If your organization has a Contingent Workforce program, you have probably seen some emerging trends in that space. One such trend that has been a hot topic over the last two years is Direct Sourcing of Contingent Workers. Whether you call it Direct Sourcing or Contingent RPO, it is no secret that more and more buyer organizations are deploying Direct Sourcing programs within their Contingent Workforce programs. The reasons for this are clear, leveraging the organizations brand is proven to attract quality candidates, deploy them faster, and if managed well, more cost-effectively.
In my opinion, this concept of “Direct Sourcing” is often overcomplicated, many times by practitioners in our industry niche. The reality is this concept is not much different than what we like to call “Payrolling” of Contingent Workers, meaning that internal referrals of contingent workers that are referred by internal resources are then engaged under a designated “Payrolling” supplier, at significantly lower fees, than if they had been referred to or sourced by a supplier of Contingent Workforce (Staffing Agency). Direct Sourcing of Contingent Workforce builds upon that foundation, but rather than depend on just internal referrals of candidates, it formalizes the process and utilizes either an internal or external “curation” or recruitment team to source and manage candidates that have been attracted to the organizational brand by various sourcing methods. The curation team can be an internal team of recruitment talent from within the organization or in the case of Managed Direct Sourcing or “MDS”, can be an external team under a partner with proven expertise deploying Direct Sourcing programs. Whether you choose to deploy internally or externally is dependent on your organizational environment, meaning whether you have the resources capable of implementing a Direct Sourcing program and curating the talent or if it makes sense to bring in a Curation partner.
Essentially there are three parts to these Direct Sourcing programs:
- The curation team (again internal or external),
- The Technical platform to facilitate requisition activity to allow for inbound requisitions from the Contingent Workforce program technology and allow for the program to submit candidates and manage sourcing activities to include a public facing portal to attract talent into the talent pool.
- A provider of EOR/AOR (Employer of Record or Agent of Record) services, to employ the workers, just like workers engaged through a staffing supplier.
As mentioned, today’s Direct Sourcing programs are the next evolution of payrolling programs. The investment required to add these programs to your existing Contingent Workforce program, especially with an external curation partner, is minimal along with the risk to do so. Most Contingent Workforce programs release sourcing requirements to the Direct Sourcing program in a “Tier-0” manner meaning that the Direct Sourcing program gets a head start to source talent for a requisition. And, even if the direct sourcing program team is unable to fill that talent within their head start timeframe, the requisition can then move to the Contingent Workforce program approved “Tier-1” sourcing supplier base to then fill the requirement. Therefore, there is no operational risk in deploying a direct sourcing program and only benefits to the program as they build pools of talent to fill requirements moving forward. The only potential roadblock to Direct Sourcing programs is sometimes a hesitancy from organizational Legal, who often do not understand how these programs work. I often ask Program Leaders encountering challenges with their organization’s Legal when building their business case to deploy a Direct Sourcing program to consider this. Do they have a Payrolling program in place already? Most times they answer yes. I then ask, where do the candidates come from? Most times they answer referrals. How do you engage the referred worker? They answer with a payrolling supplier (EOR/AOR). I then tell them to advise their Legal of that information. I have not had a Program Leader come back to me saying that they could not deploy this beneficial Contingent Workforce program tool.
Direct Sourcing programs as an add-on strategy to your Contingent Workforce program in combination with competitive sourcing of your Contingent Workforce requirements will offer significant benefits to your overall Contingent Workforce Program strategy, including the ability to decreased fill rate cycle times, increased candidate quality, increased Hiring Leader and Candidate satisfaction, and if done right, cost savings against market rates for Contingent Workers.
Eric Osterhout – Senior Specialist, Category Management, Contingent Labor
Staffing Industry Analysts “SIA” Contingent Workforce Program Game Changer, Class Of 2020 and 2022, 2023, and named to the 2023 SIA, DE&I Influencer List
Contingent Workforce Management Expert, specializing in advising Procurement and HR leadership, regarding contingent workforce program strategy development, program improvement, emerging technologies, and trends, and supply base optimization. My unique blend of experience as both a supplier of talent, combined with over a decade of buyer side program experience, allows for a pragmatic approach to Total Talent Management.
