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What artificial intelligence tools should you expect in a Vendor Management System?

Managing talent is an increasingly expensive and time-consuming process. Since the pandemic there has been a shift in the talent industry from full time employment to flexible and contingent work. This has put more pressure than ever on hiring managers and the stakeholders of the business processes used to manage vendor relationships. This is also true of the technology platforms that these stakeholders use to manage their talent.

Luckily, vendor management software has caught up with the times. Rather than relying on human input, the computer software can now leverage AI and machine learning to automate data analysis and talent management processes. But if you are looking to move your talent management onto a vendor management solution or if you are just looking to update your VMS, what AI tools should you expect from it?

Technology in the talent industry

Technology in the talent workforce management industry is constantly evolving. Existing systems and existing processes are becoming increasingly outdated in the changing talent market. New advances blend with new demands from the market to ensure that new innovations are constantly erupting. Indeed, the latest of these that has hit the talent industry is the use of artificial intelligence in vendor management.

Rather than relying on human input for data management, it means that artificial intelligence can use natural language processing, crunch data and make predictive decisions on behalf of hiring managers. This allows for not only the shortlisting and curation of talent but also control over candidate engagement, reducing the need for human interaction in the application process.  In this article we examine Vendor Management Systems AI innovations and the impact they are having.

While this market was estimated to be worth $1.75 billion in 2017, it is expected to grow to at least $3.1 billion by 2025 and may even go beyond that as the global pandemic has shifted how and where we work.

It’s hard to argue that AI is the next big thing in the talent industry; but what level of impact has it had so far?  And in what areas does it still have room to explode?

How has vendor management software evolved?

The original role of a VMS was to manage indirect spend, record vendor information and manage vendor contracts and the supply chain that served up talent.  And yet, in less than a decade, Vendor Management Systems (VMS) have transformed from simple systems of record to functional software as a service platforms with supplier relationship management and invoice processing. More recently, the VMS market has shifted towards talent engagement and career management, supporting internal talent pools and the direct sourcing of candidates.

As the scope of a VMS has grown beyond its initial design concept, the value of data analytics and predictive decisioning has become intrinsically more valuable. For most companies, artificial intelligence and automation have become staple components to facilitate external talent recruitment at scale, from hundreds of candidate records to millions. As the result of this opportunity to bring more value, some providers are moving beyond the definition of a VMS towards the delivery of a federated computing system for end-to-end external workforce management.

Who are the stakeholders?

The changing ownership of the external workforce topic in the boardroom

The stakeholders of talent management are changing. Traditionally the external workforce has been the domain on procurement teams and procurement leaders. This is because external workers were seen as another supplier that should be controlled through spend management software rather than another aspect of your total workforce. With the shift towards flexible working this has changed. As the scale of the external workforce has grown both in size and in strategic importance as a resourcing option, the Human Resources  (and more recently, the Chief People Officer role) has broadened its interest in on-demand staffing as a solution to talent shortages.

Human Resources

People are at the heart of any organization’s workforce. This is now being recognized in vendor management software. Rather than being created specifically for managing procurement spend, these platforms are starting to include capabilities to manage the relationship between businesses and candidates. This means that organizations can build internal talent pools which will give them a workforce on-tap. As many workers turn to the external workforce to build careers, rather than just look for jobs, having a VMS that can maintain this is essential.

To enable this, vendor management systems need to be able to sort through candidate applications, use business intelligence for contract management and engage with candidates through natural language processing. This requires the system to think like a human brain, and not see customer data as simply vendor contracts but as vendor relationships that should be maintained. With the help of artificial intelligence, this should be done without human supervision and instead by the VMS using human intelligence.


Even as talent management has shifted to include human resources as a stakeholder, procurement processes have also changed. While the supplier data and spend analytics will remain the same, the actionable insights will change. As past data analysis was based upon cost efficiency and managing risks of different vendors, so this approach has to be translated to the entire workorce. Here, businesses need to find the optimal talent mix for their organization. This will be different depending on the type of industry your business is in and other factors such as the size and the scale of your operations.

To do this, procurement managers need to use their VMS to analyze data from the operation of their workforce to determine what roles are best suited to external and internal candidates in turn. Business critical roles, such as those that deal with company compliance or IT infrastructure are usually best suited to internal candidates so that there is a constant presence in the business for these roles. However, for other roles such as content creation and administrative tasks that are not business critical, utilizing the external workforce can often prove more efficient. This is best achieved by using artificial intelligence to evaluate candidate performance and other workforce metrics. Only then will procurement professionals be able to find the optimal talent mix for their organization.

Does AI have a big part to play in the future of work?

The biggest, and most disruptive, change influencer in the talent industry over the past few years has not been Vendor Management System AI but rather the shifting of employers’ and employees’ priorities in the post-pandemic world. Workers have greater demand for increased flexibility and working conditions and many have chosen to use the pandemic as a route to rethink their careers altogether.

This has left employers and the talent industry with unique challenges and record-high job vacancies. While the skillsets and talent among the workforce are arguably there to meet this deficit, it still poses a huge workload for both human resources staff and recruitment bosses to fill these gaps. Imagine the number of hours it would take a team to work through the hundreds and sometimes even thousands of applications for just one role. A taxing thought. Even more so when a good proportion of those applications can be easily filtered out because they lack the specific skillset and requirements needed for the role. This is time that can be saved through the adoption of AI.

What AI tools are there?

Artificial intelligence can be used by many tools and business applications across different internal platforms. However, when it comes to a VMS there are a few cheeky tools that can help businesses automate their talent management processes.

1. Contract Intelligence

Specifically, AI can be used by intelligent vendor management systems to provide biometric scoring for quick candidate shortlisting alongside AI-based pre-assessment solutions for fast hiring. This provides recruiters with faster access to curated talent and removes the burden and demand on human resources.

2. Contacting Candidates in human language

Not only this but new talent technology can engage with clients and customers on behalf of recruiters as AI-enabled chatbots and emails can help with increased candidate engagement. As a result, it can replace all the manual tasks and heavy lifting that would traditionally be carried out by recruiters such as scheduling tools and the feedback process; more evidence, were any needed, that AI represents an essential evolution in the talent industry as both a time and cost-saving measure.

3. Deep learning and predicitive decisioning

Here it can give an automated analysis to recruiters so they can be better informed of hiring decisions, build a spend analysis and have a much clearer picture of their wider workforce. Specifically, it can help to identify a candidate’s social presence, providing important background information for a recruiter. Also, it can help to provide market-rate analysis to give a pricing reference for a position that helps to cut down costs. In this way, AI can help to provide an analytical overview for recruiters that proves invaluable in a fluid and everchanging employment market, especially post-pandemic.

4. Offering new roles

Even after the direct recruitment process, AI technology in the talent industry can use business intelligence to provide insights into when workers plan to return to work by giving them direct access and a unique user journey. Using all the vendor data available to them, vendor management platforms can score vendor performance and suggest candidates for your business to offer new roles to. This not only allows recruiters in their workforce planning but can also help to retain niche talent by offering flexible working and other market-driven perks. This all shows that AI is already playing a leading role in talent technology and vendor management systems and is undoubtedly the ongoing revolution for recruiters in the industry.

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Vendor Management System AI adoption

In response to these huge shifts in the talent industry, Vendor Management System AI has already been adopted by large numbers of companies. Indeed, in one survey 57% of hiring managers were found to be already usiang a Vendor Management System with AI in some form of the recruitment process. This number rose to 82% of recruiters who planned to adopt AI tools in the near future.  This shows that artificial intelligence technology already has significant support from the industry and will certainly be more widely adopted.

While artificial intelligence in vendor management platforms is the perfect tool to respond to the pressures that the talent industry faces in the post-pandemic world, many hiring managers are yet to realize the full disruptive potential that AI has to offer. The AI applications that are offered in next generation platforms are often underutilized by businesses. Here, business leaders need to trust new data to the ai algorithm in many of the tools offered on the platforms to help them reach their optimal talent mix. Only then will they be able to achieve the levels of automation and efficiency that artificial intelligence promises.

Overcoming the Technology Debt

Businesses that choose not to invest in their own in-house tools are not precluded from accessing the external workforce.  Public gig working platforms provide companies with a way of diversifying their workload and outsourcing their project deliverables on a defined payment basis. This provides a good jump off point for any business who is looking for a workload that demands a skill set they do not currently possess internally.

While this does provide access to the external workforce market on a smaller scale, it excludes those companies from the long-term relationship building and stability that the creation of a talent pool and the technology platforms provide.

The adoption of intelligent VMS’s and the creation of a direct sourcing talent pool will allow bigger companies to deploy their external workforce at scale.

Here, the AI-enabled market intelligence will allow larger employers to score and sort candidates based on their suitability for the role. This will reduce the overall burden on recruitment teams and hiring managers.

What does the future look like for AI enabled talent solutions?

For many recruiters then, artificial intelligence adoption in vendor management platforms has become essential to tackle the fluidity of the talent industry. The analysis into the broader market structures that AI technology provides recruiters is vital information to remain agile and informed through periods of change. This works alongside AI’s assessment capabilities that allows the curation of talent, strategic sourcing and engages with customers on behalf of recruiters; significantly cutting the human resources burden, saving both time and money. It is therefore clear that AI technology has had an overwhelmingly positive impact on the talent industry. It can provide all the heavy lifting for recruiters, giving data-driven approaches to hiring decisions that secure AI technologies place in the future of the talent industry.  More than that, those laggards yet to adopt AI-enhanced software risk becoming frozen out of the ever-changing workforce market.

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