The VMS Bogeyman

Staffing firms love to hate the VMS. It’s their favorite bogeyman. Tales of lowered margins and profits are recounted often by staffing professionals with indignation as many savor nostalgically the pre-VMS era.

But here’s the deal. Staffing firms may carp about  VMS, even refuse to work with it. But what Staffing Industry Analysts data has found is that there isn’t a strong relationship between percent of revenue that comes from a VMS and staffing firm profitability.

If anything, what our analysts found was that avoiding VMS altogether actually reduced profitability.“Firms that had less than five percent of their revenue flowing through a VMS were less continuously profitable than others. However, it’s not as if the more VMS you use, the more profitable your firm is going to be,” says Theo Vadpey, research assistant and author of the report. "It's just that avoiding it altogether seems to be suboptimal."

So what’s the takeaway? Perhaps suppliers should think before castigating  VMS. Why criticize something that can help you get business with no sales effort? And here’s the good news for the buyers. They now have some evidence that can convince their favored suppliers — those who protest the VMS — of the merits of the tool. 

Buyers have long bought into VMS, finding the visibility into their contingent workforce management spend far outweighing other glitches. It’s time now for the suppliers to follow suit.  Agencies can take comfort from the fact that many staffing firms are doing more than just fine with a VMS. So it shouldn’t be the bogeyman many firms think it is.

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Infinity Consulting Solutions

Matthew Walden01/17/2013 04:53 pm

I think most staffing firms would agree the only way to work with a VMS is to have your recruiters buy in. The only way a recruiter buys in is if they can make money. Any VMS with unreasonably low managed margins / managed markup usually fail with most recruiters and staffing firms because there is no reward and therefore the staffing firms learn to hate the VMS. When a VMS is run with by bill rate we have great success because we have buy in from the recruiters and the whole system works as it was intended.

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