Linq HR
Human Resources Career and Vendor Selection

Top 3 Challenges Faced by HR Teams When Sourcing New Vendors

30.08.22 08:00 AM By Linq HR

The rapid growth of the HR tech and outsourcing industry means there are many options to choose from. The HR tech market’s growth for instance, is projected to grow from $24 billion in 2021 to $35 billion in 2028.

Unfortunately, an ever-expanding HR marketplace doesn’t make things easier when it comes to choosing the right vendor.

Whether you’re hiring external recruiters or looking for the best HCM system, the process of identifying and screening vendors is challenging, and can be a major distraction from the everyday responsibilities of HR.

Top Vendor Sourcing Challenges for HR Professionals

Although HR can readily define the company’s needs, successfully identifying and engaging vendors remains a challenge.

Here are some of the top challenges which have the biggest business impact.

1. Lost Hours Identifying Vendors

Researching different vendors takes a lot of time and effort. It could take you days or even weeks going through vendor websites and brochures comparing product features. 

There’s also the time spent researching customer reviews on websites like G2, searching for market providers which match your industry needs or geographical spread or asking for recommendations from colleagues.

While there are no shortcuts to this—unless you outsource the process, the biggest issue here is that this time could be spent on critical HR activities such as employer branding and identifying workplace training needs.

2. Challenges Conducting Vendor Analysis

After filtering your initial list of potential vendors, it’s time to assess their suitability. Ultimately, qualifying HR vendors comes down to vetting them on the basis of factors like:

Service Quality – can they provide the service better than what you can deliver internally? Are their services truly best in class? Do they maintain high service levels?

Track record and consistent delivery – does the vendor deliver consistently across different companies and industries seamlessly?  Can you verify their track record with current clients?

HR Expertise – is their sales focus stronger than their HR knowledge? Do they have strong HR processes supporting their services? Do they stay current with or lead in HR expertise?

Value -  does the vendor provide overall value? Will your Line Managers and Finance be satisfied with the value of services being purchased? Will the vendor provide the expected impact? Will employees ultimately benefit?

3. Finalising Contracts and Vendor Engagement

Negotiating HR vendor contracts is arguably the most challenging part of the process due to the cost-related risks involved. Keen on maximising revenue, vendors can lead you into signing contracts which make the Total Cost of Ownership (TCO) or charges for underutilised services way higher than it should have been.

As a general rule, if you don’t have a skilled negotiator in your team, make sure you involve Finance. Even if Finance isn’t skilled in negotiations, they can easily spot loopholes and clauses which have the potential of leading to unnecessary costs.

When preparing to engage the new vendor its important to agree on expectations upfront before work starts. Ideally this would be in the form of measurable performance standards or at least an agreed description of outcomes expected over the first 3-12 months. Ensure the vendor has all the necessary information and access to staff in your organisation they need to start successfully.

Do You Need Help Sourcing New HR Vendors?

Using our experience in the HR marketplace we can save you valuable time finding the right HR vendor for your organisation.

If you’re searching for a new HR vendor, just reach out to us by calling 1300234566 or filling this enquiry form.