What makes 2022 the right time to upgrade your VMS?
The external workforce market is changing. The global talent shortage has spurred businesses to rethink their external workforce strategy to meet this new demand. Similarly, many workers are moving away from rigid full-time employment towards flexible working, instead choosing when and how they work.
Businesses have not yet fully adopted the technology to meet the shift in the market. As technology is the fundamental ingredient to the operation of an external workforce strategy, businesses must reevaluate their Vendor Management Systems for them to be able to reach their full potential.
What’s changing in the market?
2022 is the year that the fundamental changes in the talent market since the pandemic are beginning to be realised. Hybrid and flexible working has now become the norm. The long touted return to the office has largely been unrealized.
While some businesses are enjoying rapid growth, others are looking to slim down their workforce in response to increasing labor costs and a more general slowdown in the market. All this points to the talent market increasingly shifting towards an external workforce, for both businesses and individuals.
The external workforce can help organizations achieve their talent demands, and businesses are beginning to realize this. This itself has demonstrated that having a large proportion of payroll coming from the external workforce can increase both financial efficiency and time to completion.
Similarly, individuals have increasingly prioritized their personal and mental well-being over full-time employment. Instead of loyalty to a single employer, workers are choosing to be loyal to themselves. Those who have become embedded in the external workforce ecosystem have chosen to build their work life around their personal needs, rather than the other way around.
Outdated technology cannot keep up with this.
This means that the external workforce market is not only increasingly competitive but also increasingly populated with skilled talent. However, many organizations are still managing their external workforce through outdated technology. Previous iterations of VMS platforms were not built to deal with the increasing intensity and turnover of external workers. Moreover, they do not provide the essential features that have been born out of the changing market.
Previous iterations of VMS platforms were not built to deal with the increasing intensity and turnover of external workers.
Gen 1 – What has come before?
In their initial conception, VMS platforms were designed simply to replace spreadsheets. Led by procurement teams, they were used primarily for tracking and managing the hiring of contractors and vendors. Their main focus was on payment and candidate management, alongside time sheet and expense tracking.
Consequently, they did not meet the needs of any other internal department. Yet, in less than a decade, these platforms have transformed from a simple system of records to end-to-end external workforce management portals.
Gen 2 – What do most currently have?
The next step in this development was the transition to cloud-based second-gen platforms. These moved the technology from physical hardware onto the cloud, allowing the VMS to communicate with other platforms and better integration within existing data systems.
One big limitation of second-gen VMS software was that many of the providers assumed that all customers should be deployed onto the same platform. This meant that there was little scope for customization by organizations. These systems now appear noticeably pre-pandemic. They do not cater for multiple stakeholders or any of the features that are needed for end-to-end talent management.
Gen 3 – What is yet to come?
Gen 3 VMS platforms have developed in response to the pandemic and the changing talent market. Characterised by their ability to support the complete life cycle of external workforce management, they cater for all stakeholders of the external workforce management process.
Moreover, Gen 3 platforms allow candidates to build a relationship with a particular employer. Rather than taking one job after another, they can build long-term relationships in the external workforce. This requires more than just the procurement-based modules, but rather ones that cater for the more “softer aspects” of employment.
This specifically means that these platforms can track the training and recognition of workers, and even allow to monitor candidate well-being to further the scope for retention. These features are essential for any employer looking to rethink their external workforce strategy.
Why organizations should look to innovation to navigate the changing market
Only businesses that rethink their external workforce strategy and upgrade their VMS will be able to profit from the changing market. As the number of businesses who are looking for external talent increases, alongside the proportion of flexible workers that each business hires, so the competition for talented workers will increase.
These workers are specifically looking for the soft aspects of external workforce hiring that only Gen 3 can provide. Instead of having an entirely procurement-based VMS, organizations should rightly champion a technology-led overhaul of their external workforce.
For many organizations that already operate a VMS platform, this means they need to consider the pains and gains of their current technology. Whilst it may seem a laborsome task to upgrade your system, particularly if it is meeting your current needs, it is essential to future talent planning.
With the fundamental shift in the talent market towards the external workforce, companies should not fall behind by prioritizing the present. Here organizations should not be afraid to innovate. 2022 is the perfect time to overhaul your talent strategy and technology systems. Only those who do will be able to reap the rewards.