Direct sourcing occurs when an organization engages contingent workers using their own internal resources rather than engaging a third party vendor like a staffing agency to perform the recruitment functions. A direct sourcing strategy can provide many cost saving benefits - but the opposite can also prove true if employers don't have the proper resources in place or a formal program to manage the process.
Not too long before the pandemic caused unprecedented job loss and drastically increased unemployment rates around the world, organizations operating in the United States alone had access to a talent pool of more than 41 million Independent Workers - a talent pool that has significantly increased.
Moving away from the traditional workforce model
In order to adapt to an uncertain workforce and achieve immediate and future business goals, many organizations are re-examining their recruitment and sourcing strategies. In fact, research from Gartner reveals 32 per cent of organizations are replacing full-time employees with contingent workers as a cost-saving measure.
However, despite the number of available talent and increased interest in engaging contingent workers, a number of challenges still exist when it comes to sourcing contingent talent. Some staffing firms, for instance, can lack transparency in pricing, and managers who source talent themselves are at higher risk of compliance violations if there isn't proper talent sourcing infrastructure in place.
Direct sourcing is a popular strategy that has evolved out of these challenges. However, before discussing the benefits of a direct sourcing program, it's important to understand what exactly direct sourcing is, and if it is the best strategy for bringing talent quickly and effectively into your contingent workforce.
What is Direct Sourcing or Direct Sourcing Recruitment?
Direct sourcing occurs when an organization identifies candidates for a position using their own resources, choosing to perform recruiting and onboarding functions internally. During the talent acquisition process, direct sourcing is a recruitment strategy that ensures direct communication with candidates, allowing recruiters to build relationships with top talent over time.
Will Direct Sourcing work for you?
A direct sourcing strategy, however, isn't always the best approach for every business model when sourcing talent.
Before engaging directly source candidates, it's critical to assess whether your organization is prepared for a direct sourcing program. Here’s how you can identify whether you're ready:
• Your organization already has forecasting and workforce planning in place.
• You’re planning to recruit large numbers of contingent workers with similar skill sets.
• You require cost-effective supplier efficiency.
• You’re looking to control and capitalize on your employer brand.
• You suspect you’re spending too much on recruitment costs and require visibility into where dollars are being spent.
How can your organization benefit from Direct Sourcing?
For organizations that make Direct Sourcing work, and work well, employers will benefit from the following:
Control over employer brand
As with any online presence, organizations must be aware of their employer brand. Directly sourcing candidates allows an organization to have increased control over their engagement efforts while also building relationships with talent. Employer and company branding is just as important for contingent workers as it is for traditional employee recruitment efforts and each must be complementary as well as transparent.
Reduced costs and time to hire
Direct sourcing provides organizations with a more flexible approach to talent acquisition, allowing recruitment functions to operate internally, saving on costs and processes associated with outside vendors.
While some direct sourcing networks allow employers to search candidates by keywords relating to the work, others will automatically pair available projects with the best pre-screened, qualified candidates. This helps to minimize the time spent on recruiting functions.
Engaging talent using a direct sourcing networks not only allows employers to quickly and efficiently engage talent, they also help eliminate time spend on administrative tasks such as compliance and onboarding duties. This means contingent workers can complete work easier and faster.
Higher retention rates and worker loyalty
Direct sourcing platforms and tools make it easy to engage and communicate with talent. Contingent workers expect and appreciate flexibility and choose to engage with organizations that understand this motivation driver and use tools that make the experience as seamless as possible. These worker and client relationships generate retention and loyalty.
Increased flexibility and ability to engage niche talent
Building a pool of pre-vetted, qualified talent that has previously engaged with or completed work for your organization makes it easy to engage and deploy skilled contingent workers when the need arises.
Minimize the Risk of Worker Misclassification
When direct sourcing is done right, the platform or networks built by organizations can also reduce the risk of compliance violations. These Direct Sourcing platforms offer flexible engagements with built-in processes that allow talent to work the way they prefer to work while also maintaining compliance with each engagement.
An effective direct sourcing program can be as easy, or difficult as you make it - it all depends on your goals and approach. A basic program will offer a clear framework for onboarding and managing your contingent workforce safely over the engagement lifecycle.
Want more information on how a direct sourcing program can help your organization?
Download our free white paper: How to Optimize Costs with Directly Sourced Contractors!