Increasing need for agility & self-sufficiency in your VMS

On December 8th (2022), we hosted our online webinar, ‘The increasing need for agility and self-sufficiency in your VMS solution.’ Hosted by Nétive VMS UK colleagues, we were joined by the brilliant Melanie Forbes, MD of APSCo Outsource, who shared some great insights from her 25+ years of industry knowledge.

In this webinar we defined the mid-market by the spend of a program. For Nétive VMS, this is a programme expenditure of between five and fifty million euros.

Please read the highlights from this webinar.  The full webinar can be watched on our Youtube-channel.

What has the impact of the past few years been on the labour market?

APSCo Outsource – Fundamentally, from a UK perspective, we are seeing for the first time ever that we are in what we are calling a fully employed recession. Vacancies peaked at a record this year of 1.3 million, and the actual gap in skills just seems to keep growing. Our unemployment is still at a low record level, and although we anticipate that it will start to increase at the beginning of 2023, we still believe that the growing gap will continue well into 2025 and beyond.

How has the labour market changed?

APSCo Outsource – LinkedIn did a report recently that looked at what employees want, and fundamentally, they want compensation and benefits. But at the top of that list are flexibility, balance, and learning and development. So I think there’s a big shift in terms of what people need.

We’re also seeing key investment in certain parts of the country. For example, the green collar sector who have very ambitious targets, around carbon net zero. But their workforce is not ready for that and is very used to carbon-rich techniques, so they need to upskill and reskill their workforce.

Nétive VMS – This year, Manpower Group reported in their “Total Workforce Index” that  75% of companies globally reported talent shortages. That’s almost double the number from 2015.

Research by Korn Ferry describes this challenge as the “8.5 trillion talent shortage” and their report finds that by 2030, more than 85 million jobs could go unfilled because there aren’t enough skilled people to take them.

Where this demand for outsourced talent rises sharply, the widening supply gap creates a really potent threat to effective sourcing and vendor management, and it has the opportunity to rapidly become a very complex and business-critical issue. And whilst outsourcing does present a whole load of opportunities to those organizations that are seeking talent, it does also demand very powerful management of an often complicated ecosystem.

The opportunities in the mid-market

Nétive VMS – Industry analysts say the global MSP market is worth around $194 billion, which represents roughly 30% year-on-year growth. Back in 2016, Nelson Hall said, “Alone, mid-market companies accounted for about 40% of the overall MSP market share.”

So those numbers mean there’s an absolutely enormous market opportunity available. It is increasingly important that there are solutions built specifically for the mid-market space. Of course, we all know in this market that there is not just one size that fits all and actually many of the services that are better suited for businesses with larger contingent workforces are not necessarily fit for the requirements of these smaller mid-market programs.

The needs and challenges of the mid-market

Nétive VMS – The mid-market is considered to have some of the fastest-growing organisations in the world and as they continue to experience their own growth, they are increasingly looking towards MSP and VMS solutions that can jointly offer them a variety of different outcomes. Including visibility, cost awareness, and efficiency in their operational processes. As well as being able to leverage a more diverse supply chain to gain better access to talent and skills and ensuring compliance to manage increasingly complex legal regulations.

The evolution over the last 10 or 15 years has taken the market from being purely focused on, addressing cost compliance and supply management to seeing organisations actually want much more total talent management capabilities.

Nétive VMS – These challenges really boil down to three things now: cost, configurability, and agility. The typical mid-market client can’t justify spending up to six figures to implement the VMS tooling that would be fairly typical in enterprise markets. I mean, how could they, when this cost would be a significant percentage of their contingent spend in the first place?

Especially when we consider that one of the common key drivers to implement the VMS or MSP in the first place is, cost control or cost savings. We also tend to find that, by their nature, these organisations have a higher demand for configurability and agility than is typically needed within the enterprise market. They need to be supported by tooling that’s configurable enough and agile enough to grow at the same speed that they do.

What do you think some of the solutions to this labour shortage are?

APSCo Outsource – There has to be a real focus on tapping into what we would probably call previously untapped talent pools. It’s interesting that we talk about the skills gap and the need for talent, yet the world reaches a population of eight billion people for the first time. So it’s actually looking across, untapped talent pools but also different parts of the world. If you can work from anywhere in what we are calling, returning to the new difference in how we work following the pandemic, then we have to think more globally than we’ve probably ever thought before.

We’ve also explored using technology, using AI, and skills-based hiring and one of the many solutions that we discussed was actually looking at your candidate pool, looking at the skills they already have. Perhaps in completely different fields from the one you are looking to recruit in, but finding where you have similar workers with similar skills in completely different areas of the business.

Chaos can create, you know, great opportunities. You’ve got to be brave and also look at things through quite a different lens.

Why has it been such a challenge for MSPs to deliver a fit-for-purpose mid-market solution?

APSCo Outsource – Traditionally it was challenging because the commercial modelling had to be so different. It was always deemed that if the spend was too small, it tended to be first generation, so needed lots of people around it. The technology, typically, was very much built to be hugely transactional and very self-sufficient, and a mid-market client, certainly first generation, just doesn’t respond necessarily well to that. They need a lot of support and help in both the implementation and once the program is implemented.

What is changing in the market that means MSPs can now work with more mid-market organisations?

APSCo Outsource – The shift towards direct sourcing has been a big one. For the mid-market, they need specialists and so direct sourcing in the past wasn’t necessarily a consideration. And then as the market has evolved, as managed solutions have evolved, that opportunity to do direct sourcing as well as having a supply chain has meant that the commercials can stand up a lot better. They’re not so many first generations, so as it’s evolved, the opportunities have gotten better.

When we think of a VMS, what do we need to take into account with respect to the mid-market?

Nétive VMS  – It’s agility, it’s configurability, and it’s a low entry barrier.

APSCo Outsource – Relevance is absolutely critical and from the perspective of a mid-market buyer, they want immediate value. They want transparency, control, and cost savings. They want access to talent. They want a trusted partner that can advise and grow alongside their own growth. I think the greatest relationships are ones where we grow together. When I made it the strategy for our business to target the mid-market, as we grew with those organisations, the longevity of those relationships was just so much more than some of those huge transactional managed solutions.

Who is Netive VMS UK?

Nétive VMS  is a Dutch technology organisation founded back in 2003, with a team of just over 50 people with teams in the Netherlands, Belgium, Germany and the UK. Nétive VMS has developed a very mature, multi-tenant VMS solution designed on Salesforce, with integrated ATS, FMS and SOW functionality. This unique product combination has transformed Nétive VMS Suite into a total workforce solution, allowing for the efficient and compliant management of all permanent, non-permanent and project based recruitment. Nétive VMS has in excess of 300 workforce management programmes spread across 14 different countries. Focussed on the mid-market, Nétive VMS works directly, and alongside leaders in MSP/RPO/Total Talent to deliver its innovative technology and to drive maturity in workforce management programmes.