Direct sourcing contingent talent: it’s here to stay.
With the multiple categories of talent available in the market today – from contractors, freelancers, SOW workers, side-giggers to casuals and consultants – the opportunity for organisations to embrace all the benefits from a blended workforce is ever-present.
And while this component of the labour market continues to grow, according to McKinsey, so too are organisations expecting to increase the hiring of contingent and contract talent over the next three years.
Seems like the ideal supply and demand scenario, right?
Well actually, it’s the sourcing component of landing the right independent talent for your business, that can prove to be challenging.
Sourcing is usually undertaken in the form of one of these two scenarios:
- You engage a staffing organisation to find independent talent for you. The problem here is, when it comes to this labour category, consulting firms aren’t usually as familiar with your business needs. Nor are they as adept at finding the best contingent workers. And let’s face it – they can be expensive (at 30% markup, it’s a big financial hit for a tenure-limited worker). The other issue here? When it comes to re-engaging a contingent worker, things can get complicated if the worker has come from a staffing firm.
- You empower line managers to go it alone and find contract talent of their own accord. The risks here are many (we’ve written about this before here, here and here). Statutory compliance is the biggest risk. As well as the risk of paying market rates for a worker. Leaving the sourcing to your line managers, without a quality process in place, will leave your business too exposed.
Instead, we’re seeing more and more of our clients embrace direct sourcing. Direct sourcing is the process of establishing a relationship where the buyer (the organisation) and the seller (the independent worker) interact directly and without the involvement of intermediaries.
By establishing a process with fewer parties and less friction, organisations can create a reliable pool of talent to call upon, to meet business needs.
Today, I’ve put together the key points involved in establishing a successful direct sourcing strategy. As always, if you’d like to discuss any of the points I’ve raised here, you can get in touch here.
For now, let’s get into it.
How does direct sourcing contingent talent work?
By relying on their own resources and establishing quality processes, organisations can find, place and re-engage the contract talent their business needs. All without the involvement of third-party intermediaries.
There are a few ways for your organisation to conduct successful direct sourcing. These include:
- Line managers, HR professionals and relevant executives rely on their own networks to identify and engage contingent talent. This is typically a long-game. The huge upside is the ability to organically build a talent pool (more on that later). And by continually nurturing your talent pool you’ll be able to eliminate the need for third-party providers for good
- Internal recruitment resources go to the market to find talent. This will most likely bear a financial cost, but unlikely close to the margins of a staffing provider
- You set-up an internal talent referral program. By incentivising staff to refer quality hires to your business, you can grow your talent pool and attract ‘known entity’ contractors: and fast-track your hiring process
The one common denominator across these three strategies is this: your HR and/or procurement leaders need to establish a streamlined direct sourcing solution for the acquisition of quality contingent labour.
What are the ‘must haves’ of direct sourcing contingent talent?
There are a few ‘must haves’ when it comes to direct sourcing contingent talent.
Technology: establishing an online talent network for your business (i.e. your ‘talent pool’), needs to be supported by quality technology. The right technology will enable you to not only source the workers but also manage their lifecycle with your company, end-to-end. You can read more about this here.
Leadership buy-in: an approved strategy and process will ensure all compliance issues are factored into the sourcing strategy. Endorsement and approval by leadership, legal and compliance, and other senior executives are key.
Internal communication: gaining and maintaining the involvement and active participation from your line managers, is crucial for the program to succeed. So you need to communicate the processes and remind them of the benefits. And regularly!
Establish success measures: if you don’t measure the program, how will you know if you’re succeeding? Key metrics to consider include:
- Ability to attract high-quality talent with the right skills
- Improve the efficiency and speed of finding the right talent
- The satisfaction of line managers, with the work delivered by contingent talent
- Likelihood of re-engaging the worker into the business
- Project outcomes that are better than projected
- Cohesion with permanent and other workers on the project
What are the benefits of direct sourcing contingent talent?
1. Establish an internal talent pool:
Over time, as you build up a pool of quality, pre-vetted, compliant contingent talent, your managers can access these workers, as needed. And the benefits here are many. There’s peace of mind, knowing the groundwork has been done, especially in relation to compliance and company ‘fit’. There’s reduced lead-time (more on that below). And, as the program grows over time, there’s the confidence gained from the past success of the direct sourcing strategy. All of these benefits create a positive experience for your workers.
2. Improve hiring efficiencies
By direct sourcing contingent talent, as your business needs them, you’re minimising admin time – for all parties. This will mean the time-to-productivity for your contingent workers will reduce. And, you’ll create a better experience for the worker as well.
3. Empower line managers
With a proven, quality process in place, line managers will be able to efficiently assess, interview and engage contingent workers. No more time wasted with the staffing provider, reviewing cold candidate profiles. This also creates a better experience for the line manager.
4. Compliance checks are complete
Over time, as your direct sourcing contingent talent program gains traction and success, you’ll be armed with a pool of talent on your books. This talent that you know are compliant and approved to work in your business. No more risk of worker misclassification. Instead, confidence that the worker is right for your business.
5. Reduce hiring costs
Direct sourcing contingent talent is essentially the process of bringing the recruitment function in-house, for your contingent workers. This means, gone are the costs associated with staffing providers, and eventually, expensive advertising campaigns. A simplified compliance approvals process will also save your business time and money.
6. The opportunity for worker re-engagement
As you grow your talent pool, and as workers complete projects in your business, the opportunity to re-hire workers in the future is very real. This is particularly so if you’re keeping accurate records across your talent pool. This is another point where peace of mind comes into play. You know this worker performed well in their last contract with your business. You have internal referrals as to the quality of their work. This is what success looks like in direct sourcing.
As you can see, there are many advantages to establishing a direct sourcing strategy in your business.
But be warned: a successful program will take time. As you establish and grow your internal pool of contingent workers, you’ll also need to maintain your talent records, communications and direct sourcing processes. This will ensure the program continues to work successfully for your entire business.
As one of the world’s top suppliers of contingent worker management solutions, CXC is perfectly positioned to optimise all elements of your contingent workforce strategy. With operations in more than 50 countries across 5 continents, and with decades of experience, we can assist with every aspect of your program.
If you would like to find out more about how we can help with your contingent workforce solutions please contact us here.