Exploring Global Indirect Staffing Spend Management with Vendor Management Systems (VMS)
  • 5 min read

Benefits of Capturing Global Indirect Staffing Spend

If you’re an international business, the likelihood is you’re probably already working with staffing agencies, consultants and outsourced service providers, all of whom can be classified as contingent spend. What are the benefits of building out a global picture of your indirect staffing spend? We ask the question of our experts here.

Why the global labor market is both an opportunity and a risk to organizations

Your opportunity to bring indirect staffing spend under control

Industries are facing skills shortages everywhere. The best way, so experts say, to maximize your potential of finding the best-fit talent in the shortest time, and the right price, is to open your addressable audience to a global footprint. The core benefits of a global talent strategy are:

  • Setting out your stall to maximize your opportunity to fill vacancies with the best-fit talent by canvassing wider for the competencies you need
  • Establishing a more iterative and poised talent resourcing approach that fully leverages variations in regional talent supply and rates
  • Exposing avoidable ‘sunk costs’ across your talent landscape by using data analytics to compare and contrast talent sourcing and management metrics across operational units and territories.

The risks

While that all makes sense, actioning a global hiring strategy is not for the faint hearted. With labor laws differing from one region to the next, and variations in tax regulations and hiring rates blurring the picture still further, it’s hardly surprising that firms take a deep breath before diving into a global talent agenda.

Smart organizations are re-aligning their service delivery resourcing approach to harness global resources, education standards, and labor rates

Did you know that Estonia, that little Baltic state with just 1.3 million inhabitants, has one of the highest mathematics literacy levels in the world? Yes, the country that brought us Skype and TransferWise, is committed to giving each one of its citizens an A-level pass in mathematics. If you’re hunting for computer scientists, Estonia has become the first place to go.

But what about STEM? When it comes to raw talent competencies, The World Economic Forum reported that China had 4.7 million recent STEM graduates in 2016. India, another academic powerhouse, had 2.6 million new STEM graduates last year while the U.S. had just 568,000.

Smart businesses know that a distributed resourcing strategy is the best way to align available global talent with the jobs to be done in their organizations. That means sourcing competencies like IT, lab teams, customer service center agents, etc. from those territories where the paucity of talent exists at the right skill level and price.

business people interviewing a potential candidate

business people interviewing a potential candidate

Setting up for success

For those organizations large enough to already operate local offices in countries around the world, an opportunity exists to leverage their global reach and local talent resourcing capability to fill vacancies where the talent resides. While that sounds like a great idea, many companies today operate fragmented talent organizations, protocols and systems. This means an office in Texas can be waiting months to fill vacancies for DevOps technicians, when in Noida, India, there is a massive talent pool of capable people looking for jobs—and the Indian office of the same company probably doesn’t even know it!

Those companies that do not currently have a global reach have been looking to partner with an Employee of Record (EOR).  Bringing that solution into their VMS that allows them to cast a wider net for talent while not have global entities.

A VMS can manage indirect staffing spend

A Vendor Management System (VMS) is a technology platform used by organizations to manage the lifecycle of indirect staffing spend including contracting or hiring, checking, onboarding, scheduling, paying and off boarding (or employing) indirect workers.

For organizations looking to bring their indirect staffing spend under control, a VMS offers the following capabilities:

1. Manages and automates the ‘req-to-check’ process pan-regionally, accounting for variances in the way dates and numbers are presented (and held in databases), currency management and exchange rates, languages, etc.

2. Integrates the purchase to pay process with third party ERP and financial systems to streamline billing and make sure agencies and hires get paid on time, considering local labor laws, overtime arrangements, scheduling, time zones, etc.

3. Exposes process performance and market stats, so it’s easier to determine pay rates to optimize time-to-fill by market taking into account local labor laws, pay rates, tax systems and regulations, etc

VMS systems have evolved to support demands for greater control and governance over indirect staffing spend

Now existing for over two decades, the VMS technology market has consistently re-invented itself to keep up to date with the latest changes in the contingent workforce industry. The very latest innovations include integration of artificial intelligence (in areas including voting, screening, testing, background checks, chat bot driven customer service, etc.), the progressive use of big data and cloud computing tech ecosystems, the adoption of Direct Sourcing (DS) modules to cater for new ways of sourcing talent in the gig economy.

If you want to control indirect staffing spend, then a VMS is what you need. 

Like other markets, the Vendor Management Software sector has been transformed by digital innovations like AI, chatbots, robotic process automation, and advances in data integration standards and methods. It means, when selecting a VMS, it’s not as straight-forward as it used to be.  One could argue that the current state of the art has moved way beyond ‘the VMS’ to something different. should have the ability to embrace innovation, be mobile ready, harness data analytics to drive hiring decisions, govern supplier behaviors, and ultimately select your channel partners.