Future-Proof Your Workforce with Direct Sourcing

By MBO Partners | February 12, 2024


Key Points

Almost 80% of large organizations either have a direct sourcing program in place or expect to explore the approach within the next two years.

Direct sourcing can help companies create an ideal mix of full-time and independent talent.

A workforce that can be scaled up or down can help enterprises remain agile and competitive.

Direct sourcing—the process by which a company leverages independent contractors—has seen rapid advancement in recent years. As the market shifts to increased use of independent talent, direct sourcing will become even more important to enterprises that want to optimize their workforces

The Evolution of Direct Sourcing

Basic direct sourcing can take the form of finding talent through employee leads, referrals, or internal recruiters. The premise of these options, and direct sourcing in general, is to find and engage independent talent by using internal resources rather than a third party such as a staffing agency or consulting company. This gives companies greater control over independent talent curation, results in more qualified talent matches, and can help lower staffing costs.

These initial direct sourcing approaches have evolved in recent years to incorporate talent curation. Building pools of talent in key skill areas allows companies to quickly respond to changing business needs, have a faster time-to-hire process, and realize significant savings and ROI. In order to develop talent pools, companies speak directly to the needs of independent talent through employer branding and are using tech platforms like online marketplaces.

Direct sourcing of the future will scale through automation. Forward-thinking companies are already adapting their direct sourcing approach to design the ideal workforce mix of contingent and permanent talent, embracing agile talent management by creating a workforce that can be scaled up or down, and proactively planning their future workforce using talent forecasting.

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Four Benefits of Direct Sourcing

Almost 80% of large organizations either have a direct sourcing program in place or expect to explore the approach within the next two years. There are many benefits to be realized by implementing a direct sourcing strategy including:

1. Talent re-engagement

The ability to re-engage talent is a huge benefit of direct sourcing. Giving previously engaged talent the option to join a talent pool or community can help keep them close so they can quickly and easily be engaged for future work. Re-engaged talent is already familiar with how projects work, understand expectations, and have already proven their expertise.

Talent pools are convenient for managers, providing them with easy to access to a group of pre-vetted talent. They can also be beneficial to independents, giving them a place they can go to find work, interact with managers post-project, network with other independents and more.

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2. Better compliance measures

Direct sourcing can help improve regulatory compliance and risk management. A program that is specifically designed to vet and engage independent contractors will go farther in reducing risk and ensuring compliance than trying to adhere to laws and regulations each time a contractor is engaged.

Managers engaging independent contractors on their own or using a third party that is not familiar with independent contractor classification to find talent can be risky. A direct sourcing program should use defined processes along with worker classification documentation to help minimize misclassification. These processes can be tailored to specific industries and states to help reduce the risk of costly lawsuits, fines, and penalties.

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3. Improved workforce optimization

Workforce optimization is a framework that includes how a company acquires and deploys talent. The goal is to identify the best mix of talent for organizational needs, regardless of status—full-time employees as well as independent talent. Using a project-based approach to work along with direct sourcing can give managers access to a pool of independent talent who have specialized expertise. This type of mixed workforce can lead to improved quality of work and higher satisfaction rates among both managers and talent.

Direct sourcing can also help reduce direct and indirect labor costs. The ability to expand and contract a workforce as needs dictate can lower payroll costs and the expenses associated with hiring and training new full-time employees.

6 Benefits of Workforce Optimization for Companies

4. Proactive work planning

Conducting a skills analysis to see which functions can be done by full-time employees and which what roles should be filled by independent talent can help companies forecast talent needs ahead of demand. With direct sourcing, managers have access to a pool of talent with certain skills who are available for projects as they arise. This proactive workforce planning gives companies huge flexibility in workforce planning, allowing them to be more agile and competitive.

In time, proactive demand forecasting can help companies predict what skills will be needed in the future so they can take the initiative to find the talent they need at the right price. Transitioning to proactive work planning takes time and executive support but can deliver significant savings and ROI when carried out.

The Power of Direct Sourcing: 3 Big Benefits for Your Workforce

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