how you can grow in the markets that you are in.  There are opportunities in both the VMS/MSP and the non-commoditized space. 

As far as buyers of staffing go, they can benefit from aligning themselves with either model. It really comes down to the job they are looking to fill. Esoteric or very specialized skill sets may be better serviced through a niche staffing firm that may operate in a non-VMS space. It could be worth your while or the MSP’s to pursue them and accommodate their needs. 


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Southwest Airlines

Greg Muccio 02/09/2014 10:48 am

Conor--I completely agree that People aren't pencils and you cannot approach buying of contingent workforce like other "products". However, I cringe when I hear Suppliers say that a VMS gets in their way of doing the best job or that they need contact with a hiring Manager is necessary and that we will pay more because of our rules. I believe every buyer should be using a VMS if they are either interested in understanding their total workforce and having that visibility for all regulatory needs currently in place and coming down the road. Unfortunately, until that happened we were getting robbed blind by suppliers that had contact and were charging outrageous rates just because of a relationship with a hiring Manager.

I may be naive, but I believe their is a happy medium. We became an internal MSP to help facilitate success with our Suppliers. I feel one of our key objectives is to help set our suppliers up for success while creating a fair playing space for all of those that we engage with. We will make sure they have the tools to be as successful as possible and I want them to be profitable as well. That doesn't mean higher margins which is where most like to go. It can mean lowering your costs--we are working on initiatives to improve candidate feedback and increase speed to hire to help our suppliers be more efficient. We are looking for suppliers that want to be real partners which means helping us achieve our goals as a Company. One of our top goals as a Company is lower costs to our Customers. Thus we are more interested in Suppliers that are recruiting and service focused and not sales focused.

The BOSS Group

Conor Smith 02/04/2014 05:04 pm

While I agree that VMS/MSP has some nice "pros" in terms of metric tracking, vendor compliance etc. anytime it is stated that commoditization is an acceptable way to source human capital it makes me cringe. People aren't pencils and regardless of how low the skill set may be having motivated recruiters and sales people who form relationships with both the client and talent (and are not inhibited by needless rules limiting contact only to benefit the MSP by giving them more control) is the best way to ensure quality workers. If I am a client in need of talent would I rather have a motivated engaged recruiter working on the position or have it outsourced or put on a junior recruiters desk who is basically just data mining and throwing it against the wall (don't worry about quality, just get it in fast and cheap). For me the answer is an easy one. Sure the client may think they are paying less but in the end by hiring less qualified workers who take more time to do the work, aren't potentially good fits, higher turnover etc the temp will wind up costing you and your company more. Human beings are not commodities and should not be put through systems that force staffing firms who take pride in their services that treat them as such.

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