Employees in CORE are people working within your company. These people are on your payroll and can be part-time or full-time employees.

'Vendor' is a broader term that can be used for contract employees, outside consultants, subcontractors, suppliers, or any outsourced persons who provide services (or products) for which you owe them money. Though they may be able to enter time and expenses in CORE, they are not on your company's payroll.  

Vendors and outside consultants are practically the same in regards to what they do and actions they can perform in CORE. Vendors are usually companies hired to do work for your projects, whereas outside consultants are individuals. Neither of them are on your company's payroll, but they both can enter time and expenses in CORE with the right security permissions and subscriptions.