Today, organizations have unprecedented access to a 42 million strong pool of independent talent. And that talent comes in more shapes and sizes than ever before—contractors, consultants, freelancers, side giggers, and more are labeled as 1099 or W-2 workers, and the list goes on. Meanwhile, alongside continued growth in this labor market, 51% of global executives plan to increase the use of flexible and independent workers over the next few 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 (at talent markups up to 30%), they aren’t always familiar with how to find independent workers, and contractual terms complicate talent 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 businesses to self-source and directly engage independent consultants in a faster, more cost-effective way. Below, we explore the ins and outs of direct sourcing and discuss how to create a successful program for your organization.
In order to compliantly source, manage, and re-engage professional independent talent, many organizations are turning to direct sourcing—a process designed to augment the staffing supply chain to maximize independent workforce talent acquisition. 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:
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 program, we like to call it a “Direct Access” program, that manages the lifecycle of working with independents: sourcing, engaging, paying, managing, and re-engaging proven independent workers.
Direct Access programs facilitate the connection of enterprise managers’ talent needs and connect them with an ecosystem of proven independent workers. Critical components to be mindful of and best practices in setting up your own program include:
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, independent contractors are already familiar with the concept of using marketplaces to find work, and will gravitate towards a simplified, straightforward process.
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 independent workers, 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—a preferred destination for independent professionals.
Additional direct sourcing benefits include the ability to:
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.
For more information about creating a robust direct sourcing solution for your business, give us a call, download our whitepaper on Evaluating an Enterprise-Grade Direct Sourcing Solution, or request a demo of our direct sourcing solution MBO Connect®.
The modern enterprise understands the glaring need - and associated pressures of - engaging the best independent contractors. The FMS systems by which these workers are managed has drastically evolved in recent years.
The independent workforce is a valuable source highly specialized services. Follow these five steps to build a virtual network of qualified, best-in-class talent.