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What is Vendor Management System (VMS) in HR and Recruitment?

Vendor Management System (VMS) in HR and Recruitment Process Outsourcing

A vendor management system is a tool that is used by the recruiting department of companies and by staffing agencies for managing the vendors or recruitment process partners. You might wonder how it works and why do we need to have such a system in place? Let us look at all these questions in detail.

Vendor Management System (VMS) is a platform to connect market Suppliers/Vendors with different proposals & quotations with the end user.

VMS in Recruitment/Staffing Industry refers to the processes associated with procuring and optimizing your contingent workforce with staffing agencies to receive the best value from your vendors, who offer your organization exceptional staff solutions services.

It is web or internet-based, which enables you to enhance and manage your staffing solutions & services efficiently. It simplifies the complete process of sourcing and managing contingent staff.

1. Key Features of Vendor Management System

There are a few key features to this system that will help you to achieve the below:

  • Ability to gather insightful hiring metrics
  • Option to onboard contingent staff members with ease
  • Initiate, automate, and conduct transactions
  • Gather data related to payroll

2. Benefits of VMS

VMSs are used to manage and collate submissions from candidates. It also initiates the hiring process for temporary positions by issuing temp requirements to staffing organizations.

  • Automation

  • Process improvement is needed in the HR world via automation, giving more time to the recruiters so they can be way more effective in their field of expertise: searching for top talented job candidates.

    A VMS brings out many opportunities for these process improvements, especially with the capacity to automate and centralize the interactions and processes between a company and the staffing agencies they work with. With the help of VMS, HR professionals have the support of a platform that gives them full viewability into the exchange of the data that flows to and from the recruitment agencies they work with.

  • Cost Effective

  • Staffing agencies typically ask for a markup ranging from 25% to 100% of a hired worker’s wages. A VMS is a vital tool that can help ensure accountability for staffing agencies. This gives HR professionals an online platform to measure the effectiveness of all the staffing agencies they collaborate with. Also, they can make well-informed, cost-effective decisions in determining which staffing agencies are performing and which are not very effective.

    VMS systems provide other cost-saving opportunities, like giving HR professionals the ability to get and analyze perfect payroll data and helping them avoid unnecessary expenses.

  • Reporting Metrics & Risk Mitigation

  • A VMS system provides recruiters with a powerful resource to draw out helpful performance metrics that help you track the effectiveness of the dollars your organization is spending on the service of staffing agencies.

    It gives recruiters an easy-to-use platform to ensure that your hiring processes and the staffing agencies that you rely on continue recruiting and onboarding new talent in a manner that remains compliant with government regulations.

    VMS makes the entire hiring process easier right from the requirement collection phase. Companies can add their requirements to the tool; from there, the requirements get forwarded directly to the staffing agencies. A VMS system also automates interview scheduling, job offers and billing onboarding and off-boarding activities. Hence, it becomes much easier to hire temporary, contractual, and permanent labor.


The use of VMS makes the management of an otherwise complicated recruitment process more accessible. Most organizations have shifted their bases to a vendor management system for its benefits in terms of cost, efficiency, and transparency.

Apart from that, there are a lot of advantages of outsourcing the staff, such as zero sick days, round-the-clock assistance, a dedicated team and much more.

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