What is Direct Sourcing? (And Why You Should Be Doing It)

Are you struggling to make quality hires in 2022?

You’re not alone.

According to a CNBC survey of small business owners in Q1 2022, 52% said it was harder to find qualified people to hire now than a year ago. 

With competition for the top talent skyrocketing and many industries experiencing huge labour shortages, the best candidates now command higher salaries — if you can attract them at all. 

This means that a growing number of companies are turning to alternative workforce solutions to meet their staffing needs in 2022.

According to Gartner research, 32% of organisations are replacing full-time employees with contingent workers as a cost-saving measure.

Leveraging contingent labour can help companies struggling to make permanent hires to stay competitive, and comes with benefits like added flexibility, a shorter hiring process, and — most importantly — access to top talent.

To access these benefits, proactive companies need to be prepared with a continuous pipeline of contingent and temporary workers to tap into whenever they need it.

And one of the best ways to achieve this is through direct sourcing.

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What is direct sourcing?

Direct sourcing is a talent acquisition strategy that involves a business leveraging its own brand to source high-quality candidates for contingent or freelance roles.

The idea is to build up an internal, private pool of talent that you’ll be able to tap into as your needs as a company evolve, or when you have a short-term project that you need extra hands on. 

This pool might be made up of:

  • Previous employees
  • Previous contractors or freelancers
  • Retirees who are willing to take on occasional work
  • Referrals from employees and hiring managers
  • Runner-up applicants from past job searches stored in your applicant tracking system (ATS)
  • Freelancers or passive candidates you have identified and targeted with an invitation to join your contingent talent network  

Each of these people will be vetted and assessed, and have given their permission to have their details kept in your database of contingent candidates. 

Then, when you have a contingent or freelance role you need to fill, you can go directly to your community of pre-approved workers instead of trying to source candidates on the open market or turning to a staffing agency for help. 

This can result in both cost savings and a faster time to hire, since each candidate has already been assessed and is already engaged with your brand. 

Working with a direct sourcing provider

The definition of direct sourcing is using your brand to directly recruit for contingent or temporary roles, but that doesn’t mean you have to do it all yourself.

In fact, there are plenty of external providers who can work with you on your direct sourcing solution.

These companies use your brand to source, attract, assess, and recruit candidates on your behalf. 

Working with a direct sourcing provider is a great solution for companies who may not have the internal resources to manage an extensive database of on-demand talent in-house.

Companies that provide this service are equipped with the tools, technology and know-how to source and attract the right talent on your behalf. 

Contingent RPO

Although direct sourcing is a relatively new method of talent acquisition in the contingent workforce world, it’s common when hiring for permanent roles, where it’s known as recruitment process outsourcing (RPO).

Essentially, RPO is when a company outsources all or part of its recruitment process to an external company.

When this type of relationship exists for contingent roles, it’s called either direct sourcing or contingent RPO. 

Key success factors for your direct sourcing strategy

There’s no one-size-fits-all approach to direct sourcing. Every company is different in terms of size, hiring needs, and budget. And a good direct sourcing provider will work with you to define the best strategy for your company in particular. 

However, there are a few key factors that play into any successful direct sourcing strategy, which you should be aware of before you enter an agreement with a provider. 

  • Brand leverage: The defining factor of direct sourcing is that it leverages a company’s brand to attract and engage candidates. It’s important to talk to your direct sourcing provider about how they will represent and leverage your brand. 
  • Workforce planning: For direct sourcing to work, you need to have a clear idea of your company’s existing talent needs and how these will evolve in the future. When you have this vision in place, you’ll be able to work with your direct sourcing provider to hire in advance of your future contingent staffing needs.
  • Engagement strategy: A key part of direct sourcing is knowing how to engage your candidate pool, even while they’re not actively working for you. Companies need to develop a strategy for continuously engaging candidates. You can even automate parts of this process to save on time and cost. 
  • Technology: These days, there’s a wealth of talent acquisition, recruitment marketing and talent management software available, which can be deployed in direct sourcing. This technology can provide valuable analytics and make it easier to engage with candidates.

7 reasons to employ a direct sourcing solution for your business

Myths and truths of direct sourcing - social

Considering using direct sourcing to source candidates for contingent or freelance positions?

Here are some of the benefits you could see using this method.

1. Decreased time to fill

With direct sourcing, you’ll have a ready-built network of engaged contingent talent that you can tap into whenever you need to.

When you need to hire for a particular role, the process will be much faster than if you were trying to source a suitable candidate on the external market, since the candidates are both pre-vetted and already familiar with your company.

2. Cost savings

While working with third-party recruiting or staffing firms can be a useful way of sourcing contingent talent, it can also be costly.

Direct sourcing creates a closer relationship between your organisation and the workers you need. 

It also allows you to access talent that may otherwise have been lost to you, such as previous employees or contractors and past job applicants.

This can result in a significantly smaller cost per hire, since you already have these candidates in your network and don’t need to source them. 

3. Access to a private pool of independent talent

When you use direct sourcing, you have access to a unique pool of candidates — all of whom have been pre-vetted and are already engaged with your brand.

Unlike when you post a job ad on an open platform or an external job board, you won’t need to compete with other companies for their time and attention.

You also won’t need to spend hours wading through responses from freelancers and contingent workers that you don’t already know will do a great job for you.

4. More control over your employer brand

When you work with a recruitment agency or staffing firm, you realistically have very little control over how your brand is presented to candidates.

Plus, if a candidate has a bad experience with the agency, this is likely to reflect back on you and your employer brand.

With direct sourcing, however, you’re in full control.

Even when you work with an external partner, they’ll be experienced and skilled in representing their clients’ brands in the best and most authentic way possible. 

5. Improved retention and loyalty

Direct sourcing is a way to ensure a continuous pipeline of available talent throughout the year.

To do this, you need to make sure that your candidate experience is excellent, and that you’re providing value to the candidates in your network, even when they’re not actively working for you. 

This means that you have the potential to significantly boost retention and loyalty from contingent workers.

Plus, there’s no need to lose valuable talent once a project is over.

A good direct sourcing strategy includes ways of keeping past workers engaged and redeploying them when another suitable project arises. 

6. Smoother onboarding

The whole purpose of direct sourcing is to build a pool of pre-vetted contingent talent, who are already engaged with (and even loyal to) your brand.

These may be past employees, people who have contracted for you in the past, or even previous job applicants who scored highly but weren’t quite right for a particular role.

This level of familiarity with your company means that you can expect a faster, more streamlined onboarding process.

7. Reactivity to market changes

The major benefit to direct sourcing is that it allows you to build flexibility into your workforce.

Building a continuous pipeline of pre-qualified talent enables you to quickly react to market changes, increasing and decreasing your workforce as required.

It can also help you to quickly find and deploy niche or specialised talent.

Direct sourcing doesn’t mean you have to DIY

Direct Sourcing CXC Solution

Even organisations with extensive contingent talent needs sometimes avoid direct sourcing because it sounds like too much work.

And, while building an extensive, private pool of contingent talent doesn’t happen overnight, you don’t need to do it alone. 

There are many experienced providers who can manage your direct sourcing programme for you — like CXC, for example.

These companies will use your brand to identify and attract candidates, and then select, assess and vet them on your behalf.

Usually, a direct sourcing or contingent RPO provider’s role also includes services like secure and compliant payroll processing, as well as onboarding and offboarding.  

Keen to explore more about direct sourcing and how it could benefit your company? Check out our collection of webinars on direct sourcing to learn more.

Want to learn more about how your organisation can benefit from direct sourcing? Fill in the form below and get in touch with us today!

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