Debunking the Top 6 Direct Sourcing Myths

Direct Sourcing has tremendous potential to drive cost savings and deliver incredible outcomes, but there is some confusion about important aspects of Direct Sourcing.

Direct Sourcing refers to the process of building robust talent pipelines by accessing and engaging with your organization’s existing talent pools, as well as extending your reach into additional talent pools to find quality candidates. Many organizations also utilize their company brand to attract talent and build a talent community. Direct Sourcing is currently estimated at around $1B of annual contingent labor spend. If you’re not familiar with how Direct Sourcing works, read our introductory blog post on Direct Sourcing here

Let’s start by debunking some common myths and misconceptions about Direct Sourcing: 

Myth 1 - Direct Sourcing will automatically save our business millions of dollars

The biggest allure of Direct Sourcing is its promise to deliver businesses tremendous cost savings post-implementation. While the savings are real, the path to receiving them is not straightforward and depends on multiple factors, including:

  • The types of roles you hire for – The competitiveness of the market, going pay rates and availability of talent will determine the cost savings for each particular role. 
  • Whether the roles are repetitive or similar in nature – The more similar roles are, the bigger boost you’ll receive from existing talent pools or from building talent pipelines. 
  • Whether your biggest hiring needs are located in a few geographies or spread out – Consolidated geographies will enable more use of your talent pipelines. 
  • The volume of positions you need to hire 
  • The availability of talent for your top hiring needs

Each situation is unique, and the eventual cost savings are dependent on the amount of efficiencies that can be gained by leveraging existing and external talent pools.

Myth 2 - Direct Sourcing requires zero investment

There are ways to structure your Direct Sourcing initiative to minimize the upfront investment. But in reality, direct sourcing requires investments of time and energy to make it successful. There are costs associated with the technology solution, sourcing channels and the team members responsible for sourcing, curation and hiring. Although these costs can be added into the mark-up rate, the speed of ROI for the direct sourcing solution directly depends on the amount of investment your business is willing to commit up front. Direct Sourcing also includes an element of change management for processes relating to contingent hiring.

Myth 3 - Awesome technology is what makes Direct Sourcing possible

Direct Sourcing is not just technology dependent, but people dependent as well. A successful Direct Sourcing strategy requires experienced professionals that know how to leverage technology to fill open jobs. It is important to note that technology alone cannot ensure an exceptional candidate experience. You need team members that have a great attitude and are customer service oriented to make the hiring process one that candidates enjoy and want to engage in. Only a combined high-tech and high-touch approach can make Direct Sourcing successful.

Myth 4 - Direct Sourcing is better done in-house, without the help of external vendors

Very often, Direct Sourcing is touted as an internal recruitment strategy where managers can source talent internally, rather than relying on a third-party or intermediary such as a consulting or staffing company to fill talent needs

This is possible as long as you have the following:

  • Ample access to talent pools (internal and external)
  • Ability to engage and nurture talent through email, phone and text
  • Ability to leverage your brand for talent attraction and engagement
  • Access to technology that can power your capabilities
  • Access to a team of sourcers, recruiters and curators

Unfortunately, most businesses lack the technology and resources to effectively implement a Direct Sourcing strategy. In fact, working with a Managed Service Provider that understands your business’ culture and hiring needs simplifies the Direct Sourcing process and reduces costs plus overall contingent spend.

Myth 5 - Direct Sourcing will fulfill 100% of our open positions

Having access to millions of candidates in your talent pools doesn’t guarantee a high fulfillment rate. The data residing in your various internal talent pool sources are likely to be static and require refreshment by engaging and nurturing the talent.
Moreover, the ease at which open positions can be filled depends on the job details, volumes, geographies, availability of talent, talent interest in your brand, and more. The more your talent pools resemble the needs of your hiring program, the more you’ll be able to reap the rewards. High fulfillment rates happen over time. On average, you can expect 20-30% fulfillment in specific job categories during the first year with the ability to scale that to over 50-80% in 5 years.

Myth 6 - Direct Sourcing delivers great outcomes quickly

Direct Sourcing is still in the early days of market penetration and requires time to be understood and evaluated. For businesses looking to adopt a Direct Sourcing strategy, it’s best to take a ‘crawl, walk and run’ approach.

The first step is to define the problem to be solved via Direct Sourcing.This can be done by conducting an assessment and running a pilot to identify your hiring needs and goals. Following the evaluation process, businesses can use an agile and iterative approach that allows them to improve and tweak the solution along the way, allowing them to utilize Direct Sourcing in specific areas where they get the best ROI and results.

Should You Invest in Direct Sourcing Right Now?

Direct Sourcing has become the current hot-topic in the global staffing industry with businesses, suppliers, service providers, and tech providers starting to realize its potential value. Cost reduction is what drives this strategy – since running a contingent workforce program is expensive and approaching suppliers for volume rebates doesn’t always translate into an effective cost-cutting strategy. Innovative solutions like Direct Sourcing help to fill in these gaps. By using a combination of the latest technology, streamlined processes, and experienced professionals to manage the program, Direct Sourcing helps businesses reduce costs associated with their external vendors.

Direct Sourcing also helps leverage your brand to attract and engage talent from both your internal and external talent sources, thus ensuring a positive candidate experience. By building proactive talent pipelines for high-volume roles, Direct Sourcing also tremendously improves your speed-to-hire.

All-in-all Direct Sourcing is a tech-enabled services play that helps businesses develop a best-in-class Contingent Workforce or Total Talent Management program that is agile, diverse and high performing.

How Can Prosperix Help Your Direct Sourcing Efforts?

Prosperix is the first end-to-end workforce solution that addresses the entire hiring lifecycle, inclusive of talent attraction, branding, engagement, sourcing, assessments, recruiting, vendor management, onboarding, and workforce management. We help businesses propel their Direct Sourcing efforts by combining high-tech innovation with high-touch candidate experience. 

Prosperix helps businesses tap into multiple haystacks of talent, empowering them with an exponential ability to hire. Prosperix also provides complete transparency into the hiring process, available talent pools, and performance, leading to outstanding hiring outcomes. 

Schedule a demo with us today to learn more:

Workforce Solutions Ecosystem – More Than the Sum of Its Parts

Note: This blog post is part of a series of posts that go in-depth on different elements of our Prosperix Ikigai. For more information, visit our About Us page here.

When you think of a natural ecosystem like a pond, your mind might not drift towards the complex interrelationships between the systems of plants, insects, fish and mammals that populate the ecosystem. But a complex ecosystem like a pond is more than the sum of its parts because of those relationships, leading to natural diversity and sustainability. At the same time, an imbalance in any aspect of the ecosystem can spell trouble for its relationship to other elements in the system. That’s why wildlife management programs focus on the holistic habitat in question as opposed to one species or element – the various elements are all related and dependent on one another. 

The same rings true for the staffing process. When disparate elements and tools are managed in a siloed environment, there is less ability to realize benefits gained by integration and interoperability. 

As staffing teams are working towards maximizing proficiency, it is becoming more apparent that not only do the cogs of each machine need to run without friction, but multiple machines have to work in tandem to establish a solid framework. When hiring tools and functionalities integrate and interoperate, they form the foundational structure of a workforce solutions ecosystem.   

The Advent of Workforce Solutions Ecosystems

Traditionally, the many facets of staffing have been treated as distinct business functions having their corresponding mode of operation. However, this is no longer conducive to the dynamic nature of the current staffing environment. Swivel-seating, manual data compilation, and other passive practices once had a time and place to shine, not because of efficacy but due to a lack of digital resources.  

Even before the pandemic made remote working a necessity, the demand for contingent workers was on the rise. Everything since has only accelerated the ramp up of contingent hiring and requires technology to match the escalated expectations of hiring outcomes. Such technological advancements that support hiring efforts collectively are recognized as core to a workforce solutions ecosystem.  

Workforce solutions ecosystems are somewhat new to the game. An Oxford Economics survey found that 83% of executives in North America utilize contingent workers; yet, 34% feel they are limited by technological incompetence, marking a gap in adoption of contemporary solutions.  

What the ecosystem concept highlights is the need for the facets to unite to take a comprehensive approach to talent acquisition. Liz Bradley, Director of Communications, Scout Exchange, emphasizes this: “Ecosystems allow employers to have a unified, holistic view of total talent management across the organization. It also allows for more flexibility and cost efficiency over traditional agency approaches because everything is connected and streamlined under one platform – attracting and acquiring talent, managing and developing talent, understanding and planning talent, as well as extending talent.”

The beauty of the word ecosystem is that it inherently embodies harmony. A business that employs the workforce solutions ecosystem is harmonious within itself and with its external connections, allowing it to achieve aspirational results faster and better than any singular competency.

Components of the Workforce Solutions Ecosystem

In the 2020 edition of their report on workforce solutions ecosystems, Staffing Industry Analysts (SIA) delineated the six sections of the ecosystem as Staffing, Process Outsourcing, Payroll/Compliance, Direct Work Engagement, Talent Acquisition Technology, and Other Workforce Solutions. The scope of every section can be understood as:

  • Staffing – Sourcing and recruiting contingent labor  
  • Process Outsourcing – Human Resource Outsourcing (HRO), Business & Recruitment Process Outsourcing (BPO & RPO), Managed Service Programs (MSP)
  • Payroll/Compliance – Payroll Organization, Independent Contractor (IC) services
  • Direct Work Engagement – SOW consulting services, Robotic Process Automation (RPA)
  • Talent Acquisition Technology – Candidate discovery, assessment, processing, and engagement
  • Other Workforce Solutions – HR consulting, outplacement, training & accreditation

Prosperix encompasses all six functions through its offerings such as Crowdstaffing VMS, Crowdstaffing Hiring Marketplace, and our Workforce Solutions suite, which help with: 

  • Crowdstaffing Hiring Marketplace – Hire at scale using a network of suppliers and talent pools
  • Crowdstaffing VMS – Manage your workforce and achieve outstanding hiring outcomes
  • On-Demand Talent Pools – Speed up time-to-hire with the highest quality talent currently available on the market
  • Direct Sourcing – Access additional talent pools to make hiring quick and cost effective
  • Workforce Solutions – Expert strategy, support, and management of your contingent workforce

Combined, Prosperix’s solutions ecosystem reflects our ideology of making contingent workforce hiring and management a seamless experience. Users of our workforce solutions can realize the benefits of an integrated and unified ecosystem that solves the end-to-end hiring process for organizations. 

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To learn more about our solutions and ecosystem approach, please visit our website or schedule a demo below.