Direct Sourcing — WillHire Inc.
In today’s digital age, the global talent market is becoming increasingly dynamic and competitive with 90% of the talent finding their jobs online. A leading industry statistic says that the preferred mode of job search by 65% of this talent is via a mobile device.
With mobile devices, while the world is virtually at one’s fingertips, smartphones are no longer just a means of communication — they are also THE means of employment search.
It is common knowledge that organizations hire their full-time employees via their Human Resources or Talent acquisition teams which are fully equipped and matured with tools and processes specific to talent sourcing. However, for several years now the hiring of contractors has seen a different approach.
This approach taken by the contingent staffing industry, has for years, been solving a big question — “What if we can acquire contractors directly? Can we really do that?”
This is where Direct Sourcing comes in.
Before we delve deeper into what is direct sourcing, let’s talk about why it is required.
Talent Acquisition has changed its course over the years and more so, this year. While the pandemic conditions have made available a huge pool of talented candidates, it has established what staffing agencies always believed. Companies cannot wait till the last moment to put out job descriptions and job openings and expect the perfect candidate to wondrously appear — proven in the past few months.
Companies need a more strategic approach to hiring, particularly for their contingent or temporary workforce — enters Direct Sourcing.
Direct Sourcing is a method of sourcing contract workforce by leveraging the modern-day talent acquisition processes and techniques. Commonly used within the indirect procurement function by the procurement department, typically responsible for acquiring indirect goods and services. In this case, it includes acquiring third party labor or non-employee services through Staff Augmentation. Usually, large enterprises use one of the many names for these programs, namely, contingent labor programs also known as contingent workforce programs or non-employee or 3rd party labor programs, or Flex or On-demand talent programs.
In the staffing industry, it is used as an alternative sourcing approach in addition to traditional staffing suppliers for sourcing talent. While this is not a new process in the talent acquisition industry, contingent programs are a bit backlogged as compared to the HR and HRTech industry which have witnessed major modernization in the past two decades.
Every enterprise has a talent acquisition team that relies on an Applicant Tracking System (ATS) or other HRTech platforms to attract and engage talent directly for direct hire/full-time roles.
Historically, this contract talent or temp labor sourcing was acquired/ managed through staffing agencies that are managed by a program management team internally or outsourced externally to a managed service provider (MSP).
Define Direct Sourcing?
A common analogy we use at WillHire is — “Direct Sourcing is what Netflix is in the entertainment industry”. No contingent program manager likes to be a Blockbuster story while not attempting to modernize their program. Direct Sourcing is a result of applying Design Thinking & Digital transformation to a contingent program.
With these being unprecedented times, Direct Sourcing has become the new normal and accelerated its need multifold for enterprises to build better predictability and bring cost savings into the organization. It gives an ability for enterprises to source temporary labor or contract talent directly thereby reducing the dependency on staffing suppliers.
Clearing Assumptions and Busting Myths — What Does Direct Sourcing Entail?
There are too many assumptions, confusions, and myths around direct sourcing.
Let’s look at the key takeaways for enterprises that clarify what direct sourcing could do for them:
● Potential cost-saving: Direct Sourcing has proven to be significantly cheaper than traditional staffing agency markups
● Leveraging Employer Branding: To create a great candidate experience and attract good quality talent
● Building and Nurturing Private Talent Pools: To fulfill the current and future needs of any organization
● Reducing Time to Fill: By using a pre-vetted private talent pool — ready to hire
● Talent Diversity: Measuring and managing talent diversity within the contingent labor pool
Now let’s talk about what direct sourcing is not:
● It is not a replacement for your existing MSP
● It is not an ‘All or Nothing’ method.
● It does not fully replace all your traditional staffing suppliers, but rather gives you a way to increase the bar on talent sourcing
● It is not a replacement for your VMS (Vendor Management Systems). However, direct sourcing platforms do act as an extension to the existing VMS.
● It is not a total talent management (TTM) system or method. It is, however, heavily focused on contingent labor and builds a pathway for TTM.
● It is not a co-employment risk, as it aligns into the program similar to existing suppliers.
● It is not all about cost savings
Direct Sourcing is a model to directly attract and engage the contract workforce by leveraging the modern-day talent acquisition techniques which include leveraging your brand, repurposing your traffic from the company’s website and your career pages, generating job seekers from job boards or all possible online channels and generating referrals for the temp roles similar to an employee referral program, and building a private talent pool which you can tap into as and when you need.
There are multiple models within direct sourcing on who and how talent is attracted, screened, or shortlisted and managed. In the entire process, technology plays a major role by ensuring efficiency and not acting as a disruptor in existing programs.
Benefits of Direct Sourcing
1. Potential cost-saving
Enterprises can post opportunities to source and select contingent workers that fit their needs using direct sourcing tools. Willhire, for example, uses a matching algorithm to pair qualified talent — already in your network and from the platform — with available opportunities, reducing the time managers have to spend reviewing candidates.
This is cheaper and faster than a traditional staffing agency. Direct sourcing reduces the cost of giving contingent workers what they need to start their professional engagement in one place to use internal resources better and minimize the risk of compliance.
2. Employer branding
Along with your existing employer branding program with direct sourcing, you can tap into the contingent workers market. A good employer branding exercise can increase the number of quality applicants, reduce the cost per recruitment, and help create a differentiated proposition from competitors.
With your direct sourcing tool, you can now extend your employer branding program to contingent workers. Enabling excellent candidate experience to turn candidates into business advocates — ensuring top talent keen to work with the organization.
3. Curating & nurturing talent pool
A curated pool of contingent talent makes it easier to find and engage when required. Enabling organizations with flexibility and allowing the recruiter to function in-house. Engaging with this pool can increase output and higher satisfaction. Overall reduce the time to fill open positions.
Many organizations face challenges while hiring contingent workers with a niche skill set occasionally. But having a curated talent pool of these contract talent makes it much easier to find and re-engage as and when services are needed.
4. Talent diversity
Diversity in today’s world is not just jargon or compliance mandates but also a proven change agent to include people from diverse backgrounds for business growth.
D&I technology in a direct sourcing program will help an organization leverage a diverse contingent workforce’s true potential. Features like talent diversity analytics, measuring diversity stats, diverse talent acquisition channels, etc., are readily available on direct sourcing platforms to step-up talent diversity.
5. More control over the hiring process
A staffing agency securing top talent might contract qualified people’s services but could be way out of budget, not an ideal organizational fit.
But with direct sourcing keeping it in-house, organizations have more control over the recruitment budget, enabling better planning and budget optimization.
6. Increased manager and talent satisfaction
Direct sourcing reduces the time managers spend reviewing candidates, creating a simplified, easy-to-follow process.
Faster hiring also allows organizations to deliver a better candidate experience. A private talent pool available to an organization will enable them to attract and repeatedly engage with contingent workers, allowing them to build deeper relationships and develop trust. In turn, candidates also let their peers know what a fantastic employer they have worked for.
To engage and hire contingent workers, Direct Sourcing can be an excellent strategy for your organization. It can deal with fluctuations in workforce needs during times of uncertainty. Plus giving you the advantage of cost-saving leveraging the talent pool that’s readily available.
Technology plays a massive role in how talent is attracted, screened, shortlisted, and managed. Research and building a robust strategy is the key to reap the benefits of direct sourcing.
Where to Start Direct Sourcing?
With the increase in the number of participants in the independent workforce, companies realize they now have access to better talent than ever before. Enterprises with extensive requirements for contingent workforce deal with a massive cost from staffing agencies, quality issues, and lack of control in their day to day operations now understand direct sourcing is here to stay.
Enterprises now understand the advantages of direct sourcing but are challenged “where to start their direct sourcing journey.” While there are multiple models for direct sourcing. Enterprises need to answer several questions to choose an ideal model that fits needs based on the current program and maturity levels. Before enterprises get to direct sourcing, it is essential to ask a few questions to access your requirement:
1. Is your program ready for direct sourcing?
Based on the enterprise’s current hiring need and structure, it is crucial to understand direct sourcing is not always the best solution in every situation. It’s essential to assess the organization’s readiness for a direct sourcing program. Few ways to evaluate your organizational readiness are:
● The business already has workforce planning and forecasting in order.
● Organization plan to recruit a large pool of contingent workforce
● The current model is not serving as a cost advantage.
● Need control over the process to gain visibility of dollars spent
● Looking to leverage your employer brand to hire contingent workers
● Implementation of the whole program or only a particular job category
● Current status of contingent workforce program — If currently an MSP driven or self-managed program:
○ Who would curate the talent,
○ How to curate the talent?
○ Is there a need to coordinate with the HR Team? Why? And how?
● What vendors and partners are more suitable for the program to make this initiative successful?
2. How can the organization benefit from direct sourcing?
Direct sourcing can provide many cost-savings benefits, but the opposite can also be true if employers don’t have the proper resources or a formal program to manage the process.
Tools like Willhire, an end-to-end direct sourcing technology platform, help in talent attraction, curation, and managing candidates to put the direct sourcing program on autopilot.
When managed properly, the organization reap the benefits of direct sourcing:
● Potential cost saving
● Employer branding
● Curating and nurturing talent
● Talent diversity
● More control over the hiring process
● Increased manager and talent satisfaction
After accessing these two questions, organizations should look to start their direct sourcing journey.
Here’s how to launch an effective direct sourcing program
Step One: Set an organizational plan
Any great program needs to have a clear and achievable goal, which needs to be well rounded by people, process, and technology to achieve success. Identifying the right model and all the relevant attributes get you ready to launch. Identifying your MVP (Minimal Viable Product) to establish and measure is mission-critical?
Few important factors to consider:
● Internal Buy-in
● Employer Branding Strategy
● Talent Attraction Modelling
● Talent Pool Approach
● Talent Curation Process & Owners
● Talent Engagement Models
● Onboarding & EOR/Payroll Services
● Accommodating for the cost of acquisition
Step Two: Measuring the experience design — setting KPI’s
Building a community of engaged contingent workers and future employees is not easy — it requires intentional thinking from the talent’s perspective about participation’s experience and benefits. The real value of the talent pool is as good as curation. It is implementing a curation model that applies to the program with modern-day self-assessment tools and automation.
KPI’s, which will track program success:
● Recruitment Budget Spend
● Spend by Source
● Total Applicants by Source
● Organic VS. Paid
● Cost per Applicant
● Time to Hire
● Total Members in Talent Pool (Growth by Week)
● Total Referrals & Cost of Referral
● Jobs Filled through Direct Sourcing Vs. Supplier Sourced
● Supplier Bill Rate Vs. Direct Sourcing Bill Rate Comparison
Step Three: Optimize program architecture.
In tandem with the measurement process, every program needs to keep optimizing its fundamental structure to eliminate unnecessary steps to ensure a better talent experience and improve the key metrics.
To prepare for scale, organizations need to ensure the right mix of tech and process is in place. An essential step in this direction is driving sourcing as a marketing play setup with the right engagement trigger driven by MI/AL.
Leveraging this organization can create:
● Build faster curation model
● Create niche talent traffic generators
● Increasing applicant conversion rate
● Improve time to hire rate
Step Four: Scaling your direct sourcing program
For every organization, the end goal of implementing a direct sourcing program is to get the benefits of lower supplier cost and dependencies, hiring quality candidates, and reducing time to hire. But achieving these and moving to a 100% direct sourcing model being the target — it’s essential to repeat steps two and three.
A direct sourcing tool is excellent for managing everything on autopilot mode. Simultaneously, the organization can focus on growing the talent pool to scale the program at large.
It’s essential to have a rock-solid foundation to get the real value of a direct sourcing program. These steps will help any organization looking to start direct sourcing and focus on the primary indicators that they need to figure out before deciding to launch a program. These may vary on the organization’s maturity, size, and complexity.
Have questions on direct sourcing and how it is more beneficial than hiring a staffing agency?