6 Benefits to Creating a Direct Sourcing Strategy
Today, organizations have unprecedented access to a 42 million strong pool of independent professional talent. And that talent comes in more shapes and sizes than ever before—contractors, consultants, freelancers, side giggers, and more work as 1099 or W-2 workers, and the list goes on. Meanwhile, alongside continued growth in this labor market, 61% of organizations saying they expect to hire more contracting freelance or consulting workers in the next three years.
Amidst these positive trends in both supply and demand, a number of challenges still exist when it comes to sourcing independent talent. Third-party staffing or consulting firms can be expensive (with markups up to 30%), they aren’t always familiar with how to find top independent talent, and contractual terms complicate re-engagement. Similarly, when internal managers self-source independent talent, there’s a higher risk of compliance issues if a streamlined sourcing process is not in place.
One increasingly popular solution that has evolved out of these challenges is direct sourcing, which enables access to and connection with top talent by creating a more frictionless and direct relationship between provider and buyer—enterprise managers and independent talent. With direct sourcing, managers can source talent internally, rather than relying on a third-party intermediary such as a consulting or staffing company to fill talent needs. Below, we explore the ins and outs of direct sourcing and discuss how to create a successful program for your organization.
What is Direct Sourcing?
In order to compliantly source, manage, and re-engage independent talent, many organizations are turning to direct sourcing. By identifying candidates for available opportunities using their own resources rather than relying on a third-party intermediary, organizations can directly source independent professionals.
A direct sourcing solution will look slightly different from organization to organization depending on company size, talent needs, and available budget. Direct sourcing can happen in a few different forms, including:
- Managers and HR professionals using their own networks to identify independent talent
- Organizations using internal recruitment resources to identify talent
- Organizations working with procurement and HR business partners to identify existing vendors that perform a specific service
- A streamlined program set up by HR or procurement that managers can to use throughout the entire organization
How Does Direct Sourcing Scale?
The concept of direct sourcing must be supported and backed by technology, such as a talent marketplace, that enables organizations to easily find, engage, and re-engage talent.
Many talent marketplaces available today simply match clients to contractors. Yet if a company engages a worker as an independent contractor and the worker doesn’t meet the myriad of federal and state qualifications to be legally considered a contractor, the company will bear the risk of misclassification. Consequently, it becomes even more critical to ensure the direct sourcing solution you choose to work with is fully vetting independent contractors.
Direct sourcing, therefore, is only part of the picture. In order to effectively directly source independent talent end-to-end, organizations must build a centralized engagement program that manages the entire lifecycle of working with independent talent: sourcing, engagement, payment, management, and re-engagement.
A centralized program facilitates the connection of enterprise managers’ talent needs and connects them with an ecosystem of proven independent talent. Critical components to be mindful of and best practices in setting up your own program include:
- Executive leadership support from the executive level down throughout your organization
- Attracting talent to your marketplace that is in line with the skillsets required by your internal enterprise managers
- Obtaining internal buy-in from managers, and an ongoing communication plan to keep them informed and aware of the program
- Key metrics and reporting around the program’s ability to improve key metrics including an increase in talent quality, manager hiring experience, and improved efficiency for the entirety of the independent talent engagement
With the right technology in place, organizations can breathe easy knowing their engagements are compliant and can focus on building their pool of independent talent. On the other side, independents are already familiar with the concept of using marketplaces to find work, and will gravitate towards a simplified, straightforward process.
What are the Benefits of Direct Sourcing?
Direct sourcing provides many benefits for both contractors and organizations. Independents want to be able to easily search for, find and apply to new and relevant projects that meet their requirements. When organizations invest in programs and policies that meet the needs of independents, they are in an optimal position to attract and retain this talent and facilitate re-engagement where possible. These steps are key to gaining a competitive advantage among their peers and becoming a Client of Choice. As a Client of Choice, organizations are optimally situated to attract and retain independent talent, giving them first choice in the talent they want to work with.
Additional direct sourcing benefits include the ability to:
1. Create a private pool of independent talent
By building a pool of pre-vetted talent that has already been engaged with your organization, it becomes easy to find and deploy skilled workers when you need them.
2. Realize cost savings
Direct sourcing provides flexibility in talent acquisition, allows organizations to bring most recruiter functions in-house. It also simplifies the compliance vetting process.
3. Increase efficiency and decrease time-to-fill
By engaging independent talent on an as-needed basis, organizations can realize increased output, and higher satisfaction and productivity levels among independent talent.
4. Ensure compliant engagements
Organizations such as MBO Partners provide a trusted methodology for evaluating and engaging independents, and mitigating the risk of worker misclassification.
5. Empower enterprise managers
Direct sourcing helps to reduce the amount of time managers spend reviewing candidates, creating a simplified, easy-to-follow process.
Previously engaged independent talent can quickly and easily be re-engaged.
While there are many benefits to direct sourcing, is important to set the expectation that implementing an effective solution will take time—building and maintaining an internal pool of independent talent does not happen overnight. The way we work is undergoing an exciting period of change. As we shift away from traditional hiring models, more flexible solutions such as direct sourcing will enable organizations to effectively utilize the independent workforce to take their business to the next level.