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How to Define and Implement a Direct Sourcing Strategy


Many leading organizations, across all geographies and industries, have recognized the benefits of direct sourcing as an effective method to attract and retain the vital talent they need to grow and innovate. As the world of work continues to evolve and talent scarcity becomes more acute, the successful deployment of this strategy will continue to grow in importance.

Direct sourcing defined

Direct sourcing (sometimes also referred to as “self-sourcing” in the staffing industry) is the process by which a company develops and leverages its own candidate pool to engage as contract workers instead of going to a staffing provider or third-party labor supplier. These flexible workers can be found in many places, including current and former contractors, former employees, retirees, silver medalists, freelancers, etc., and are often engaged via a third party solution provider, like TalentWave, who contracts with the company to appropriately classify and pay the direct sourced workers.

The opportunity

Sourcing and engagement of contingent workers has historically been done mostly through staffing suppliers. While this process is fairly predictable and low risk, it brings high transaction costs (mark-ups can reach 60%, or more, or worker pay rate), long time-to-fill metrics (often measured in weeks, not days) and occasionally questionable quality.

These process gaps and solution shortcomings are amplified when we consider knowledge workers, who are often highly skilled experts working on time-sensitive and mission-critical projects. With this demographic of worker, any delay or additional cost has a significant impact on the bottom line. In addition, many of these workers simply do not want to work through a traditional staffing supplier.

Fortunately, direct sourcing can address all of the above shortcomings.

In addition, this strategy brings the added benefit of providing access to a much broader population of talented professionals who prefer to work independently by engaging and working directly with a range of different organizations. When combined with an independent workforce compliance and engagement solution, like the services TalentWave provides to enterprise clients, a company has a turn-key solution to deploy a direct sourcing strategy that both attracts and retains scarce talent.

First, get clarity on your talent demand

To get started on your strategy you must first gain clarity on your need for talent. Thinking about your ideal company structure, the mix of employees versus flexible workers, and your short- and long-term talent demand are crucial inputs to strategy development. To get you started we’ve developed a couple of useful resources:

  • The Flexible Workforce: A shock absorber for turbulent economic conditions – What is the optimal staffing level? How do you determine the right mix of traditional workers versus flexible workers (independent contractors, freelancers, temporary workers)? This whitepaper will help you learn how total talent management works and how you can adapt this flexible workforce model to your organization’s needs.
  • The Flexible Workforce Strategic Planning Guide – Almost every industry can benefit from engaging the independent workforce. So how do you effectively tap into the potential of highly skilled independent workers (contractors, freelancers, temps, etc.)? This step-by-step strategic planning guide will help you build your own unique strategy for engaging independent workers alongside your full-time employees.

Consider your talent supply options

As mentioned earlier in this article, independent workers can be found in a variety of categories. Some of the most common include current and former contractors, former employees, retirees, silver medalists, freelancers, etc.

Stay tuned, we will explore these in greater detail in an upcoming TalentWave blog article.

A few direct sourcing best practices

  • Focus on building your “client of choice” brand. Under the umbrella of Total Talent Management, many Procurement organizations have begun to partner with their Human Resources colleagues to create a framework for managing the organization’s entire talent chain. To do this they must also create a new, singular, company recruiting brand. In times past the focus was on becoming the “employer-of-choice”, in the new era of talent scarcity it has morphed to becoming a “client-of-choice”!
  • To help you get started on building your client of choice brand, we wrote a whitepaper on Becoming a Client of Choice for the Independent Workforce. It explains how progressive organizations are learning that in order to attract and retain independent workers they must strive to become a “client-of-choice”. This whitepaper presents 10 proven best practices for success in the new workforce era of talent scarcity and Total Talent Management.
  • Build a contingent work option into your recruiting stream. Many leading recruiting organizations are beginning to ask potential candidates, right at “point of sale” – during the initial interview process, if they might be interested in contracting or project work instead of a traditional employment arrangement. Many  workers today want the flexibility and independence of being a non-employee.
  • A great way to scale a direct sourcing program is to build and actively curate your talent pool within a company-branded talent community. One easy way to do this is to deploy a proven platform, like TalentWave’s TalentBridge solution, which combines the software and services you need to create a thriving community of talented independent professionals that you can direct source from.

Conclusion/Next steps

Executing a direct sourcing strategy can provide a new, viable approach to accessing the mission-critical talent that your business needs. Like many developing solutions, there is still a lot of hype in the marketplace around direct sourcing, and many unproven technology solutions which can introduce a lot of risk and frustration into the equation. Fortunately, there are also tested and trusted experts, like TalentWave, who can be your partner in building and deploying a direct sourcing strategy that attracts and retains talent, shortens contractor time-to-productivity, mitigates risk, and delivers cost savings.

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