Companies are adding direct sourcing to their recruiting toolbox

The rising demand for new and emerging skill sets, massive employee turnover, and fierce competition for top talent have companies rethinking their talent acquisition strategies and searching for better sourcing solutions. Throw in record-breaking inflation and a fractured economy, and it’s fair to say – the struggle is real.

One solution that is gaining traction across the business spectrum is Direct Sourcing. In fact, in a survey conducted by Staffing Industry Analysts, (SIA) 60% of businesses surveyed said they plan to make Direct Sourcing a priority in the next few years to meet their workforce demands.

Incorporating Direct Sourcing into your recruiting toolbox can give you an edge over the competition by helping you build a more agile, cost-effective, and scalable workforce. But before we explore the benefits, let’s discuss what Direct Sourcing is and how it works.

What is direct sourcing in recruiting?

Sometimes referred to as self-sourcing, Direct Sourcing in recruiting is precisely what it sounds like – the process of a business engaging and sourcing talent directly, by strategically leveraging their employer brand and essentially capitalizing on their own network of candidate resources (i.e., silver medalists, former employees, referral programs, interns, freelancers, retirees), to create a centralized pool of highly curated, on-demand talent.

One critical benefit of Direct Sourcing is the ability to craft a pre-qualified pool of candidates to suit the specific needs of your business in terms of culture, skills, diversity goals and overall compatibility.

The history of direct sourcing

Historically, Direct Sourcing in recruiting was primarily focused on leveraging an employer’s brand to cultivate and nurture a talent pool of contract labor or contingent workers curated from a variety of internal and external sources. This was one of the main differences between Direct Sourcing and traditional recruiting in years past, and can be attributed in part, to the rise of the gig (freelancer) economy in recent years.

Currently, there are an estimated 70+ million freelance, or contingent workers in the U.S. alone; a number that is expected to rise to more than 90 million by 2028. Factor in a recent global survey in which 90% of corporate leaders said they use freelancers, also stating they would be increasing their reliance on them in the future, and it’s easy to see why so many organizations started adding Direct Sourcing to their talent acquisition strategies.

In a Direct Sourcing model, the talent acquisition team is typically internal, and workers in these highly curated talent pools are often people who showed interest in working for the company in the past but were not selected but remained relevant candidates to be considered for future roles. These candidates can be engaged, and re-engaged by a company, essentially becoming a valuable, and also – reusable resource. On the flip side, traditional recruiting methods are typically geared towards finding full-time employees to fill long-term positions and often include third-party recruiters and staffing agencies.

Who uses direct sourcing and why?

Staffing agencies, managed service providers (MSP), and vendor management systems (VMS), have been at the forefront of Direct Sourcing since its inception and have been an integral part of the evolution into more mainstream talent acquisition strategies. However, even though the Direct Sourcing model has its’ origin in the world of the contract labor or contingent workforce, the way it is used today and by whom, has changed a great deal. There are companies who outsource their entire Direct Sourcing

program to an external Managed Direct Sourcing provider (MDS), some who apply a hybrid approach, and still others who take it all in-house. Being able to better manage and tailor your workforce is likely why more and more enterprises are leaning into the Direct Sourcing model to address their staffing needs.

Enterprise case for direct sourcing

The talent acquisition challenges faced by businesses today are virtually unparalleled, with more than 10.1 million jobs in the U.S. remaining unfilled. As enterprises both large and small, struggle to meet internal staffing needs from a skills perspective, they must simultaneously find a way to satisfy the broad expectations of today’s candidates. And there is the classic supply and demand issue, with the overwhelming demand for qualified workers far exceeding the available supply. This is where direct sourcing can help in a myriad of ways.

How does direct sourcing benefit enterprises?

Proprietary pool of curated talent

Enterprises utilizing a traditional recruiting approach where third-party staffing agencies or external recruiters are doing the sourcing, are essentially sharing talent with any other companies a particular agency works with. With Direct Sourcing, your talent pool is a proprietary pool of candidates curated from your own sources, who are very likely pre-vetted and also proven candidate resources.

Leverage your company brand

Enterprises can leverage the power of their own company brand to attract more candidates from diverse sources to build a thriving pool of talent, whereas a staffing agency or external recruiter often relies solely on the job description to attract candidates.

Decrease costs

One of the more obvious benefits of Direct Sourcing comes from the ability to bypass traditional staffing suppliers with high markups. The Direct Sourcing markup is typically much lower – in the 10% – 15% range, with companies saving approximately $14,000 per contingent worker annually. But there are also savings associated with the ability to manage compliance processes more efficiently by taking your recruiting in-house. Savings that can ultimately help cover the costs of launching a Direct Sourcing initiative.

Boost skill levels

The skills gap in today’s workforce can be another hurdle for businesses trying to source talent with emerging or specialized skills. If your only options are the full-time employees on your payroll or pay the high cost of recruiting new talent, you’re always going to be limited by the skills they possess. Direct Sourcing through a curated pool of candidates means access to a broader set of skills as your talent pool grows.

Capitalize on talent you’ve already invested in

One of the fundamental elements of a direct sourcing program involves tapping into your own candidate resources, past, present and future to curate your talent pool.

In doing so, you are able to capitalize on candidates you’ve already invested time and training on.

Hiring agility, enhanced productivity

Being able to quickly engage qualified talent from a pool of known, vetted candidates who can hit the ground running, not only speeds up the hiring process – it drives productivity, increases efficiency, and enhances your bottom line.

Reduce employee turnover

There’s no question some employee turnover is inevitable. But it can cost companies an estimated 1.5 to 2 times of an employee’s salary to lose an employee. This is not the case in a Direct Sourcing model. Having a robust pool of ready-to-work candidates can mitigate and even eliminate the issue of employee turnover.

Scale your workforce quickly

With a database of pre-qualified talent, expanding your workforce when you need to, is faster and easier. Conversely, if market conditions change – you can scale it back down just as quickly.

What is the most important element for a successful direct sourcing program?

There are certainly a multitude of benefits to be gained by establishing a Direct Sourcing program. But to build it effectively and reap those benefits, it’s essential to understand that one of the most powerful aspects of talent acquisition today is rooted in constantly evolving technology and choosing your Direct Sourcing technology wisely. Here are some must-haves for an effective Direct Sourcing technology platform.

AI – driven advanced skills matching

When it comes to AI technology, it’s safe to say that not all platforms are created equal. To maximize your ability to build a truly curated talent pool filled with candidates most likely to excel in the jobs you are looking to fill, it’s essential to invest in AI technology that goes beyond simple skills matching.

The Arya recruitment platform takes AI to a whole new level with Artificial Intuition. Uniquely focused on delivering the most compatible candidates and the best long-term outcomes, the Artificial Intuition in Arya scores talent against 300+ attributes most AI tools ignore and doesn’t just deliver candidates. Arya delivers the candidates most likely to excel in the role, thus reducing time-to-hire and minimizing employee turnover.

Advanced market intelligence capability

Transforming key market insights into actionable strategies is a critical step to building a successful roadmap for your Direct Sourcing strategy. By leveraging the advanced market intelligence capabilities in Arya, enables businesses to forecast, strategize and develop a more comprehensive, effective Direct Sourcing plan that meets the specific needs of their business in a given market.

Automated and customizable workflows

Increasing recruiter efficiency by automating repetitive tasks and customizing workflows are essential for an effective Direct Sourcing tool. The automation and customization capabilities within Arya streamline the recruiting process, allowing you to focus on more important tasks.

Create custom talent segments

The ability to create tailored talent segments by job title, industry, geographical location, etc., can fast track your sourcing efforts. The advanced market intelligence in Arya provides key insights to help you segment, engage and monetize your existing and growing talent communities.

Superior candidate experience

An unparalleled candidate experience and personalized communication is more important than ever to find and retain the right talent. The multichannel candidate communication dashboard in Arya makes it easy to connect, engage and nurture candidates through the platform’s talk, text, email and chatbot functions.

Easy integration into your tech stack

Whatever stage your business is at from a tech perspective, you’re going to want a platform that not only plays well with your existing tech stack but can be seamlessly integrated without disruption. Arya is built on an open API platform allowing for smooth integration into your existing applicant tracking system (ATS) and vendor management system (VMS). Maintaining your existing workflows while you simultaneously speed up sourcing and improve candidate quality is a win-win for everyone.

It’s safe to say the Direct Sourcing “movement,” is here to stay for the foreseeable future. But that doesn’t mean every business will apply it in the same fashion to their talent acquisition playbook. The benefits are plentiful but the real beauty of the Direct Sourcing model of recruitment, is the flexibility it can bring to your workforce planning at a time when gaining an edge over the competition is harder than ever.

Whatever your short or long-term talent acquisition goals are, arming your business with the right tools is a step in the right direction. With next level AI guiding the way, Arya is the platform that can help you achieve them