5 Direct Sourcing Benefits That Can Help Overcome Challenges Using Independent Professionals

By MBO Partners | September 21, 2022

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Direct sourcing benefits address challenges related to engaging independent professionals.

The independent workforce is growing and many of their skills are in high demand, requiring enterprises to find strategic solutions.

Internal talent marketplaces put direct sourcing into a strategic position as a talent acquisition approach.

Spurred by the Great Realization, the independent talent population is steadily increasing. Fifty-one million professionals are currently working as independents and that number is expected to see 38% growth over the next five years. Even as this talent segment becomes a permanent part of the workforce and a component of competitive advantage, leaders are faced with challenges. With more and more reliance on independent professionals for needed skills, the strategic question is no longer “Should we hire them?” but “How can we effectively hire them?”  

Challenges around Using Independent Professionals 

Human resource managers and leaders report that they face challenges in the use of independent professional labor. Their top concerns include: 

  • Finding and hiring specialized talent. Independent professionals with in-demand skills are hard to find, especially in a local area, and HR recruiters struggle to find people to fill critical roles. 
  • Ensuring consistent quality of work. Work quality and consistency can suffer when contingent labor engagement creates a revolving door of talent coming into and going from the company.  
  • Managing turnover, transitions, and time to hire. Onboarding needs and the time required to get contingent labor in place compound the revolving door challenge, keeping companies from quickly putting people with needed skills in place. 
  • Managing costs. Staffing companies have been the go-to source of independent professional labor, meaning that extra fees are incurred for their third-party services. 
  • Accessing and managing skills. Managers know what skills they need to meet goals but staffing companies can be a sort of “black box” in terms of hiring independent professional labor. They only see what their staffing rep shows them, and often the rep only selects from a local talent pool, missing potential candidates in other places. 

Additional challenges related to hiring independent professionals center on cultural issues. It can be difficult, if not impossible, to know if a candidate will fit into company culture until after they are on board (which can be too late if the fit isn’t good). The culture of the HR function can present challenges, as recruiters and HR managers may still view contingent labor as tactical short-term necessities rather than strategic long-term assets. 

Direct Sourcing Benefits 

Leaders cannot satisfactorily address contingent labor challenges through traditional avenues. Direct sourcing, which leaves out the “middleman” and allows companies to hire talent directly, offers viable solutions.   

HR leaders have reported direct sourcing benefits that address the challenges they’ve experienced with traditional sources of independent talent. The most notable benefits are: 

  1. Greater access to specialized skills. Direct sourcing lacks geographic boundaries. Managers can engage independent professionals who have the needed specialized skills regardless of location. 
  2. Increase in quality of freelance work. Managers who directly source independent talent can more effectively qualify candidates and have relationship-based interactions that motivate quality work. 
  3. Ability to create a quickly accessible freelance bench. Whether the needed talent is project-based, long-term, or a temporary fill for an open full-time position, companies can build depth in their freelance bench that will allow fast engagement of the right talent when it’s needed—and that is familiar with the company processes and culture. 
  4. Cost reduction.  Direct sourcing benefits can save money directly and indirectly. Directly, reducing reliance on staffing agencies can reduce fees for their services. Direct sourcing also saves costs indirectly by empowering managers to vet and engage talent themselves, streamlining onboarding, and re-engaging preferred independent professionals.  
  5. Increase in manager satisfaction. Putting managers in the driver’s seat through direct sourcing can empower them to make the best choices for the talent and skills they need which makes a difference in the achievement of their business goals.
     

Direct Sourcing Benefits of Internal Talent Marketplaces 

A step that puts direct sourcing into a strategic position is a talent network or marketplace. Consisting of a pool of independent professionals who have been vetted before inclusion, an internal talent marketplace can ensure that the talent being hired fits the company culture. Further, the establishment of a marketplace can help HR leaders embrace direct sourcing as a strategic talent acquisition approach.  

Another direct sourcing benefit of a talent marketplace is potentially significant cost savings, both directly through saved expenses and indirectly through streamlined processes, accelerated talent selection, and efficient onboarding. Here are examples of independent talent marketplace results from companies in different business sectors: 

  • For a publicly traded healthcare improvement company, direct sourcing benefits included cost savings by eliminating expensive markups charged by traditional staffing companies and boutique consulting organizations. Using MBO’s platform, the organization now has direct access to the talent they need, and a streamlined, legally compliant onboarding process. 
  • In partnership with MBO, a Big 4 consulting firm created a custom, self-service platform enabling managers to directly find and engage talent. Over the last four years, direct sourcing of independent talent has grown consulting firm’s platform to more than 50,000 workers and achieved nearly $100M in supply chain savings across over $650M in spend. 
  • Optimizing their workforce through direct sourcing, a bank with locations across the US implemented a baseline compliance program that saved $150K. By engaging more independent talent through direct sourcing, Further, they saved an additional $5.2M by engaging more independent talent through direct sourcing. After just one year of direct sourcing through their talent marketplace, the bank created a network in which 33% of their total requisitions are filled via directly sourced talent. They are projecting annual cost savings of $13.2M as more full-time roles convert to independent professionals. 

Independent professional labor is becoming a solid part of the workforce. Enterprises must have ways to access this talent cost-effectively and productively. Direct sourcing offers leaders and managers effective access to in-demand skills, helps boost productivity, and enables faster reactions to changing markets and competition. The establishment of an internal talent marketplace for vetted independent professionals can compound direct sourcing benefits and increase the strategic value of this portion of the workforce. 

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