What is the difference between MSP, VMS & RPO?

Navigating the world of recruitment can be confusing in today’s dynamic talent landscape. Three acronyms often come up: MSP, VMS and RPO. But what exactly do they mean, and how can they help your small or medium-sized business?

The abbreviations stand for Managed Service Provider, Vendor Management System and Recruitment Process Outsourcing, respectively. Each plays a distinct role in the recruitment landscape, so organisations need to understand the differences to effectively enhance their talent acquisition strategies. 

What is a Managed Service Provider in recruitment? 

Imagine a dedicated recruitment expert handling all your temporary staffing needs. That is the power of a Managed Service Provider (MSP). An MSP goes beyond simple supplier management, giving you access to:

• A scalable model for temporary staff fulfilment that can adapt to your evolving needs.
• Ownership and accountability for the quality of vacancy fulfilment beyond cost management.
• Trusted advice on a range of recruitment matters.
• Strategic workforce planning and solution expertise.

The MSP market is experiencing explosive growth, fuelled by the increasing demand for flexible workforces, remote workforce management and a focus on business continuity, among other factors.

Pros

The range of benefits of MSPs offer are undeniable. 

• Their process excellence ensures efficiency, while cost savings are achieved through their expertise in vendor negotiation and market intelligence. 
• They leverage innovative technology to deliver talent analytics, empowering businesses to make informed hiring decisions. 
• By outsourcing temporary recruitment to an MSP, you can free up your team to focus on core business functions, confident that your contingent workforce is managed flawlessly.

Cons

MSPs can be an investment, which may be beyond the reach of family businesses and startups. However, it’s worth prioritising the outlay as this holistic solution can quickly pay for itself. Doing your own recruitment without a targeted strategy can cost more in the long run. Leaving positions unfilled can also put a financial strain on your organisation.

What is a Vendor Management System (VMS)?

If you’re looking for a less comprehensive solution that focuses more on tech, a Vendor Management System (VMS) is a good option. This type of software platform operates to a set of pre-configured rules, decided between you and the VMS partner often referred to as a Neutral Vendor, giving you better visibility of and control over:

• Supplier management
• Order distribution
• Consolidated billing and reporting
• Collecting candidate submissions
• Scheduling interviews and managing job offers
• Handling billings and timecards
• Risk mitigation and legal compliance
• Headcount tracking and real-time fulfilment insights

Pros

The global contingent workforce is rapidly growing, with researchers predicting the market will reach $325.7 trillion by 2028[1]. Recent data also shows a 17% increase in the number of temporary workers in the UK.[2] This trend underscores the need for efficient data management solutions like VMS. A Neutral Vendor can negotiate keen and uniform pricing on behalf of their client – but they’re only one part of an ideal contingent talent workforce solution.

Cons

VMS has its benefits, but it lacks the flexibility, quality control and innate ownership over the quality of talent supplied compared with an MSP. A Neutral Vendor neither owns the agencies it is dependent on for supplying staff to your vacancies or the relationships with the critical talent communities who you hope to have as temporary staff. In complex and often competitive labour markets, MSPs can think outside the box to solve talent challenges such as diversity and inclusion, that sit beyond the reach of cost reduction.

RPO Elevating your permanent recruitment needs

Recruitment Process Outsourcing (RPO) takes your permanent hiring to the next level. Imagine a recruitment specialist assuming complete or partial control of your talent acquisition, from sourcing and screening top candidates to onboarding new hires. RPO providers offer unparalleled flexibility and efficiency to the hiring process, reducing recruitment costs and streamlining the procedure. They ensure compliance, provide access to state-of-the-art technology, and deliver advanced analytics to optimise your hiring strategy. The result? A diverse talent pool with a reduced turnover and the confidence of knowing you are attracting and hiring the best candidates in the most efficient and cost-effective manner.

Pros

RPO providers bring efficiency to the hiring process, reducing recruitment costs and streamlining the entire candidate-brand experience. They ensure compliance, provide access to state-of-the-art technology, and deliver advanced analytics to optimise your hiring strategy. The result? A diverse talent pool with a reduced turnover and the confidence of knowing you are attracting and hiring the best candidates in the most efficient and cost-effective manner.

Cons

While an RPO gives you access to a recruitment expert, it only covers permanent staffing. It’s generally a solution deployed on a long-term basis and better suited to larger organisations with ongoing recruitment needs.

Getting the perfect fit for your business 

MSPs and RPOs are service providers involved in a wide range of recruitment activities, including workforce management, market trends analysis and strategic responses, employee value proposition (EVP), supply chain management and regulatory changes. On the other hand, VMS is a technology platform, offering the ability to pre-programme a set of business processes and supplier network parameters, centralising management of fulfilment processes and with the enhanced management of a Neutral Vendor, achieves savings on the cost of supply across an agency network.

Understanding these distinctions is crucial to optimise your talent acquisition strategy. Whether you choose an MSP, VMS, RPO or a combination, Blue Arrow's expertise can help you find the perfect solution for your unique needs.