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Direct sourcing: Designing a program that works for you

Aug 22, 2019

Alex MacKenzie
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Alex MacKenzie
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They go by many different titles: contingent workers, gig employees, freelancers, consultants and contractors, but regardless of naming, they all serve the same purpose in providing organizations with flexible, skilled staffing solutions to help employers quickly respond to market changes and demands.

In an effort to save on cost, better manage talent and regain control over their recruits, organizations have become increasingly more comfortable taking on some or all of the contingent worker engagement process for simple or frequent openings within their organizations.

The practice of engaging contingent workers directly is known as direct sourcing, and while it's true that direct sourcing can save organizations money, the opposite can also be true if the company doesn’t have the proper resources in place or a formal program to manage the process.

Making Direct Sourcing Work for You

According to the World Economic Forum there is a world-wide shortage of skilled workers which makes the process of sourcing and recruiting talent that much harder. Having a program in place that gives you immediate access to a pool of skilled, proven workers has many obvious benefits, not the least of which is a reduction in ongoing recruiting fees and shorter down-times.

Designing Your Own Direct Sourcing Program

The best direct sourcing programs usually complement other recruiting practices rather than replace them altogether. And programs can vary greatly based on the individual organization’s needs and available internal and external resources.

Below is an overview of the five big decisions companies must make when designing their own direct sourcing program, from the informal to the fully-developed:

Informal programs are usually managed by a hiring manager who sources contingent workers directly and often at a higher rate card than necessary. This can happen when the hiring manager has a particular candidate in mind and is more interested in quickly getting a resource in place, rather than opening the direct sourcing process to competition and potentially lowering the rate of pay for the selected contingent worker.

Most often, however, a direct sourcing program model will involve some kind of internal recruitment team, an applicant tracking system (ATS) to manage candidates and an approved rate card.

It’s important that whatever model you choose, there is some structure to it and discussion around the five big decisions. Otherwise your direct sourcing program may end up costing you more time and money than if you had continued to outsource to an external staffing vendor.

For all models, using a third-party service provider to manage the paperwork for your directly sourced contract workforce will help mitigate risk and make your job easier. A good provider:

• Will manage contract administration,
• Be knowledgeable in the latest payroll, benefits and employee/contractor status regulations,
• Can recommend process improvements,
• Ensure compliance and meet submission deadlines to government agencies.

If your organization is considering adding a direct sourcing program to your talent acquisition strategy or would like to learn more about complimenting your current model, download our free whitepaper: How to Optimize Costs with Directly Sourced Contractors

DOWNLOAD WHITE PAPER

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