Choosing the right vendor or talent supplier is a decision that should not be made based on price alone. Who you choose can make or break your upcoming projects, so the decision is better made after weighing a variety of factors like:
The vendor’s track recordFirst up – who are 'vendors’? Vendors are third-party companies providing you with the talent you need. Think staffing companies, talent agencies or temp agencies. Here, we’ll specifically delve into choosing talent vendors – and not material suppliers, software platforms or tool providers. (See more: Vendor selection best practices)
Poor vendor decisions negatively impact your project, ultimately affecting your company reputation.
What happens when you choose the wrong vendor?
Cost overruns. If a vendor fails to provide the right talent, you may have to make urgent last-minute hires. Some vendors also have hidden costs that affect your budgets.
Missed deadlines. With poor talent fit, you look at having to rework tasks, fix quality issues, and manage dependencies – all leading to delivery delays.
Compliance issues. Vendors who use non-secure systems, engage in unethical talent practices, and neglect data privacy, tax and other laws put you in a tough spot that may lead to fines and penalties. (See more: Contract management in vendor relationships)
On the other hand, having strong vendor partnerships is a huge advantage. Here’s why:
Reliability. You can turn to them for your talent needs time and again.
Trust. You can rest assured that the talent they provide will be of the highest quality.
Price advantages. You can negotiate a bulk pricing for ongoing needs.
Ease of operations. You benefit from various efficiencies thanks to their great processes. (See more: What is a Vendor Management System?)
Talent vendor selection: Criteria you should consider
| Criteria | What to look for | How to do this |
Red flags |
| Track record |
Ascertain their credibility by finding out: How long have they been operational?Who are their other clients? How many successful projects have they recorded? |
Look for: Company registration detailsClient testimonials |
They have no proper website. Their registration details are not available. They cannot provide testimonials or have negative reviews. |
| Industry experience |
Even if they are well established, their professionals might not be the best fit for your needs. Find out if they have specific experience in your field. If so, how extensive is that experience? |
Ask for: Information about their projects.Samples from past projects. References from within the industry. |
They cannot showcase work within your industry. Their talent does not match the expertise you need. |
| Capacity |
Establish if they can actually deliver the quality and quantity of work you need. Ask: How big is their talent pool?What’s their delivery track record? Do they have frequent delays? Are they equipped to maintain the quality standards you are looking for? |
Review: Samples of their past work with the help of a cross functional team at your endThe different aspects of their offerings – for instance, timely delivery that involves a massive headcount may not make sense for you. |
They have disparate talent numbers across sources. The samples they provide are not up to the mark. |
| Pricing |
Weigh the different aspects of their pricing structures. Check: Are their rates competitive?What is their pricing model – per head per day, hourly, or per project? Do their payment terms (advances, milestones) work for you? Do they have any hidden costs like steep termination fees? |
Establish price feasibility by: Comparing their rates with other providersAsking for an itemized price breakdown. Checking reviews to see if any past client has flagged hidden costs. |
Their pricing structure or terms are unclear. The price quoted is either too high or too low compared to industry standards. |
| Reputation |
Look for factors that go beyond the talent they provide but that may impact their engagement with you. Check for: The financial health of their organization.Their compliance track record. Their reputation as an umbrella company for talent. |
Verify their credibility by: Vetting their public information and registration details.Conducting financial and technical due diligence. Looking at reviews from the freelancers and contractors who work under them. |
They have only positive reviews, using similar words and phrases. Their public information doesn’t match your research. Their workers highlight issues like non-payment. |
While more objective metrics like price, capacity and reputation are important, they don’t guarantee the vendor will be the right fit for your organization.
Your supplier evaluation criteria should also consider soft factors like:
Communication style. Check whether you can expect a dedicated point-of-contact and if there are any language barriers that may be a cause for concern.
Culture fit. Find out if the vendor organization’s values align with your own in terms of diversity, sustainability and ethics.
Responsiveness. Explore how quickly and effectively they are able to offer resolutions.
Also consider their legal and compliance processes like:
Data protection. Your vendors will likely handle a lot of confidential data from your project. If they do not have formal processes to handle this, that can signal potential issues that may impact you too.
Insurance. Find out if they have the necessary insurances in place to cover liability issues like data breaches or non-delivery.
Certifications. Confirm if they have the necessary industry certifications and what processes they follow to ensure these certifications are up-to-date – for their organization and for the talent that works under them.
The biggest risk when selecting talent vendors is non-compliance. While minor miscommunication or delivery issues can be sorted out easily enough, non-compliance is a more serious offence.
If a staffing firm or umbrella company is found to mishandle taxes, exploit workers or operate unethically, your organization may face the ripple effects. Even though the vendor is responsible for managing compliance for their talent, their failure to do so may mean fines, penalties and legal liabilities for you!
For instance, in an effort to close the tax gap in the UK, the government recently announced a new reform under the Finance Bill 2025-26. Under this legislation that will kick in from April 2026, the end client will face joint liability in case the umbrella company or agency fails to pay PAYE taxes or NIC.
This means that the HMRC can recover the unpaid amount directly from you! What’s more – the liability remains, even if you prove that you had conducted initial due diligence on the umbrella company.
This is just one example. Laws and compliance regulations constantly evolve around the world – and some of the reforms may mean major implications for you. This is why it is so important to vet vendors, conduct ongoing audits and have airtight liability clauses so that you are not left to face the fallouts.
Before you select a talent vendor, you’d need to send out an RFP or an RFQ.
An RFP is a Request For Proposal. This is a request that you issue when you want vendors to send you comprehensive details about the talent services they provide. Essentially, you want to find out how the vendor might help you meet your goals.
They will respond with information on what services they offer, the capacity they have, their charges and also possible suggestions on how they can innovate to get you closer to your goals.
What should a good RFP include?
Request For Proposal (RFP) structure
| Company overview |
Include information on:
|
| Project requirements |
Tell the vendor about:
|
| Project timelines | Be upfront about the deadlines you are looking at. This lets the vendor evaluate your headcount requirements. |
| Proposal requirements |
Highlight what details you want the vendor to include in the proposal. For example, you may ask for:
|
| Evaluation criteria |
Let them know how you plan to compare different vendors to arrive at your decision. Include:
|
This stands for Request For Quote. This is what you send out when you already know what you need in terms of talent services – the expertise, headcount and support. Now, you just want the vendor to quote their price for the requirement.
What should a good RFP include?
Request For Quote (RFQ) structure
| Company overview |
Include information on:
|
| Project details |
Outline specific project requirements including:
|
| Timelines | Share the project timelines, making sure that they are reasonably aligned with the headcount you have in mind. |
| Pricing |
Request details on:
|
Assess your needs to decide whether you should raise an RFQ vs an RFP. For instance, if you are just starting a project in a new geography, you may want to go for an RFP. The vendors’ talent expertise in the location can prove valuable in finding solutions you had not considered.
If on the other hand, you have a straightforward project and all you really need is talent to execute the work quickly and efficiently, then send out an RFQ.
Your RFQ or RFP process steps should include the following:
Step 1. Define your needs.
Bring together all relevant stakeholders to establish what your project goals are and where exactly you need external talent support. This is also where you chalk out timelines, budgets and other details.
Step 2. Create documentation.
Prepare your RFP or RFQ, filling in all the details discussed above. Customize it as per your needs – adding any further information that you think will get you the most detailed response.
Step 3. Send requests.
Explore vendor marketplaces, industry publications or conduct online research to identify the top vendors within your industry or location. Recommendations from industry associates also help! Once you have your longlist, invite those vendors to send in their pitches.
Step 4. Evaluate your vendors.
Evaluate your proposals using the vendor assessment checklist discussed above. Remember: Assess them on the value they bring – not just the price they quote!
Step 5. Make your selection.
Have follow up discussions and negotiations with your shortlisted vendors to arrive at the best prices, managed service inclusions, and other terms. This should help you make the decision.
A few key points to remember:
Include interdepartmental perspectives to ensure your needs as an organization are aptly reflected.1. RFP and RFQ templates.
Create customized templates for your organization, covering all the details mentioned above as well as any specific fields particular to your company. Once you have these templates, you can just fill in the details and send out new requests easily.
2. Email templates.
Templatized communication for new requests, as well as selection and rejection notifications can help you automate the process further.
3. Evaluation scorecards.
Create a scorecard with every factor listed out. Assign a weightage to each value and fill in the scores for every vendor under consideration. A sample scorecard may look like this.
This is a funnel that tracks which step of the evaluation process you are at. This can include steps like:
TalentDesk plays a critical role in these processes. It gives you a single platform through which you can manage all these third-party vendor selection steps, and offers vendor management assistance.
TalentDesk advantages: During the selection process
Upload all customized RFP, RFQ and email templates in one place, so everyone in your organization has access to them.
Create vendor selection dashboards so that all relevant stakeholders can view progress and communicate as needed.
Have all vendor contacts, details and negotiation information safely stored in the cloud.
Get KYC support and compliance tracking assistance to vet your vendors well.
Start by signing contracts and gathering all required documentation. You will need to onboard the vendors onto your systems – timesheets, project trackers, communication channels, payment portals and so on.
Get a run down of
Next, connect your vendors to all the stakeholders they will be working with. Get the project rolling by setting expectations on delivery, assigning responsibilities, and communicating timelines.
Finally, make sure to track performance metrics on an ongoing basis to evaluate whether a vendor is meeting their KPIs. Establish a periodic review process so you can offer feedback, communicate expectations, hear out their pain points and guide them on how to improve services.
TalentDesk advantages: Beyond the selection process
Create legal contracts, e-sign them and save them securely.
Create customized onboarding processes and track documentation, making sure you have gathered all the necessary compliance paperwork.
Integrate and manage systems by tracking vendor project milestones, timesheets, deadlines and more – all from one platform.
Pay your vendors across countries and currencies with just one click.
Find out more about TalentDesk. ⬅️
Time’s up for disorganized vendor selection methodologies that bank on scattered texts and emails, verbal agreements – and luck! Today, the key to selecting the right vendors (compliantly) is to have a clear, consistent and quantitative selection process.
This takes the guesswork out of vendor evaluation, and keeps the process efficient, bias-free and auditable. It ensures that no compliance protocols fall through the cracks, minimizing liabilities for your organization. What’s more, it’s completely scalable. With the templates and steps all in place, you know the next time you need to bring new vendors onboard, the process will run like a well-oiled machine.