VMS vs MSP: Choosing the Right Model for Your Contingent Workforce

Are you considering whether your organization requires a VMS or an MSP to help you in managing your contingent workforce? This article examines the difference between a VMS and an MSP, and how they work together to power your contingent management program.

MSPs and VMS Partnership: How Are They Different and How do they work together to Power Modern Contingent Workforce Programs?

Managing contingent labor is more complex than ever. With rising talent needs, multiple staffing agencies, compliance requirements, and cost pressures, organizations need streamlined, centralized solutions. Two of the most common models are:

• Using a Vendor Management System (VMS)

• Partnering with a Managed Service Provider (MSP)

Many leaders ask: Do I need a VMS? Do I need an MSP? Or both?
This article explains the differences between an MSP and VMS, the benefits of each, how they work together, and how to choose the right model for your organization.

What is an MSP? 

A managed services provider (MSP) is a company that assumes the responsibility of managing your entire non-employee workforce. This involves outsourcing the complete management of non-employee workers and staffing agencies to an external provider, rather than having it handled by your company’s HR or procurement department.

• An MSP handles all aspects of managing your contingent workforce and staffing agencies, including sourcing workers, managing vendor relationships, evaluating vendor performance, processing payments, and more.
• MSPs can be either vendor-neutral or not. Some managed services providers recruit contingent workers from their own pre-approved database of staffing agencies, while others do not have exclusive ties to specific staffing agencies.

What is a VMS? 

A vendor management system, also referred to as vendor management software, is a web or cloud-based platform designed to help companies manage, automate, and centralize the oversight of their non-employee workforce in one place.

• A VMS automates all tasks related to managing your contingent workforce and its vendors, covering essential processes like sourcing, onboarding, time tracking, approvals, payments, and more. This automation saves your organization significant time and greatly enhances internal efficiency.
• Beyond automating these tasks, consolidating a non-employee workforce program provides strategic insights into its performance. It offers companies clear visibility into vendor performance, identifies areas of unauthorized spending within their non-employee workforce program, and assesses whether staffing agencies are meeting set targets

MSP vs VMS: Alternative Approaches

It's crucial to understand that an MSP and a VMS are not fundamentally different solutions; rather, they represent alternative approaches for managing your contingent workforce program. Utilizing a VMS internally simplifies the management process, whereas an MSP handles the process externally, allowing your internal resources to focus elsewhere.

MSPs need a VMS to manage your Contingent Workforce

• If you are a larger company, it's likely you have a managed service provider. The managed services provider will use a vendor management system to manage your contingent workforce on your company’s behalf.
• In today's world, some MSP have an existing relationship with a VMS and in other situations, their client's may have their own VMS that the MSP will partner with. 
• For many organizations, an MSP brings extensive VMS experience, and could offer additional talent pools necessary for agile growth, along with strategic consulting.

Remember:

An MSP should not run a program without a VMS
A VMS, however, can run independently without an MSP

Questions to Ask to Determine Which Model You Need

Here are a few questions to ask yourself, to help you determine which model is best for you: 

1. Do we have internal resources and expertise to manage staffing suppliers?

• If yes → VMS may be the right choice
• If no → MSP may be the right choice

2 - How much contingent labor spend do we have annually?

• Over $2 MM  → should have a VMS
• Under $70M → VMS-only may be ideal
• Over $70M → MSP-supported model is common
  

3 - Do we need full control over relationships with staffing agencies?

• If yes → VMS-only model is a better fit
• If no → MSP supported model is common

4 - Are we managing multiple staffing vendors?

• If  25+ → should have a VMS
• If 50+ → MSP-supported model is common

5 - Are we managing multiple locations or complex hiring needs?

• If yes → MSP + VMS creates consistency at scale

6 - Do we want to own the technology or let an MSP choose it? 

• If yes → VMS-only model is a better fit
• If no → MSP supported model is common
• Many companies now choose their own VMS and require the MSP to use it

Benefits of Each Model 

Benefits when you choose your own VMS:

• You maintain data ownership

• You keep control over supplier access and configuration

• You avoid being locked into a single MSP’s preferred system

• Transitioning MSP partners becomes easier

• You ensure the VMS meets your requirements—not the MSP’s

Most MSPs readily use the client’s VMS.  Some MSPs even prefer this model because it aligns them with client requirements and ensures transparency.

Benefits of the MSP bringing their own VMS:

• Faster deployment

• Standardized processes

• Preconfigured workflows they already know

Benefits of selecting your own VMS and having the MSP operate within it:

• You stay in control

• Your technology is consistent even if you switch MSPs

• The VMS is tailored to your internal needs

• Avoid vendor lock-in

• Independent data visibility

MSP vs VMS: How to Choose the Right Model for Your Organization

1. Start with budget and workforce size
2. Assess internal capacity and expertise
3. Identify your need for control vs. outsourcing
4. Evaluate efficiency gaps (spend leaks, compliance issues, long cycle times)
5. Ensure you choose a modern VMS that works for both scenarios

The right model depends on your internal resources and strategic goals - but the right VMS is essential in every scenario.

Final Thoughts

Choosing between a VMS, an MSP, or a combination of both ultimately comes down to your organization’s resources, goals, and the level of control you want over your contingent workforce program. A VMS provides the technology foundation - centralization, transparency, automation, and data-driven decision-making - while an MSP adds dedicated expertise and operational support for organizations that need additional capacity.

Many companies start with a VMS to modernize their processes and gain visibility, then introduce an MSP as their program grows in size or complexity. Others prefer to keep management in-house and rely solely on a VMS to streamline workflows and strengthen supplier relationships. There is no single “right” model—only the one that best fits your structure, capabilities, and long-term strategy.

Whether You Use a VMS, an MSP - or Both - Conexis Is Your Best Option for your VMS Partner

Conexis VMS gives organizations and MSPs the flexibility to build a solution that fits their needs:

✔ Manage your own program with our VMS
✔ Work with an MSP - who can easily operate inside Conexis VMS
✔ White-label the platform for MSP delivery
✔ Ensure simplicity, visibility, and cost control

No matter which path you choose, Conexis VMS provides the modern technology foundation your program needs.

Why Choose Conexis VMS (VMS-Only Model)

Perfect for organizations managing their program internally.

• Lightning-fast deployment (live in weeks, not months)

• User-friendly design—no heavy training required

• Real-time analytics and spend visibility

• Compliance and documentation hub

• Automated processes for sourcing, onboarding, time, expenses, and invoicing

• Transparent, flexible pricing with no hidden fees

• Cost-effective compared to enterprise VMS platforms

Why MSPs Choose Conexis as their VMS Partner (MSP-Supported Model)

We proudly partner with many leading MSPs

• Fully white-label ready

• Configurable workflows to match MSP processes

• Fast onboarding for new clients

• Supplier-friendly design simplifies adoption

• Robust reporting for program governance

• Ideal for MSPs serving the mid-market

• MSPs can scale their portfolio with an affordable, modern VMS

MSPs use Conexis to deliver a better client experience, faster implementations, stronger visibility, and measurable ROI.

Learn more about the Choosing the Best VMS 

Download a copy of our Free VMS Buyer's Guide

Articles for Managed Service Providers

From ways to grow your business, to reducing cost, automating your program or delivering more value to your clients, read our library of articles for MSPs 

MSP & VMS Partnership

• Why MSPs Need a VMS Partner, not just a Vendor
• MSP and VMS Partnerships - How do they work together?
• MSP vs VMS - What's the difference?
  
• The Conexis VMS Solution for MSPs

VMS Technology MSPs need 

• Open APIs - A Game Changer for MSPs
• MSPs: How to get open access & control of your own data with a VMS
• Why MSPs need a more customizable VMS to be competitive
• How Conexis with our Open APIs Delivered for our latest MSP Partner!

Growing your Business with a VMS

• MSPs & Staffing Agencies: Grow your business with a White-Label VMS
• Why Mid-Market MSPs need a Mid-Market VMS
• The MSP Advantage: Why you should add a Mid-Market VMS to your Toolkit

Choosing the Best VMS for your MSP

• MSPs: 5 Key Factors to Consider when choosing the Right VMS
• Legacy vs Modern VMS - What's the Difference?
• The 4 Key Features that define an Exceptional VMS for an MSP
• Can I switch my VMS without switching my MSP?
• Conexis Case Study - How an MSP improved fill ratios, client acquisition & profitability
• Conexis Case Study- How Open APIs delivered results for our MSP Partner

Moving from Spreadsheets to a VMS

• 6 Reasons to switch from spreadsheets to a vendor management system
• How to get started with a VMS

Adding Value with a VMS

• How MSPs can leverage VMS software to deliver higher ROI for Clients
• MSPs - 3 Ways to Immediately add Value to your Client's CWF Programs
• VMS & MSPs - Why User Adoption is important
• Why Customer Care is important - 5 VMS Best Practices