As companies take on more contingent labor, some are now beginning to use more information technology to keep track of spending and manage their contingent workforce. This software is called a vendor management system.
A recent survey showed that more than 60 percent of companies are using a vendor management system, up from 30 percent just a few years earlier. Analysts predict that number will climb this year, as well.
This software is expected to help companies get a handle on their expenses for contingent labor and to help them comply with government regulations. Moreover, these systems are especially attractive because staffing vendors normally pick up the tab for them.
The vendor management systems were introduced in the 1990s. They were used to help companies apply for, select and track temporary workers at staffing agencies. They still do that today. The software automates the process of requisition, approval, sending the requisition to staffing agencies, assignment letters, time sheets and invoicing. Today’s VMS also can help manage other types of independent contractors.
The best way to use a VMS is with a managed service provider, according to industry analysts. A recent study examined how well companies were able to save money using temporary workers, how quickly they were able to fill positions and how well they were able to comply with regulations, The study showed that more than half of the companies that ranked the best in these areas used a vendor management system, and two-thirds used a managed service provider.
Businesses that use managed service providers usually have a standardized management process for their contract labor and evaluate staffing agencies on how well they perform.
One big advantage of the vendor management system is its ability to keep track of how much a company is paying for its contingent workforce. And it reduces the time needed to fill positions. Companies using a vendor management system reduce their hiring times by one-third and save more than one-third more than companies that do not use a VMS.
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