staffing employees using software

Last Updated on September 27, 2021

If you’ve heard about vendor management systems or VMS, you may be wondering if they’re right for your staffing firm. You’re looking to grow your staffing business and recruit more workers and employers to keep in your pipeline. However, letting a software application help you manage that process brings up a lot of questions.

Will it really increase your staffing firm’s efficiency? What are the advantages and drawbacks? Plus, there are always things like costs and impacts on how your staffing firm operates. Keep reading to learn about what goes into a VMS, how it operates, and why it might be the right fit for your agency.

What is a VMS, and How Does It Work?

A VMS is a group of software applications, systems, or websites that facilitates the recruitment process. These systems typically help manage the recruitment process for temporary workers. However, some staffing agencies also hire temp-to-permanent employees or match candidates with direct hire positions.

Vendor management systems aren’t necessarily tied to a single staffing agency. A third-party vendor usually uses these systems to let agencies know about positions employers have available. The software electronically distributes job requisition details to all of the staffing firms working with the vendor.

A VMS also can track which agencies submit resumes or applications for open positions. The software produces reports on how many candidates from each of the agencies are submitted and how many are hired. Another VMS reporting feature tracks how many candidates from a staffing firm drop out of the hiring process.

VMS applications are usually cloud-based to make them accessible from the Internet. Some advanced VMS solutions can help facilitate the onboarding process. Others have automation tools for distributing open positions.


A management services provider or MSP can use a VMS to manage the recruitment process for an organization. An MSP typically attracts, screens, and hires temporary workers. Depending on local labor laws, temporary workers may include 1099 and contract employees.

An MSP handles the entire recruitment process for a company. The vendor figures out a recruitment strategy, onboarding employees, managing separations, and other services. These services can include managing payroll for temporary workers, interviewing, and career coaching for applicants.

With an MSP, there are people involved in the process, and they use technology to support their efforts. A VMS, on the other hand, only includes the tech piece. Organizations can use a VMS but need to know how to take care of the non-technical aspects of recruiting.

How Can a VMS Help Staffing Organizations Operate and Grow?

One of the advantages of a VMS for staffing organizations is it reduces the need for a sales force. Your staffing organization won’t have to spend as much time “wooing” companies to find out what openings they have. A VMS also cuts down on competitive tactics and unscrupulous sales tactics among various staffing agencies.

Instead of companies letting certain staffing organizations know about employee needs, a wider variety of staffing firms can get notified. Staffing organizations gain more of an even playing field when it comes to submitting candidates. Since a VMS tracks staffing firm performance, organizations that consistently submit qualified and successful candidates can get a leg up.

The second advantage of a VMS is that staffing organizations can instantly get details on companies’ job requisitions. You’ll know what the employer is looking for in terms of skills, experience, and educational background. A staffing firm will know what the company can pay, how long positions last, and what location(s) the job openings are in.

This advantage helps staffing firms send qualified candidates that match each employer’s requirements. Plus, when companies know there are open positions, staffing organizations can recruit and select candidates accordingly. A VMS helps a staffing organization become efficient when it comes to finding and submitting suitable workers for employers’ review.

Pros and Cons of Companies Using a VMS

The cons of using a VMS include not knowing what other staffing companies are seeing the same job requisitions. You could be viewing jobs that have a lot of competition, meaning other staffing agencies have already sent qualified candidates the employer wants to hire. It’s also possible an employer already selected a candidate from another agency.

Another con is that technology is known for hiccups. If the system goes offline or is inaccessible, you may experience delays in your recruiting process. A VMS also requires you and your staff to be tech-savvy, and there’s a possibility that employers won’t enter accurate or complete information into the requisitions.

However, a VMS can increase your overall efficiency and knowledge of how to price your services. You will also gain more opportunities to work with a variety of employers and repeat business.