Managing an external workforce across multiple staffing vendors is harder than it looks on paper. According to Kelly's 2025 Re:work Report, 40% of business professional and industrial executives say their organization is already outsourcing or considering outsourcing parts of its workforce to attract top talent, and another 37% are using strategic MSP partners to supplement their existing teams. For organizations buying external labor at any real scale, the vendor relationships behind that workforce have a direct line to program performance. Most companies are leaving measurable value on the table by treating those relationships as a logistics problem instead of a strategic opportunity.
In more than two decades building and managing external workforce programs, I've seen that difference play out consistently. A vendor management system (VMS) gives you the infrastructure to manage your external workforce with visibility and control. But a VMS is only as useful as the program built around it. Programs that consistently perform share one thing in common: disciplined execution around the technology they implement. These eight vendor management best practices reflect where high-performing external workforce programs consistently pull ahead.
Of all the practices that separate high-performing external workforce programs from those that plateau, this one is the most underestimated. When I look at programs that underperform relative to their potential, the gap is more often in the quality of the relationships built around the technology than the technology itself.
Staffing vendors are being asked to bring you the talent that keeps your business moving. Organizations that recognize the weight of that ask tend to see meaningfully better performance from their supply chain than those that engage suppliers purely at the transactional level. That’s because those organizations invest in understanding their vendors' capabilities, missions, and ways of working. That commitment to the relationship should run both ways. The right workforce solutions partner comes to the table with the same curiosity and strategic investment, not just a catalog of services to sell you.
Building that depth takes deliberate effort. That might look like conversations that go beyond order status, a willingness to share context about where the business is headed, and enough transparency on both sides to develop real mutual understanding. Suppliers who know your organization well are better positioned to serve it well.
Part of developing that relationship can happen during onboarding. Most organizations put real thought into how they bring contractors into the business. The onboarding process for the vendors supplying that talent often gets far less attention, and that shows up in performance.
What a new supplier understands about your organization shapes everything that follows. A vendor who knows your business goals, your culture, your hiring standards, and how you prefer to communicate is positioned to serve you differently than one who only knows your job orders. That means sharing context about where the business is headed, walking suppliers through your requisition and approval processes before the first order is placed, and establishing clear points of contact on both sides.
Disorganized vendor onboarding processes can stretch timelines to six months or longer, which is a delay that typically falls hardest on the programs that can least afford it.
In an unmanaged environment, vendor selection tends to be driven by perception: a company's name sounds technical, so they get the IT work; another sounds generalist, so they get the administrative roles. Hiring managers buy from whoever they know, whoever called last, or whoever has always handled a particular need. Vendors get locked into narrow lanes based on reputation and habit rather than demonstrated capability, and organizations lose visibility into what their supply chain can actually do.
A well-managed program replaces that dynamic with data. When every transaction runs through a centralized system, you stop guessing about which suppliers are performing. You know who is responding to requisitions promptly, whose candidates are clearing the pre-screen, and who is consistently filling roles within established rate tolerances. That visibility means workforce leaders are able to make decisions based on actual supplier performance. It can also surface capabilities within existing vendor relationships that were previously going untapped.
One of the most common questions I hear from organizations building out their contingent workforce programs is: how many vendors should we be working with? There's no universal answer. The right number depends on the talent channels you're buying from and the roles you're trying to fill.
In high-volume environments, like a single manufacturing plant sourcing common roles, a smaller vendor pool tends to work better. When too many suppliers are competing for the same workers in the same market, you create confusion for candidates trying to figure out how to get in the door. Fewer vendors with deeper relationships allows for better accountability and a cleaner experience for the talent you're trying to attract. That said, resilience still matters. Your primary vendor should always have a layer of depth behind it so that if they hit a rough patch, your program doesn't stall with them.
That said, there are reasons to widen your talent net. If you need a particular IT capability, a specific engineering discipline, or another hard-to-find expertise, it often makes sense to work with vendors who focus exclusively on that space. Breadth in your supply base matters more when the talent itself is scarce and the cost of an unfilled role is high.
In an unmanaged environment, contract compliance tends to be inconsistent by default. Hiring managers sign statements of work without legal review, labor gets bought off-contract through informal arrangements, and the terms under which agencies are engaged vary from department to department. Each of those gaps is a compliance exposure, and at scale, those compound quickly.
A manageable supply chain is supported by a well-defined, standardized contractual arrangement that applies universally across your workforce vendors. Universal terms create a consistent baseline for how suppliers engage with your organization, such as how workers are classified, what onboarding requirements apply, and what intellectual property and non-disclosure protections are in place. That consistency reduces legal risk and makes the program easier to audit if your practices are ever scrutinized.
It's worth noting that the regulatory environment around worker classification continues to shift. As of March 2026, The Department of Labor has proposed rolling back its 2024 independent contractor classification rule and returning to a more flexible framework. Regardless of the outcome of that proposal, organizations should prioritize getting contractual terms right from the start.
Vendor performance can't be managed on instinct alone. In my experience, the programs that maintain a high-quality supply chain over time are the ones tracking the right metrics consistently and using that data to have informed conversations with their suppliers. Four KPIs tend to be the most predictive:
The above KPIs are only useful if someone is reviewing them with vendors on a defined cadence. Without a structured forum for that conversation, performance data sits in a dashboard and the relationship stays transactional.
For high-impact suppliers, quarterly business reviews are widely recognized as best practice. It’s frequent enough to catch emerging issues before they become costly, and regular enough to build genuine continuity in the relationship. An initial review 90 days after onboarding gives both sides a chance to calibrate expectations before patterns become entrenched.
The "two-way" part matters as much as the cadence. Vendors who are embedded in your program have visibility into your talent markets, your supply chain, and your competitors' hiring activity that your internal team often doesn't. A business review that only flows one direction leaves that intelligence on the table.
A managed service provider should operate as a broker, balancing the interests of the buyer and the supply chain rather than defaulting to one at the expense of the other. That distinction matters more than it might seem, and it's easiest to understand through the ways it breaks down in practice.
I was recently on a call with a third-party program that had implemented extended payment terms for its partners. In certain operating models, that approach can be reasonable. In others, it creates unnecessary friction. In those cases, a strong program administrator should be advising the client on the downstream impact, not simply enforcing the policy. When an arrangement stops working for top-tier partners, they disengage, and the organization ultimately feels the effects through reduced performance and lower overall quality.
Beyond supplier advocacy, look for demonstrated progression of value over time. Any MSP can handle the basics: billing, policy governance, transactional efficiency. What separates a long-term partner from a vendor is the ability to push your program forward once the fundamentals are in place, with the cross-client experience and institutional knowledge to keep finding lift after the initial implementation settles.
The practices in this article aren't complicated in isolation. Most organizations already understand that supplier relationships benefit from investment, that performance data should inform decisions, and that compliance requires consistent standards. The harder part is building the operational discipline to apply all of them simultaneously, across a supply base that's constantly changing.
That's where the right MSP partnership makes the difference. At Kelly, we've built and managed external workforce programs across industries and organization sizes, working with clients at every stage, from first-generation program builds to organizations that have outgrown what a previous provider could deliver. If you're looking to strengthen how your organization manages its staffing vendor relationships, reach out to start the conversation.