Fast-moving companies don’t have time to waste when filling contingent worker roles. They need talent with the right skills to jump into projects with minimal downtime. But with top talent at a premium, companies have to work harder than ever to find qualified candidates.
To expedite the process, companies turn to direct sourcing, or hiring from pre-screened talent pools to quickly bring in qualified candidates with the skills they need. Nearly 40% of large companies that engage contingent workers use direct sourcing to do so—and experts expect that number to grow.
Read on to learn more about direct sourcing, how it differs from traditional staffing methods, and four ways it helps companies efficiently meet their contingent workforce needs.
What is Direct Sourcing?
Direct sourcing refers to companies creating talent pools from their extended workforce, so they streamline the process of filling contingent assignments.
Companies that engage in direct sourcing bypass the traditional route of using staff agencies to find contingent workers. Under the staffing agency model, companies identify a talent need and then rely on vendors to search for that talent. These vendors, or staffing agencies, compete to find talent that meets the company’s needs and then submit their candidates to its hiring decision-makers.
To utilize direct sourcing, companies build their own contingent worker talent pools, then turn to those pools when contingent workforce needs arise. Companies fill these talent pools with the following types of workers:
- Manager Referrals: Talent that managers or team members referred in the past but were unable to hire because no immediate openings were available.
- Past Contingent Workers: Workers with a track record of success completing previous contingent assignments for a company.
- Silver Medalist Candidates: Applicants for previous job postings that were qualified and worthy of hiring but finished as a runner-up to the candidate that was ultimately hired.
- Returning Retirees: Talent that recently retired before deciding to return to work on a contract or freelance basis.
- Boomerang Employees: Talent who voluntarily left a company for another opportunity before returning on a contract or freelance basis.
Due to its numerous benefits, the number of companies that utilize direct sourcing is expected to nearly double over the next two years. Following are four reasons companies benefit from direct sourcing talent to meet contingent workforce needs.
Direct Sourcing Ensures You Engage Proven Talent
There are no guarantees when it comes to bringing in new talent. Direct sourcing, however, bypasses the uncertainty that comes with engaging unproven contingent workers. When you have a pre-screened pool of vetted, proven talent, you fill your contingent roles with talent you know and trust.
In the case of silver medalist candidates, you’ve already undergone the interview process and determined that the talent has skills that benefit your company. Similarly, boomerangs, returning retirees, and past contingent workers have all demonstrated their value to your company through previous work.
While there is always an element of risk in engaging unproven talent from a third-party staffing agency, re-engaging trusted talent brings a sense of comfort and confidence. Companies that use direct sourcing to engage these types of talent know they are hiring workers that can get the job done.
Direct Sourcing Helps You Align Talent With Your Unique Needs
No one knows your workforce needs better than you do. Direct sourcing gives you greater control over the hiring process, ensuring you bring in candidates that fit your exact needs.
Working with a staffing agency, on the other hand, can be a game of telephone. Vendors reproduce their own version of your job posting across multiple job boards. When doing so, vendors often sell different aspects of the position they think are most appealing to job-seekers. This process makes it more likely that important details get glossed over or omitted altogether.
Utilizing direct sourcing gives you complete control over the contingent worker hiring process, eliminating the middleman and mitigating the risk that key information becomes lost in translation. When you direct source contingent workers, you have full control over your communication during the hiring process—and ensure they understand exactly what you expect from them.
Direct Sourcing Streamlines the Talent Acquisition Process
HR and talent acquisition teams know that engaging new talent is anything but an overnight process. Direct sourcing speeds up hiring, so you get new talent up and running with minimal downtime.
When companies turn to a staffing agency for hiring, they must follow a lengthy process to source new talent:
- Create a job description
- Rely on staffing agencies to find workers based on that job description
- Review the talent presented by the staffing agency
- Interview qualified candidates
- Onboard and train talent that passes through the interview stage
Direct sourcing allows you to circumvent this process. Because you engage talent you already know, you don’t need to wait for a staffing agency to pass along the job description to contingent workers, sort through applications, and present you with a list of qualified candidates. You also save time by skipping the interview process, considering you’ve already screened both silver medalist candidates and returning talent.
Furthermore, because returning talent already knows your company’s processes, standards, and infrastructure, they’re able to get started on projects with no learning curve—offering you huge time savings compared to bringing in brand new talent from a staffing agency.
Direct Sourcing Saves Companies Money
When it comes to hiring talent, the adage “time is money” is more than a cliche. It’s an established truth—and the reason that more and more companies turn to direct sourcing to meet their workforce needs.
Quickly hiring talent through direct sourcing helps you undergo the lengthy and costly process of screening, interviewing, and onboarding new talent. You’ll also skip the long ramp-up period required for new talent to reach full productivity at work. A recent study reveals that new hires need an average of 12 weeks to become fully productive in a new position.
Direct sourcing enables your company to quickly benefit from your talent pool’s familiarity with the work, processes, or expectations. As a result, you cut down the time—and money—spent screening new candidates, then waiting for them to get up to speed with their new position.
At the same time, direct sourcing helps you avoid paying a markup to a third-party recruiter. These savings free up capital you can reinvest in talent. While pay grade is not the sole indicator of a talent’s value, workers with a proven history of success or a hard-to-find skillset often demand higher wages.
Optimize Direct Sourcing with an Employer of Record
Companies that hire contingent talent through direct sourcing must compliantly pay their contingent workforce and handle any necessary taxes, benefits, and withholdings. Employers must also ensure they correctly classify their talent according to local labor laws. Companies turn to Employer of Record (EoR) partners to handle these responsibilities with minimal hassle and total peace of mind.
An EoR partner acts as an extension of a company’s HR or legal department, ensuring full compliance with labor laws across markets. By administering payroll and handling necessary taxes, benefits, or withholdings for talent, an EoR frees the company from taking on extra responsibilities when direct sourcing. In short, an EoR provides a stress-free and streamlined employee experience for any type of contingent talent that companies bring on—in any market.
Velocity Global provides EoR services to companies in over 185 countries and all 50 United States. Our global work platform creates a seamless experience for employers and talent, removing friction and risk wherever direct sourcing occurs. Find out how our expertise can benefit you by reaching out to Velocity Global today.