Remember back when offshoring was all the rage? Companies thought setting up an office in India was the Holy Grail for saving money, but it was actually a disaster. Time differences, communication issues, and employee frustration all accounted for causing more harm to a company than the money spent to have a unified team in one area.

Today, companies are employing a new hiring method to try and counter costs with the use of Vendor Management Systems. A VMS is a computer program that regulates staffing services and provides candidates to a company. Just like when a man takes steroids in hopes to get buff, companies who use a VMS often don’t take the long term negative effects into account. The goal is to get a greater flow of candidates for a reduced cost. However, this process causes a drastic reduction in quality, talent acquisition, and retention, and is much like throwing mud at a wall as fast as possible and hoping you get a few throws to stick.

Take a look at the leaders in each market segment and think about what sets them apart. Most of the time, success is earned by the quality of the employees that are hired. One cannot simply close his eyes and pick a candidate in order to get a good one. A job gets posted and the VMS shoots as many resumes towards it as possible. The hiring manager is then forced to weed through a cesspool of resumes in hopes to find a good one. This process is time consuming and not effective.

So you say that the VMS supplied you a candidate and the money saved looks good at the moment. Two months go by and this candidate is not working out. He is a total jerk and already caused Cole, your amazingly talented and awesome blogger, to quit. Now you have two open positions, one of which was already filled by a person who was an asset. You return to the VMS and receive another poor employee that quits after one month. Suddenly these money saving techniques seem a little less amazing. In the long run, the VMS method is actually less cost effective because you are not paying for quality or screening for the right fit.

A VMS also lowers the amount of candidates you are getting supplied to you by vendors. A VMS charges the vendors anywhere from 2-4% in order to reduce the cost to the company. A good recruiting company makes about 8-10% profit, but most only get 5-6%. A VMS, therefore, takes a good portion of the revenue away from the vendor companies, who then no longer think doing business with the client is worth it.

Let’s face it. Starbucks did not get to where it is today by hiring chimpanzees. They may be cute, but they cannot supply the consumer with good customer service and most would rather throw poo at their fellow employee chimps than work together with them. Brand promise is delivered by the employees who work for you, and so more screening time is needed to assure a person of quality is found. Commoditizing talent is never a good thing. People-centric recruiting is still the most profitable way to find employees in the long run, unless of course you like hurling mud at a wall and hoping for some good luck.


Resource is a team of passionate professionals dedicated to helping individuals and organizations elevate and enhance performance levels in the workplace. For over 35 years we have helped companies of all types and sizes solve their most critical talent challenges through advisory and delivery of smart, integrated and tailored performance based programs and solutions. From staffing and recruiting to training and development, we are all about supporting workplace environments where employees thrive!

Our value proposition is simple: We help our clients increase employee retention and accelerate business performance.





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Comment by Anudeep Shringi on March 7, 2011 at 4:08pm

Well I do not completely agree. VMS software or any other one meant to make Recruiting process easy & fast. still the final decision is of responsile recruitng personnel. The VMS system are like any other IT services which makes company or indivisul work much easy. Might be there are some VMS or ATS or SaaS services for  recruitng which really do not keep check on resume before sending to the recruiting authority but this is not the same with every provider.

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