Cost is one of the main reasons companies like yours implement a Vendor Management System in the first place. With a system designed to save you 5-10%, why would you not make your life easier using a VMS? What many organizations do not realize, however, is the further cost-savings you continue to drive after the implementation is complete.
In periods where uncertainty is everywhere, it is understandable that many organizations consciously stick to a tight budget. For example, at the beginning of the COVID-19 pandemic, some organizations decided to cut their contingent staff altogether though many organizations prioritized bringing back temp labor as they began to rebuild. This actually lead to a Year-on-Year increase in contingent labor utilization in September 2020.
Where should cost savings come from if not from increasing contingent labor usage? When increasing your use of contingent labor, you can still cut costs through your integrations. Read on for three integrations we believe you should make to drive cost savings into your organization.
1. Direct Sourcing
What Is Direct Sourcing?
The phrase “direct sourcing” has become commonplace, but what does it actually mean? With direct-sourcing technology, you are meeting the workers where they already are.
Using your company’s career site, or third-party job boards, you can attract talent via your brand in the places workers are already looking for relevant positions. You can further increase reach and get your vacancies in front of even more candidates by using the integrations that allow your results to appear on Google for Jobs.
How Does Direct Sourcing Cut Costs?
The main way that direct sourcing cuts tangible cost is by eliminating finders feed so you only use a payroll rate, which reduces the bill that you pay for the worker. If a candidate is sourced directly from the internet, then you can add them to the job and have them payrolled through your payroll vendor, which can save you roughly 20% on your markup.
Our direct-sourcing partner Willhire suggests that using direct sourcing results in a 20% decrease in time-to-fill. So as well as the hard cost-savings for your recruitment budget spent on finding the right candidate, direct sourcing can also provide time savings for both you and your organization.
You may also like to watch: ‘The Future of Sourcing: Combining Direct Sourcing With Your VMS Strategy’
2. Rate Benchmarking
What Is Rate Benchmarking?
When you set up your VMS, you will likely store the rate information for your vacancies. But are those rates competitive? A rate-benchmarking system can help you to understand if the jobs you typically source come with rates that align with the market.
This can either be done for you by your service provider or can be integrated into your VMS, depending on the level of visibility you would like. Rates can also change depending on location. So, as well as providing rate information for a location, great benchmarking providers can give you the average mark-up for jobs in that area.
How Does Rate Benchmarking Save You Money?
If your rate is above average for a location, field, or job-type, you can drive cost-savings by reducing your bill rate to meet the standards in that area. But what if your rate is below market? This isn’t necessarily a loss as it can give you a lot to think about. Armed with this information, you have the data to decide if you wish to:
- Continue on and increase your budget.
- Work with lower-skill candidates for a lower rate.
- Make the position full-time (if it would be more cost-effective in the long run).
Having accurate rate information can also allow you to shorten cycle times as you will be aligned with the average market rate for your role(s).
Recommended reading: ‘How Much Does a VMS Cost? The Vendor-Fueled Model Explained’
3. Freelance Management System
What Is a Freelance Management System (FMS)?
Often confused with a direct-sourcing tool, an FMS has its own set of cost-saving functionalities. An FMS gives you the flexibility to store, group, and curate talent for use in the future. This allows you to create a varied talent pool, curated to your needs, ready to work on upcoming projects and contract work.
Depending on the type of FMS you work with, you can either curate talent yourself or use a system that has a pool of talent pre-vetted ready for your use.
How Can an FMS Save Money?
Similar to direct-sourcing technology, you can drive down the bill-rate associated with the worker by working with freelancers and contractors you have worked with before. Existing talent from your pool is matched to the right job and automatically pulled into the VMS to be assigned to your payroll vendor.
This allows you to increase efficiencies and save admin time by sourcing pre-vetted talent. In circumstances where you are working with the same contractors and freelancers repeatedly, it can also reduce onboarding time and time-to-productivity as they are already familiar with how your organization works.
Related reading to download: ‘Successful Staffing: How to Bring the Gig Economy Into Your Workforce’
Integration Is in Your Best Interest
Integrations can be done for a variety of reasons. For example, they can drive efficiency, reduce manual effort, and decrease risk. When budget-season is in full swing, it’s in your best interest to see how integrations can drive down both your costs and your manual admin time for your contingent workforce management program.
Integrating new technologies can help you attract candidates at the source, spot-check your current rates, and craft pools of talent that will save you time and money.
For more information on how your VMS can help you drive down your contingent labor program cost, reach out to our dedicated team of professionals on how you can leverage your VMS for ultimate cost savings.
Meet the Expert
Taylor Ramchandani – VP of Strategy
Taylor Ramchandani is responsible for the management and strategic planning of the VectorVMS vendor management system. Taylor is committed to client satisfaction and to ensuring VectorVMS technology meets the current and future needs of clients and managed service providers (MSPs). She uses market research and in-depth industry experience to create products and services that make extended workforce management efficient and intuitive. Taylor oversees product development, marketing, and business partnerships for VectorVMS and is responsible for driving innovation for contingent workforce management. Connect with her on LinkedIn.