a contigent worker working in her apartment in a city

VMSs. MSPs. The human cloud and contingent workers.

You know that the widespread growth of technology over the past decade has allowed new ways of working to take hold. But with so much different terminology being thrown around, how can you make sense not just of what these new options involve, but how your company can leverage them for maximum competitive advantage?

Here, we’ll explore the massive growth in contingent talent worldwide, as well as the lingo your organization needs to understand to tap into them.

Why You Should Care About Contingent Workers

According to Randstad Sourceright’s Q4 2017 Talent Trends report, which surveyed 700 global human capital leaders in 15 countries, 61% of employers plan to replace up to 30% of their permanent positions with freelancers, gig workers, and independent contractors to become more agile and flexible in the changing economy.

In part, this increased interest in contingent workers stems from perceived talent scarcity. Further data from Randstad suggests that, although 69% of companies surveyed expect the talent gap to create challenges in the near future, nearly 40% believe they can mitigate its impact with an integrated hiring strategy.

However, bringing on contingent workers offers several other benefits as well, including:

  • Reduced overhead expenses compared to in-house employees
  • The flexibility to partner with contingent workers on a limited term, per-project basis
  • The ability to tap into a broader pool of talent than that which is available in your geographic area

Contingent Workforce Terminology

Pursuing an integrated hiring strategy—whether to eliminate talent gaps in your industry or to complete projects faster and more cost effectively—requires an understanding of the lingo.

Though you may already be familiar with the definitions of phrases such as “independent contractor” and “freelancer,” you’ll want to get comfortable with the specific language defined below:

  • Vendor management system (VMS): A VMS is a central system (typically, a SaaS product) through which enterprise companies can oversee many aspects of their contingent workforce ecosystems. This might encompass everything from publishing project needs and selecting talent, to onboarding new workers and analyzing performance. See how Upwork Enterprise can be used to optimize your chosen VMS.
  • Managed service provider (MSP): While a VMS is a tool, an MSP is an agency that uses VMSs to support companies that require large pools of contingent workers.
  • Freelancer Management System (FMS): Though FMSs operate similarly to VMSs, VMSs aren’t generally well equipped for supporting contingent talent in diverse locations. The best FMSs offer access to a broad, worldwide pool of talent, as well as all the tools required to engage them effectively.
  • Vendor neutrality: The phrase “vendor neutral” is often discussed in the context of MSPs; a “vendor neutral MSP” is one that fulfills openings through all qualified suppliers, rather than granting preference to a small group. Vendor neutrality prevents enterprise companies from missing out on the opportunity to bring on top talent that may be represented by a non-preferred supplier.
  • The human cloud: Though many different definitions are used to describe the human cloud, Staffing Industry Analysts offers the following, “An emerging set of online/digital marketplaces where talent and those looking to hire talent can find and engage one another in a work arrangement.”

How and When to Engage Contingent Workers

Clearly, there’s some overlap in the definitions above. An FMS might be part of the human cloud, while an MSP could use both VMSs and FMSs to fulfill their openings.

Choosing the right solution for utilizing contingent talent for your business comes down to answering the following questions:

  • Do we need onsite workers, or can our tasks be completed remotely?
  • Do we need part-time, full-time, or project-based talent?
  • How long will we need contingent talent?
  • How hands-on can we be in selecting contingent talent?
  • How much time is required to onboard talent for the project?

Let’s look at two hypothetical regional hospital organizations to see how appropriate contingent talent solutions might differ in execution.

Organization A is planning to roll out a major rebranding campaign. While its in-house marketing team can handle the bulk of the work, part-time, limited-term support is needed to produce website articles and newsletter updates to communicate changes to key stakeholders.

Organization B, on the other hand, is facing a nursing shortage and needs to bring in traveling nurses to fill its shifts. All of the nurses must be quickly onboarded with proper training to ensure the hospital’s standards of care are met.

While Organization B will likely be best off working with a vendor neutral MSP that has experience recruiting and onboarding temporary nurses, Organization A has more flexibility in fulfilling its needs. Organization A can use FMSs or reach out directly contingent talent who have the necessary writing and marketing skills—no matter where in the world they are.

Getting Started With Contingent Talent

Because there’s no “one size fits all” approach to tapping contingent talent, there’s also no wrong way to do it.

Carefully consider your company’s needs, and educate yourself on the different tools, resources, and systems that are available. Test the waters with small projects, then expand as necessary to take full advantage of the benefits of today’s contingent workforce.