Advantages and disadvantages of direct sourcing when hiring independent workers

With competition for the top talent in any industry high and a vast array of industries experiencing labor shortages, the best candidates can be hard to find  – especially when it comes to tech talent – and when you do find them, you may have to pay them more to attract them to your business. This talent shortage has led to a growing number of companies turning to alternative workforce solutions, like a direct sourcing solution, to meet their staffing needs.

Direct sourcing can help companies who are struggling to make hires stay competitive and comes with added benefits like a shorter hiring process, extra flexibility, and (more importantly) access to top talent.

But what exactly is direct sourcing and how can it benefit your company? Read on to find out.

What exactly is direct sourcing?

For those unfamiliar with the term, direct sourcing refers to when companies bypass third-party recruitment providers and utilize their own brand to build a talent pool they can access easily.

This candidate pool can consist of current employers, retired staff, former employees, freelancers, contractors, or second-choice candidates who have passed through a company’s application system but were not considered the right fit for the role they applied for.

Direct sourcing is often a bespoke solution that will vary from organization to organization, with candidates sourced, hired, and onboarded based on the company’s size, budget, and the talent needs of the role. In a competitive talent market, direct sourcing allows businesses to tailor their talent pool around the unique aspects of the organization and will allow them to attract and retain better contingent workers.

The benefits of a direct sourcing strategy

In an increasingly complex recruitment market, it’s no surprise that companies are exploring the possibility of using their own direct sourcing strategy. Direct sourcing can help a business to:

Access a pool of talent already engaged with the company

Direct sourcing gives businesses access to a pool of pre-vetted talent. This can allow managers to eliminate any uncertainties associated with talent acquisition from other avenues like job boards or recruitment agencies.

Direct sourcing also enables companies to nurture longer term relationships with independent talent, which can help to increase loyalty from employees while creating a network of advocates for the company.

With a pool of already engaged talent to call upon, a company stands a far better chance of attracting and subsequently retaining the right contingent workers for the business.

Reduces costs

Third-party recruiting methods (like a staffing agency) can be expensive. The markup of hiring contingent workers from an external recruiter can range anywhere between 20% to 40%. This can be particularly true where the role is hard-to-fill or a technical role

Direct sourcing gives hiring managers the means to source and select the right temporary talent for specific projects without the need for expensive marketing or third parties. By cutting out the middleman, companies can save time and money while also freeing up valuable resources for other important business tasks.

It can help enhance other aspects of the business

Not only can direct sourcing save a company money when hiring, but it also has a number of other cost savings that often go overlooked.

Typically, direct sourcing reduces the time it takes to complete a hire, encourages more efficient onboarding, and helps businesses to create a deeper talent network. All of these can create soft savings for a business and may even enhance the employer’s brand and company culture, which may further strengthen the chance of hiring top talent in the future.

It helps a business become the employer of choice for potential recruits

Gaining a reputation as a good employer enables companies to attract and retain the best talent. By expanding this to become the client of choice for a recruitment pool, a business stands a far better chance of attracting the best workers, even in highly competitive industries.

It can help make a better workplace culture

Permanent workforces are becoming a thing of the past for many businesses as workers are being replaced by independent contractors, freelancers, and temporary team members. That can lead to a negative shift in the workplace culture that can be hard to turn around.

If the workplace culture is disjointed, the performance of the business may struggle, and attracting and keeping the top talent in the industry can be difficult.

Direct sourcing focuses on hiring contingent talent from a pool of potential employees who are already invested in the business in some way. This can result in happier staff straight out of the gate who will elevate the culture within the business.  

What are the disadvantages of direct sourcing?

Whilst a cost-effective method of resourcing, top talent direct sourcing, isn’t right for every business and does have its drawbacks.

Setting up your talent pool can take time

Implementing direct sourcing for contingent talent is best done as a gradual transition. Getting your talent pool up and running and filled with the candidates who offer something to your company can take time. On top of this, you will need to educate hiring managers about the process of direct sourcing and get them to buy in to its advantages or they may be reluctant to change their traditional recruitment methods.

Save time and effort in finding the right consultant. Book a free consultation with us today. 

You need a compelling employer brand

If potential employees view your employer brand in a dim light, they are unlikely to want to join the talent pool you will need to fill to make direct sourcing a success. But building a good brand and employer value proposition can take time, effort, and often a lot of money.

You must invest in your own vetting and onboarding processes

With direct sourcing you will need to set up your own processes for bringing new staff on board. You’ll have to put a team in place, research and use freelance management systems to manage your independent workers, while at the same time ensuring that all rules, laws, and regulations are followed to avoid legal issues.

Hiring temporary staff from an external agency can help with the candidate journey, take the work out of the onboarding process and may reduce vetting issues that could see you get into trouble with regulatory bodies.

In conclusion

The benefits of direct sourcing as a recruitment strategy are undeniable. Not only does it bring lowers costs, quicker hiring cycles, and enhanced engagement but it can help create a better culture within your business.

But direct sourcing takes planning to make it work, and mistakes can be made if a business attempts to introduce it too quickly.