How VMS are Reacting to the Evolving Freelancer Marketplace

Brian Delle Donne

The advent of the Vendor Management System (VMS) is considered the last significant disruption to the procurement of temporary labor by corporations. Today, VMS stands at the gate of the processes that enterprise buyers rely on to screen, hire, control and pay temp labor. Platforms and marketplaces now entering (or innovating in) the scene will become the next disruptors of this existing highly engineered paradigm.

For those who focus solely on full-time recruiting or work in smaller companies, VMS may seem like a mystery, while freelance labor is obvious and understandable. The goal of this article is to shed light on the inevitable juncture of VMS and freelance. At one time, VMS was itself a disruptive entrant into the contingent markets. Today, however, they will need to adapt to the new age players that Talent Tech Labs classifies as e-Staffing services, Temp Labor Marketplaces and now Freelance Management Systems.

More than 40% of the American workforce are estimated to be #freelance workers by 2020. @TalentTechLabs breaks down what this means for Vendor Management Systems: Click To Tweet

So how are the leading VMSs adapting to the changing needs of the workplace, and what is their view on the future state?

Managing upstarts into what many consider an established field can be threatening, especially if the opportunity to collaborate is bypassed as new technologies and companies move into the establishments’ space.

  • Will industry leaders be open to these new players?
  • Are they seeing the same quality of hire or even submission rate as they would with the traditional vendor supply chain?
  • Are the new technologies merging with the traditional solutions to help those in Talent Acquisition hire better?

Here’s what we learned:

By 2020, independent studies estimate that more than 40% of the American workforce, or 60 million people, will be independent workers—freelancers, contractors, and temporary employees. That’s in just three years!

The reasons behind this proliferation are increasingly apparent.

  • Technology advances have made it simpler to work remote from worksites.
  • The economy has made full-time work less the norm and freelancing actually preferred by some.
  • Marketplaces like UpWork, Catalant, Shiftgig, Hyr, and Twago have all made securing freelance work much more accessible.

A micro-snapshot of the larger economy? I wouldn’t say no. Neither would the smart companies that pioneered vendor management. Fieldglass, an industry-leading VMS that’s now part of SAP, is embracing the natural evolution of the freelance economy. Instead of fighting what looks like a perfectly normal progression (given the makeup of today and tomorrow’s workforce), Fieldglass is choosing instead to focus on “How Work Gets Done”. In fact, that’s its focus:

“We want to help clients optimize and simplify how work gets done. Make it simpler for hiring managers to access these new talent sources, while keeping rules and compliance in place.” 

– Arun Srinivasan, SVP Strategy & Customer Operations, SAP

Fieldglass believes the winning proposition will be optimizing access to talent, combined with the automation of (sometimes tedious but always necessary) business rules to enforce compliance.

ADAPTABILITY IS KEY

While all the VMS providers we spoke with have some trepidation around self-serve as a model for avoiding or replacing VMS and MSP, we asked them specifically about freelancer delivery alternatives now coming on the market. Several of those we spoke to were not only adapting to these platforms but are partnering with and investing in freelancer delivery.

According to Brian Hoffmeyer, VP of Product Marketing at the VMS firm IQN, one of the company’s three Pillars of Differentiation—the IQN EcoSystem—has a number of emerging Talent Acquisition Technology (TAT) partners. These partners are being leveraged to address niche hiring and talent clouds as additional sources of talent for clients. The technological innovation in this regard is IQN’s platform-based architecture, which is designed to allow easy integration with their own ecosystem partners.

These new ecosystem partners are alternative sources of supply. Additionally, some of the partners, WM and Genesys, allow clients to self-source from alumni and silver medalists.

@TalentTechLabs explains how the leading VMSs are adapting to the increase of #freelancers of the #workplace: Click To Tweet

In today’s world, the MSP sees the job requirements first, reducing the advantage marketplaces may have for expediency. In the future, changes in workflow will have managers look in talent pools first before releasing the requirement for sourcing from external providers.

As clients reduce the size of their staffing vendor lists, the candidates that the excluded staffing companies could submit shrinks the available pool the client can select from. With On Force, staffing suppliers not on the list may have the opportunity to submit their applicants into Beeline self-sourcing for clients to consider and access a piece of the spend.

IQN released its own talent pool functionality earlier this year to help clients self-source certain kinds of talent. Brian Hoffmeyer also told us of IQN’s development efforts building machine learning into an analytics engine that will someday be able to predict demand.

FMS IS SLOWLY SEEPING INTO VMS

We think it won’t be long until the differentiation between VMS and FMS is further collapsed. Ever proud of its ultimate-intermediator status (particularly with the large enterprise), VMS is not going to give up quickly.

However, with new solutions like those delineated by Beeline and IQN, perhaps they won’t have to. After all, many Freelance delivery platforms are legitimate players in the Talent Acquisition Ecosystem, while they’re primarily built either for freelance workers or third-party recruiters. The compliance, reporting and tracking features that HR and Procurement need from tools generally aren’t there.

HOW MIGHT COLLABORATION LOOK?

In short, VMS vendors still see the e-Staffing and Temp Labor marketplaces as the “Wild West.” The VMS and MSPs have served as a moat around the enterprise. But while the castle keeps are designing their own drawbridges, the freelance delivery upstarts are seeking to avoid the castle walls altogether.

Fieldglass is backing that up. Rather than create their own e-Staffing solution, or partner with any specific freelancer platforms, Fieldglass is implementing an open and welcoming architecture via API. The goal? To create the necessary interfaces so business users can get what they need simply.

Fieldglass believes many of the rules around VMS administration can be automated, thus facilitating the engagement of the new players.

In the end, how these VMS experts view the emergence of e-staffing platforms or Temp Labor Markets can best be described as interested benignity. Trends notwithstanding, based on the position VMSs still hold inside the enterprise, they know a change is coming. However, as of today, they’re not threatened. Instead, they are making strides and room for collaboration or building alternatives.

The future of VMS and e-Staffing, Temp Labor Marketplaces, and FMS will become increasingly intertwined with each demonstrating its unique attraction. Clearly, the best of breed formulation is yet to come.