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Talent, Technology and the Future of Direct Sourcing

Oct 20, 2021

Alex MacKenzie
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Alex MacKenzie
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Direct sourcing isn’t new. But the concept has increasingly gained prevalence among employers in recent years, becoming almost a catchphrase in the staffing industry today. The onset of the COVID-19 pandemic has only accelerated existing contingent workforce trends, growing already-heightened demand for direct sourcing thanks to the evolution and expansion of talent acquisition technological tools and services.

While there is no universally accepted definition, direct sourcing in a contingent workforce context can be understood as “the process by which a company leverages its own internal candidate pool … to place within the company as temporary employees,” according to a 2021 report using research by Staffing Industry Analysts. 

Direct Sourcing as a commitment

Fundamentally, it's a commitment by a client to go deeper with a supplier to help them find talent. It involves much greater focus on technology and resourcing, often with the business purchasing a tool from a vendor to gain a competitive edge within talent acquisition.

The current business climate has companies stretching their corporate wings and seeking creative, cost-effective talent acquisition tools, especially due to the increase in labor demand before, and because of, the coronavirus. Indeed, 60% of surveyed buyers intend to explore direct sourcing in the next two years, more than any other workforce strategy, according to the SIA report.

What is driving this interest? The promise of across-the-board gains, such as cost reductions and increases in hiring speed and continuous program innovation, as well as a desire to leverage the employer brand to attract elite, diverse talent. And let’s not forget basic supply and demand; many employers are trying to regain lost employees due to the pandemic and also needing to acquire top talent as they grow.

Innovations in direct sourcing technology

Technological advancements present a plethora of direct sourcing options. The sophisticated offerings include specialized Applicant Tracking System (ATS) software programs, which bring improved efficiency and vital record-keeping to the recruiting process. Direct sourcing also provides key functions within the recruitment process lifecycle, saving companies time, money and headaches.

Other innovative products involve third-party vendors/employers of record that help companies with payroll processing and onboarding for temporary and contingent workers. Still others offer large data groupings and specialized reports, which assist executives with employment trend evaluation and tracking.

Without a doubt, new technological tools and services have dramatically transformed the landscape – accelerated by developments in artificial intelligence, automation, and big data – which offer expedited, improved talent search options. Recruiters are now able to reach specific groups of qualified candidates and customize job searches through various mediums, including LinkedIn, Indeed, and ZipRecruiter.

Such innovative products may appear to have it all, but there is a common deficit. Analysts admit that technology cannot serve as a substitute for a quality recruiter. It can offer solutions within micro activities of the recruitment process, but there remains a need for the human element. Client-candidate interaction, trust-building, contract negotiation, candidate control, salary negotiations, and other human resource activities can’t be easily replaced by current technology.

How to make direct sourcing work for enterprise, HR, procurement, and workforce management executives

Businesses have a range of procurement and supply chain issues, in addition to process improvement needs within sourcing. Direct sourcing can help with talent acquisition if approached the right way. 

Consultants recommend a targeted evaluation of needs, objectives, and current outcomes, and they often talk about investing wisely. When considering direct sourcing, a company’s primary objectives and its ability to identify the intended accomplishments should be at the center of the decision. Our staffing industry experts recommend asking the following questions:

  • What are your current obstacles, and where do they appear within the recruitment process?
  • What’s on your radar for the next 24 months within your program?
  • What part of the supply chain isn’t doing what you intended it to do?
  • What could you improve within existing supply chain processes to accomplish production and revenue goals?

    Department managers must be aware of what is working within the organization and equally aware of what is not working. The core value of direct sourcing lies in an organization’s ability to discover potential roadblocks within its processes.

    From a recruiting perspective, companies are highly encouraged to identify and review current sourcing strategies and provide critiques of existing production teams. They should monitor and evaluate the main strategic components while recognizing the importance of adaptability. A program manager must be open to changes and constantly looking to enhance direct sourcing components.

How to get executive buy-in and what to consider when setting up your program

Direct sourcing success relies heavily on change management and process support at the executive level, which can require a hefty and authentic buy-in. Executives are always looking to best their competitors, so help with securing top talent in today’s difficult job market certainly is alluring. 

For starters, pre and current pandemic job market trends should be presented. COVID-19 created a huge surge in talent demand because so many employees left the workforce and have not returned. Among the advantages and capabilities of direct sourcing programs are lost talent tracking and connection tools that can re-capture this segment of the candidate pool.

An effective direct sourcing program must align with a company’s primary success markers. Each department must clearly articulate and understand its KPIs and what is lacking within the recruiting processes. Most importantly, the direct sourcing program must uniquely contribute to, and result in, cost-effective talent acquisition. 

Future-proofing your direct sourcing program

The recruitment tech stack is integral to a successful direct sourcing program. This tech stack includes the need to identify and use upcoming recruitment tools within a sourcing strategy. Additionally, the individuals responsible for recruiting activities – internal employees or a third-party vendor – must be thoroughly evaluated. Direct sourcing success hinges on a company’s willingness and ability to review the efficacy of solution-focused components while remaining open to upgrades, eliminations, and improvements.

Technology is vast and constantly changing. It can’t replace essential human actions, traits, and decisions. Intuition, verbal communication, trust-building, perception, and negotiation are key elements that lead to successful recruiting processes. A viable direct sourcing program needs a strong tech component and a dynamic human element. 

The progression of software technology will demand company mutability within process change and program adaptation. A future-proof direct sourcing solution depends greatly on a company’s flexibility and openness to using new software tools and services as they emerge.

Accelerate your Direct Sourcing journey

Are you interested in learning more about how a Direct Sourcing program can help your organization engage proven talent and save on costs?

Download our complimentary whitepaper to gain insights into how to Optimize your workforce with Direct Sourced Workers:

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