Contingent Staffing and the Rise of Direct Sourcing

The nature of procuring contingent labor is transforming before our very eyes.

Whereas before we saw sourcing of contingent staff carried out indirectly through suppliers, modern technology and a significantly increased pool of available contingent labor have driven a move towards more direct talent acquisition.

Indirect sourcing is often carried out through managed service providers which can help drive competition among contingent staffing suppliers, lower staffing mark-ups, and achieve compliance with contractor workforce policies and procedures. 

However, we are now seeing this method decline in popularity and witnessing the rise of direct sourcing. But what does this mean for the contingent staffing procurement business and what is the best way to manage this transformation?

Direct Sourcing

Direct sourcing benefits an organization by making the process of procuring contingent staff faster and more streamlined than would have previously been possible.

By cutting out the middlemen – agencies, managed service providers, suppliers, etc. – organizations can use their own brand as an attractive force and build their own pool of talent from the ever-increasing number of freelance contractors available.

"According to Staffing Industry Analysts (SIA) upcoming market research on direct sourcing, only 16% of the 158 contingent programs surveyed strongly agree that direct sourcing is effectively implemented today," writes Head of Corporate Development at Raise Recruiting, Edwin Jansen. "Another 21% somewhat agree that direct sourcing is effectively implemented, and within two years, an additional 23% of programs either strongly or somewhat agree that direct sourcing will be in place."

These data suggest that, while direct sourcing may still be in its infancy when it comes to contingent staffing, we are on the cusp of a sharp rise in its adoption and can expect to see these proportions rise significantly over the next couple of years.

Not only does direct sourcing allow an organization to build its own private database of talent, but it also saves money from avoiding paying agency commission and other costs. Perhaps even more beneficial is the fact it empowers a business to switch from a reactive- to a forecasting-based model when it comes to managing its contingent workforce. By having all elements of the process in-house, HR can more effectively collaborate with project managers to assess future requirements and acquire and onboard the necessary talent ahead of time.

Keeping this pool of talent engaged both before, during, and after this process is also a key element of direct sourcing and will contribute towards developing the talent pool we’ve already discussed.

"Direct sourcing doesn’t stop when a candidate is placed," writes Director of Contingent Workforce Strategies and Research for SIA, Christopher Paden. "It is important to think of the experience of the workers and create a population that is highly engaged and eager to come back after the assignment ends. Strong resource engagement and satisfaction becomes extremely important as you consider the value of redeployment of high-quality/highly skilled workers."

Technology

Naturally, there’s a host of technological solutions available which can help your organization with the transition to, and maintenance of, a direct sourcing model for contingent staff procurement.

Automation tools use powerful AI technology to quickly and efficiently scan through your talent database/s to find the best candidates for a particular project. By streamlining the candidate selection, interview, and even the onboarding process, these technologies rapidly whittle down the number of potentials your human procurement officers need to assess – freeing up their time for more business-critical decisions.

When it comes to building your pool of talent, market intelligence platforms can assist you in learning what makes an organization attractive to freelance workers and what factors are likely to encourage them into the fold.

"When your organization takes on a direct-sourcing function, it’s important to be smart about how you source and recruit talent," continues Paden. "Depending on the type of information and intelligence you are looking for, there may be a technology solution to connect you to the data. These intelligence platforms can help you to recruit smarter by identifying where you can find the ideal population of talent and even what influences talent’s decisions whether to join a company."

There are many other platforms available which can help with everything from relationship management to acquisition and, whatever the needs of your organization’s contingent staffing procurement team, there will be a selection of tools suitable for the job.

Final Thoughts

Direct sourcing can help your organization lower costs and streamline the process of procuring a contingent workforce. It will take some work in the early days of the transition to attract workers and build your talent pool but, once that is achieved, you can start really reaping the benefits.

Direct sourcing is certain to be part of the conversation at ProcureCon Contingent Staffing 2022, taking place in March at the Renaissance Phoenix Downtown, AZ.

Download the agenda today for more information and insights.