What's the Difference? In-House vs MSP Contingent Workforce Programs

As Businesses hire more externally-sourced workers (such as freelancers, temps and contractors), a common question is whether you should manage your contingent workforce internally or outsource it. In this article, we look at some of the challenges in managing a contingent workforce and the differences between in-house vs outsourced contingent workforce management.

What are the challenges of managing a contingent workforce program?

The main challenge with any contingent workforce program is that most companies that manage it internally are doing so without the proper expertise, technologies and processes to gain visibility into program performance.

In fact, most companies are using fragmented processes and manual spreadsheets, with no company-wide approach to standardize the entire program. This leads to rogue spending and a complete lack of visibility into what hiring managers are doing, how much they are paying and how staffing agencies are performing.

This results in businesses having no insight into how much money their program costs, how much money they are wasting due to poor hiring practices and inefficient processes, and why they are failing to acquire top talent.

What are your options when it comes to managing your contingent workforce?

To address these challenges, companies have two options. They can either outsource the management of their program to a third-party with expertise in the contingent workforce category or they can invest in a vendor management system (VMS) to improve how they manage the program in-house.

Here are the top two options most businesses turn to when it comes to improving their contingent workforce management program.

In-House Vendor Management Software

A vendor management system (VMS) is a software that automates and centralizes all of the processes associated with the procurement and management of contingent workers internally. This not only improves all processes associated with your contingent workforce management program, but it also gives insights into program performance that help reduce costs and improve talent quality.

Outsourced MSP Partner

A Managed Services Provider (MSP) is an outsourced partner that manages either all, or part of, your organization's externally-sourced workforce program. This method is a way of outsourcing your contingent workforce program to an industry expert - alleviating your own team from the burden of managing contingent workers and staffing agencies.

Is in-house contingent workforce management right for you?

While many businesses can realize great results by outsourcing their contingent workforce program to an MSP, internally-managed programs may be a better choice for some companies with smaller volumes of contingent workers - where the expense of outsourcing their program to an MSP is just too high.

Managing your contingent workforce management program in-house gives your organization the opportunity to truly focus on its business goals, corporate culture and the ability to gain complete control over its externally-sourced workforce.

The key, however, if you are looking to manage your contingent workforce internally, is to implement a vendor management system.

The right VMS software will help your business monitor and track vendor performance, gain complete visibility of your workforce, automate the end-to-end processes of managing your contingent workers and staffing agencies, ensure contingent workforce compliance and consolidate your vendors (and program) into one centralized location.

Additional Reading

Editors Note: Read a more in-depth view of how to choose whether you use an MSP or in-house VMS in our more recent article:

MSP and VMS: Choosing the Right Model for your Contingent Workforce Program

Here is an excerpt from this article:

Choosing a VMS

Choosing an MSP

Choose a VMS when:

You want to manage staffing agencies internally
You have a smaller or mid-market contingent workforce program
Your annual temporary staffing spend is ~$3M–$30M
You prefer control over vendor relationships
You want to streamline processes and improve visibility without outsourcing
You need automation but not a fully managed solution

Choose an MSP when:

Your contingent workforce program is complex or enterprise-level
You manage multiple departments, locations, or countries
You need dedicated external support
You want supplier management and program governance handled for you
Your team doesn’t have the capacity or expertise to manage the program internally

Organizations that use a VMS independently are typically:

Mid-market companies ($3M–$30M contingent spend)
Organizations with a small HR or procurement team
Companies wanting to modernize without outsourcing
MSPs themselves (white-label VMS to support clients)

Organizations that use an MSP are typically:

Enterprise companies
Highly distributed operations
Organizations lacking internal bandwidth
Companies with complex compliance or high-volume hiring needs

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

The Conexis VMS Difference

Conexis VMS is an award-winning vendor management system built for organizations that want the power of enterprise software without the complexity or cost.

Leveraging the latest technology, Conexis VMS delivers the expertise, reliability and security of enterprise systems, while offering the flexibility, user friendliness and tailored, personal service you require. Learn more about our Company and what makes Conexis VMS different.

Discover the Power of Conexis VMS

Conexis VMS is trusted by staffing agencies, MSPs and leading organizations to modernize and manage their contingent workforce programs. Here's why organizations choose Conexis VMS:

Modern VMS Technology - Built on the latest AWS microservices architecture and Open API
Fast Implementation - Get up and running in under a month, free setup and training included
Fully Branded White-Label VMS - Your Logo. Your Domain. Your Branded Communication
Flexible Pricing - No setup fees, with free implementation, training and account management
Personal Attention - Experienced senior account management from implementation onward

Switching Your VMS or Just Getting Started?

We work with teams at every stage, from first-time buyers to companies replacing outdated platforms that can't keep up. Either way, we'll show you what a modern VMS looks like, up and running in under 30 days.