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HCMWorks Insights

What is Direct Sourcing, and How Can it Benefit my Organization?

Posted by Julia Fournier on 14 Aug 2018

Successful sourcing top talent can have a significant impact on a company’s revenue and future direction. As a result, businesses are moving away from traditional hiring models and adapting to a new generation of employees.

Many organizations are turning to direct sourcing in combination, or in lieu of, traditional staff vendors for the recruitment of temporary workers. This staffing strategy can come with significant time and costs savings if done correctly, and can help a company directly access the booming contingent workforce

Never heard of direct sourcing? Direct sourcing refers to the process in which companies make use of their own internal candidate talent pool to place workers within the company on a temporary basis.

This internal candidate pool can be made up of former employees, retirees or applications within the company’s own applicant tracking system. Once selected, these contingent workers are often engaged, managed and paid by an outsourced managed services provider (MSP), such as HCMWorks, which also establishes an arm’s length relationship and ensures their proper classification.

A new era of talent acquisition

Talent acquisition has changed, and that’s largely due to a huge shift in the style of work over the past decade. Some 30% to 40% of the US workforce is now made up of contingent workers, who work on a freelance, contractor or consultant basis.

Candidates in this pool of workers are picky, and can afford to be so. They come with specialized skills that can seriously benefit a company, and their way of working can help a business to create an agile workplace.

Making the most of this labour pool is your best weapon in the war for talent. Companies that find and engage with contingent workers outside of a traditional staffing agency relationship are, by definition, direct sourcing.

Contingent workers offer your company access to top tier and specialized talent, workforce flexibility, and cost savings when compared to hiring full-time employees, as well as allowing your company to hire on a project-by-project basis.

There’s no surprise that many organizations are now focused on building contingent workforce programs.

How direct sourcing reduces recruiting time and cost

Whether your HR or procurement department is in charge of hiring new talent for your organization, the sourcing and engagement of contingent workers has traditionally been done through staffing suppliers and agencies.

Direct sourcing, however, can significantly reduce the time and costs associated with recruiting as long as a properly managed strategy is implemented. While staffing agencies still have their own benefits, direct sourcing can cut down transaction costs, shorten the time it takes to fill skill gaps and ensure that your company hires the exact worker it needs at any given time.

Becoming a “client of choice”

In the past many companies have worked hard to build up their reputation as an “employer of choice”, to help attract and retain their full-time employees. Some companies are now expanding this effort to become a “client of choice”.

This reputation as a client of choice is just part of a wider strategy to attract the very best contingent and independent workers. It means temporary workers will know your brand and will be eager to work with you on a frequent basis.

Becoming a client of choice means company’s can engage with their own internal labour pool to access the right workers at the right time, as well as reach new workers through peer-to-peer word of mouth.

Workers who want to work with your company will deliver better results, offer an improved return on investment (ROI) and help drive up revenue.

A direct sourcing strategy doesn’t mean DIY

Many companies refuse to implement a direct sourcing strategy as they believe they are on their own. They believe that they will have to create their own processes, systems and platforms, and that this will all be too much work.

HCMWorks, however, can help you build a successful direct sourcing strategy, while managing the entire process on your company’s behalf.

Want to learn more? Contact us today.

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Tags: Contingent Workforce

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