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July 12, 2021

The Problem with VMS's Underserving Businesses

Lauren B. Jones of  Leap Consulting Solutions founded her firm for one reason above all others: she saw that small, medium, and minority-owned staffing businesses were underserved. She wanted to help the smaller fish better compete with the larger fish in the recruiting pond, by assisting them in making educated and innovative decisions on technology.

Jones not only does this with clients, but also as co-host of the  You Own The Experience podcast, where she recently took the opportunity to stand atop her soapbox and explain the issue of technology providers underserving small- to medium-sized businesses (SMBs), and how the staffing technology sector might work to level the playing field.

serve all firms

At the risk of overwhelming you with acronyms, let’s talk about the relationship between SMBs, vendor management systems (VMSs) and managed service providers (MSPs).

Many MSPs are quite egalitarian. They utilize master service contracts that are designed to offer opportunity to those who need it, by making it obligatory for the MSP to engage with minority-owned businesses to serve a percentage of the overarching contract. Usually this contract is also engaging a VMS, which these small companies need to engage with in order to contribute as they need to.

The problem? VMSs have made the technology so expensive. In many cases, prohibitively expensive. While the master service contract does what it can to level the playing field for small and minority-owned businesses, the VMS part of the equation will often undo all that good work.

At its most effective, VMS technology is amazing, particularly for minority-owned businesses. It encourages group participation, it grants the business the ability to compete with larger players in the market, and it enables them to grow in markets and geographies in which they may not currently have a presence.

But by making their services so prohibitively expensive to the little guys, VMSs and other technology providers are essentially cutting themselves off at the knees. Not only does it make a master service contract difficult to deliver, it also curtails or prevents the development of these minority-owned businesses. By pricing the small fish out, technology providers are in essence stunting the growth of their potential customer base.

price solutions appropriately

The solution is simple. Technology providers must think of SMBs and minority-owned vendors when they put their pricing together. If they want to serve the larger master accounts in a more robust way, and allow more organizations to participate and innovate in the industry, they cannot continue to apply rates that the small fish can’t afford.

Jones’s message to technology providers: this isn’t just an opportunity to line your own pockets. You have a responsibility to make it affordable for minority-owned businesses to participate in our industry.

Let's hope that they hear us.