4 Things You Need to Know About Direct Sourcing

With the global workforce landscape continually changing, one thing remains constant: the demand for talent continues to far exceed the supply.

Some estimates point to 0.5 unemployed workers available for every available job in the US. Likewise, the number of job vacancies in the UK reached a record high of 1.3 million in May 2022 – 535,000 more vacancies than the same period of 2021. And in the APAC region, the shortage of manpower in some sectors is driving up demand for skilled workers, which adds to the global pressure on the talent supply.

Today’s numbers will fluctuate over time, but the shortage of workers will likely remain. And employers will continue to find themselves in a seriously competitive situation as they seek talent for critical work. Given the short supply, talent acquisition is a major challenge for nearly every company today, and it is not just about hiring employees. It’s about finding contractors, too. Now more than ever, candidates are open to contingent employment opportunities that provide greater flexibility in an ever-changing world. What does it take to attract them?

Companies with brand name recognition have benefited from introducing contingent direct sourcing as a key element to their talent ecosystem as it is an innovative way to capitalize on a company’s brand equity by communicating directly with contractors instead of working through traditional channels like staffing suppliers. Co-founder and president of TalentNet Jonathan Prothero says, "Historically, a well-established brand has been a valuable asset in talent acquisition but rarely used to its full potential in contingent labor. Today, a direct sourcing program that leverages a company's brand in their contingent workforce program increases access to talent, provides a unified brand message and unlocks significant program savings.”

What is Direct Sourcing?

To truly understand the benefits of this approach, you need to start with the fundamentals.

First, consider the traditional path of connection between the company and the contingent workforce. Typically, organizations rely on a network of suppliers to provide non-employee talent. Ideally, that network is managed through a managed service provider (MSP) solution. The MSP brings a consistent non-employee workforce strategy, processes, data and resources, typically as an outsourced solution. Those suppliers could specialize in everything from technical workers, to light industrial, administrative, creative and more. The supplier determines the job advertising approach, message and branding while the worker applies to the supplier, who acts as the employer and manages the worker relationship.

Often, however, companies experience gaps where their supplier networks don’t have the specialization or relationships to best attract and engage certain types of workers at an ideal speed or cost. In this case, the company can take recruitment into its own hands, using recruitment resources through its MSP provider who work as representatives of the company to reach needed candidates directly.

In direct sourcing, the company is the face of the talent acquisition effort, not the staffing supplier. That means the recruiters, the message, advertising and the social media relationship-building is led by the company’s brand. At the same time, the right workforce solutions provider brings the sophisticated technology and expertise needed to engage candidates in an extremely competitive market. Combining the power of the company brand and the specialized resources of a proven recruitment partner, yields advantages on several fronts.

What are the Benefits of Direct Sourcing?

1. Opens Up a New Sourcing Channel

This current war for talent shines a bright light on the importance of having multiple sourcing channels available for recruiters. Existing employees, supply chain companies, statement of work (SOW) workers, freelancers and direct-sourced workers should all play a part in talent attraction. Most organizations have a healthy amount of known talent already associated with the company brand. Former contingent workers, retirees, alumni candidates, interns, full-time applicants and employee referrals all provide potential paths to needed talent. The direct sourcing team can re-engage these valuable candidates through targeted marketing campaigns and develop proactive pipelines to develop a talent community that is ready and available for any future hiring needs.

2. Achieving DEI Goals

Cost savings and improved recruitment metrics are well-known benefits of a direct sourcing program, but one often-overlooked advantage is the impact on diversity, equity and inclusion (DEI). Organizations can now leverage this as a channel to help achieve strategic DEI goals. The dedicated team can execute the company’s agreed-upon sourcing strategy and ensure existing DEI commitments and targets are continually met. The recruiters deliver diverse slates of contingent talent while using metrics to drive diversity conversations and strategies with hiring managers. Through DEI partnerships, targeted marketing campaigns and the use of best-in-class technology, organizations can meet and, in many cases, exceed their diversity goals.

3. Ability to Control the Message and Experience

The most successful direct sourcing programs use the customer’s brand to drive external candidates into the talent community while also capitalizing on the valuable “known talent” that so many organizations often underutilize. Through this approach, the company has control over the message and the experience of everyone in that community. In particular, the experience improves as candidates apply for contingent roles directly with a company because it reduces the uncertainty that may occur when working through a staffing supplier. Applicants feel connected to the organization’s brand because they are working with a dedicated recruiter who is aligned to the company’s culture and message. Recruiters serve as brand ambassadors for the company and can provide specifics on corporate identity, values, ethics, as well as insight into what it’s like to work for a particular business unit or team.

How Do I Select a Direct Sourcing Technology?

Having a best-in-class workforce solutions provider is critical to success but equally important is the technology that underpins the team of recruiters. When selecting a technology, your provider should be able to effectively address the following questions:

• Does the platform integrate with core vendor management systems (VMS), applicant tracking systems (ATS), candidate relationship management (CRM) tools and human capital management systems (HCMS)?
• Does the technology offer a white-label design?
• Is there a stack-ranking algorithm to support recruiters during the search process, and does the technology provide total talent visibility, allowing the organization to house all talent (e.g., FTEs, contractors and freelancers) in one place?

Overall, technology must boost the candidate experience and recruiter capability. With that in mind, it’s also important for the technology to support an omnichannel marketing strategy that allows recruiters to communicate via SMS text and email directly from the platform. These features and functionality not only strengthen talent attraction but ensure that recruiters can easily identify talent for all open requisitions while also maintaining and managing candidates within the talent community.

What are the Best Practices When Launching Your Direct Sourcing Recruitment Strategies?

No two strategies will be exactly the same. The size of the organization, location and the types of roles that are filled should all help determine the scope of the project. Working with your MSP partner to review and analyze historical worker data can provide insight on where to start.

Here are a few best practices to consider when getting your effort off the ground:

• Talent pool segmentation and defining common skill sets can aid in the development of deep candidate pipelines. This approach ensures your recruiters have a healthy bench of talent to recruit from as requisitions are distributed. Focusing on specific roles also helps with job advertisement placement and the development of the recruitment strategy.
• Post-launch, it’s important to have a roadmap for expansion. The goal should be for direct sourcing to support various skill sets and labor categories across the organization. To do so successfully, the effort should continually attract highly skilled, in-demand candidates across a myriad of specialties.
• Plan ahead for major hiring initiatives. To get ahead of new hiring demands, recruiters should work directly with the MSP provider as well as business leaders. Through workforce planning sessions, recruiters and hiring managers can analyze the existing pipeline, determine current gaps, and forecast workforce supply and demand. This type of visibility will ensure that the organization can effectively adapt to market changes and meet the business’ recruitment needs.

The growing adoption of flexible work models has demanded companies consider adding or increasing usage of direct sourcing as a path to contingent talent engagement. Moving forward, organizations can expect this approach to grow in popularity, and those that have a well-considered strategy and committed partner in place will stand to gain an advantage in the challenging post-pandemic workforce environment.