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What is Vendor Qualification? 

Vendor qualification is essential to help you find the right partners for your business. Discover the importance of vendor qualification, as well as how to ensure that your potential vendors meet requirements. What’s more, we’ll explain how your organisation could benefit from an MSP partnership with Enterprise Solutions at Hays.
 

What is vendor qualification?

The aim of vendor qualification is to assess each new or re-deployed service provider. Your vendor qualification checklist acts as a quality control process. This approach follows a set of standards defined by the client, including essential factors like insurance or certifications.
 
It’s becoming increasingly common to use vendors to perform work on your behalf. These external experts may provide services from window washing to Enterprise Resource Planning (ERP) and Customer Relationship Management (CRM). But without a proper vendor qualification process in place, there may be risks involved.
 

Why it’s important to have a vendor qualification checklist

Not all vendors are created equal. It’s likely that the vendor is either an employee or an independent company, or even a company of one. If there’s a pre-existing relationship between the vendor and the manager, this could complicate matters further as managers could be exercising control over how the work is being completed.
 
Vendor qualification helps to allay the business risks associated with using service providers, including:
 
  • Not running day-to-day operations efficiently
  • Co-employment or independent contractor misclassification
  • Confusion over layers of vendors and sub-vendors
  • Lack of documentation on whether they are independent or a W2 employee
  • Penalisation when being audited by the Department of Labour
  • Protection of intellectual property
  • Missing background checks
  • Not meeting regulatory requirements
  • Lack of insurance
  • Incorrect payments e.g. overtime and sick pay.
 
Too often, these issues are only raised when a project has started to go wrong. Many organisations may rely on a Statement of Work without considering these risks. That’s why it’s important to have a proper vendor qualification process in place.
 

How an outsourced vendor qualification solution can help

With help from Hays’ Managed Service Programme, organisations can outsource their supplier qualification process. Outsourcing vendor qualification will help you to manage your vendor partnerships effectively. Our third-party expertise helps to streamline the process and protect your brand.
 
Many clients elect to contract directly with their larger service providers. However, they delegate the contracting and administration of smaller (<10 people) providers to us.
 
Once we’ve completed the vendor qualification process, we can then subcontract the service provider to Hays with our Managed Service Programme. We evaluate each worker delivering client services for proper worker classification and appropriate engagement.
 

Your vendor qualification checklist

Working with a third party will ensure that you don’t run into any legal complications or risk poor standards of work. Whether you choose to outsource vendor qualification or not, it’s important to cover these points in your vendor qualification checklist:
 
1. Do they have appropriate insurance in place?
2. Do they pay their workers correctly?  
3. Have you carried out background checks?
4. Is there a contract in place to protect your IP?
5. Is there proper indemnification between parties?
6. Are you contracting with the actual employer or agent of work?
7. Are there any other vendors involved?
8. Have they passed credit checks?
9. Do they have the right business licences?
10. Do they have up-to-date qualifications for the job?
 

Hays’ vendor qualification in action

In one case study, we discovered that 30% of a client’s engaged vendors were sole proprietors rather than businesses. Their work had been hidden behind a Statement of Work, with each invoice submitted and paid for by the organisation.
 
We also found that almost half of the vendors were not directly employing their workers. This involved multiple complicated layers such as (Client to Vendor to Vendor to Vendor to Worker). The organisation was:
 
  • Paying overinflated rates
  • At risk of misclassification
  • Working with vendors without active contracts
 
Without support from a third party, organisations run the risk of slow onboarding, unnecessary workloads, poor legal compliance and worker misclassification. 
 

How our Managed Service Programme adds value

Our vendor qualification solution offers a talent-forward MSP service provider to allay these risks. In turn, it makes the process more efficient and avoids overinflated labour costs.
 
Ask about our Managed Service Programme today to benefit from:
 
  • Significant cost savings
  • “Client of choice” market presence
  • Faster onboarding times
  • Enhanced regulatory compliance
  • Best practices for worker classification
  • Ongoing management training
 
As managing this type of work becomes more complex, it’s important to have a trusted workforce transformation partner. Focusing on vendor qualification reduces hidden risks and costs, ensuring continued growth and protection of your brand.
 
Find out more about our Managed Service Programme. Contact us to learn more about how our vendor qualification solution and consulting services can benefit your organisation.
 

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AUTHOR
 
The Enterprise Solutions team at Hays
 
At Hays, we invest in lifelong partnerships that empower people and businesses to succeed.
 
We’re a future-focused, customer-centric organisation equipped with the skills, solutions and technological capabilities of a true leadership partner. We better meet your workforce needs and solve the complex challenges you face today, tomorrow and in the future.
 
Hays has strategically located delivery centres and 250+ offices across the globe, offering thousands of experts and diverse talent. Stay a step ahead of market trends and solve your business challenges with over 50 years of building progressive workforce strategies.
 
We’re always learning, always one step ahead, and always working for your tomorrow.