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Direct Sourcing

Direct Sourcing’s Future of Work Impact

Contingent WorkforceDirect SourcingGeneral InsightsPodcastSolution ProvidersTechnology and Innovation by Christopher J. Dwyer on

The Future of Work Exchange podcast features coverage of industry news, software developments, Future of Work happenings, and, most importantly, conversations with industry thought leaders.

Several months ago, I chatted with Sunil Bagai, CEO of Prosperix, for an insightful Future of Work-oriented discussion (click to listen to the full interview). Sunil and I discussed the changes in how businesses engage talent, the continued growth of direct sourcing, and some interesting Future of Work predictions. Today’s article is a recap of our conversation. [Note that this excerpt has been edited for readability.]

Christopher Dwyer: Seeing how our world of work and talent has been changing so much, you’ve had a front-row seat being where you are in workforce management software space. From your perspective, what do you feel are the biggest changes in the way businesses engage talent and get work done, and how the pandemic has shaped those aspects over the past couple of years?

Sunil Bagai: That’s a really good question. Several changes have been happening. Some of them were obviously sped up by the pandemic. For example, businesses are now much more open to hiring remote workers. And when we say remote, it’s kind of like an umbrella where everybody can be under that remote category. But the reality is we need to slice it a bit further. Remote can be onshore where they’re local to that office, so they can at least still come into the office. Remote can be not local to the office, so some other state or anywhere else in the country. Remote can also be offshore where a person can be in the Philippines, Colombia, India, or somewhere else in the world supporting that organization. There are a variety of different ways to slice and dice what remote really means. And that nuance is new. And it’s important going forward.

Another trend that I’ve seen happen in the last few years is much more openness to a variety of different marketplaces. And that means being able to hire talent directly by going onto a portal, for example. So, that trend has taken off. What that does, however, is create a challenge in these organizations. Why? Because enterprises are not equipped to deal with the nuances of being remote or how to integrate hiring marketplaces into their existing hiring processes. So, for example, their ATS and VMS platforms are not fully equipped to integrate with those new ways of hiring. That’s creating some more challenges and friction, which will get ironed out and addressed as the next few years go on.

CD: Direct sourcing has become such a hot strategy. And the more we talk about it on the Future of Work Exchange, the more we’re educating the market on something that seems to be dominating conversations not only around the Future of Work but also talent acquisition and workforce management. I think back to some of my first encounters with the Crowdstaffing platform, and you were one of the pioneers of direct sourcing. What are your thoughts on where direct sourcing is going and where it could be headed?

SB: Let’s start by differentiating what is traditional direct sourcing. What we’re doing with a hiring marketplace is a step towards direct sourcing without having to necessarily, say, get rid of your suppliers. Because direct sourcing today assumes that you’re sourcing every candidate on your own without the use of suppliers. And I believe there’s a middle ground where you can still use suppliers — your incumbents or your initial supplier pool. The network can be a second supplier pool that can give you more access to talent as well as lower costs. And then you have a third option which is the bucket of direct sourcing, where you can engage talent directly using your brand. I believe that all can coexist.

And the aim is to use technology to publish your jobs across all diverse hiring channels. Each of these becomes a hiring channel…and may the best channel win. It shouldn’t matter where the talent comes from, as long as it’s the best talent and the best price (hopefully). From there, it’s about optimization and being able to select based on quality, based on price, and based on speed for your talent fulfillment. If you can do that, then that’s your ideal solution. It’s not one or the other, it’s a mix of all the options available through one common technology platform to help you achieve your talent needs.

CD: What are some of your 2022 Future of Work predictions — not just technology, but the space in general?

SB: For 2022, you’re already starting to see some interesting things happen in the industry. We’ve seen some large acquisitions, and we’ll probably continue to see consolidation where certain companies try to acquire other companies to have a larger presence in the space and diversify their solution portfolio. And there will be more consolidation of customers, as well.

We’re also starting to see MSPs really up their game and add much more value than they were traditionally accustomed to. Before, MSPs were managing programs, and now they’re really trying to differentiate themselves by offering more capabilities within their solutions. New technology will also continue to surface and add a different spin on how the workforce should be managed. That’s what I’m seeing for the remainder of this year.

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The Many Extensions of the Future of Work

Business LeadershipDirect SourcingPodcastTalent by Christopher J. Dwyer on

The Future of Work Exchange podcast features coverage of industry news, software developments, Future of Work happenings, and, most importantly, conversations with industry thought leaders.

The Season Seven premiere of the Future of Work Exchange Podcast, sponsored by Beeline, featured in-depth, Future of Work-oriented discussion with Jen Torney, VP of Client Engagement at Talent Solutions TAPFIN, and Brian Hoffmeyer, SVP of Market Strategies at Beeline (click to listen to the full interview).

Today’s article recaps a piece of the podcast discussion focused on several key Future of Work-focused topics. [Note that this excerpt has been edited for readability.]

Christopher Dwyer: We’re going to close things out with what I call the “Future of Work lighting round.” Let’s start with remote work.

Brian Hoffmeyer: Remote work is here to stay. We’re talking to our clients considerably about it and doing several workshops with them about the best way to handle it from a contingent workforce perspective. Because it’s not as easy as saying, “I want to hire from low-cost areas.” What does that really mean? What are the tax implications of doing that? There’s a different tax rate and a lot of complexity behind the scenes to work out. I’m still seeing companies make pretty arbitrary decisions about remote work, saying you have to come in on Tuesdays and Thursdays — when that doesn’t make sense. Companies need to be very purposeful in making these decisions as they go through the process.

Jen Torney: Yes to all of that. I would say this is so much bigger of a conversation than whether or not you’re going back into the office. We’re encouraging organizations to really look at their true workforce plan and strategy. Because this changes everything. It changes how you can hire, where you can hire, and at what cost. It becomes a much bigger holistic conversation around the opportunity to completely rebuild organizations. There is a lot of hybrid work, but it’s very arbitrary in approach. Now that I’ve been back to traveling at a pre-pandemic level, in-person makes a difference. It really does. But I’m not sure that clocking in at eight and leaving at five to fight traffic and get home is really going to be a part of our culture anymore — except when there’s a requirement. There are several smart ways to get work done, and that eight-to-five model doesn’t need to be the model to do that.

CD: Up next: direct sourcing.

JT: Direct sourcing is smart sourcing. We think direct sourcing is blowing up. It is definitely a new layer of workforce strategy. I don’t think this is going to replace traditional staffing, but it has its place in niche areas within our workforce. I’m certainly excited to see how this proliferates in the organizations that we’re working with. The smart sourcing aspect of layering and upskilling is going to be the future.

BH: Just do it. Just do it. I think too many companies are taking too long and overcomplicating things. Pick an area, pick a geography, pick a skillset, and get the right providers together and start somewhere.

CD: Off to the next one: purposeful work.

BH: I love this. We’re in this position in our industry to help people find meaningful employment and to get them the skills they need to improve their lives. That’s the ultimate purpose that I see in what we’re doing. I want to continue to see companies not treat contractors as less than and make them part of the workforce. Yes, there are rules you have to follow, but include them in D&I initiatives and company events.

JT: One of the things we’ve realized as a global society over the course of the pandemic is that it’s critical to be part of something, to feel that you are contributing value, and to be able to show up as your best self. Purposeful work is so important to the younger generations, especially those coming up into the workforce. So, figuring out ways as employers to build that into your culture so that you’re creating an environment for the future leaders to feel it is the right place for them from an employment experience.

CD: Let’s roll into conscious leadership.

JT: Yes, it kind of dovetails. All this focus on D&I has been so amazing because of the evolution of how we’re approaching these conversations around belonging and inclusion and truly showing up as your whole self. It allows for more creative outputs, better collaboration with your team members, and better energy all around. But again, we are shifting and changing how we approach non-employee labor.

I was just with a client last week talking with its DE&I team. Throughout its history, it was focused on the FTE. But going forward, they’re really trying to move the needle on the entire culture of inclusiveness within their organization. The client has 40% contingent labor, and we’re trying to figure out ways to untangle the risk associated with supporting those goals within their contingent labor population, which is unfortunate that we must think that way. However, I think we are breaking down barriers every day in this industry trying to get to a place where we can truly forward the momentum of DE&I for contingent labor, and truly inclusive and conscious leadership for organizations at that stage.

BH: Jen mentioned letting people be their true selves at work and I think that’s incredibly important. Because that’s going to make them feel included and allow them to bring up ideas that give them the space to fail. As leaders, we must do the same thing — show our own vulnerabilities and give people that space. The blending of work and life is going to continue to happen. And that to me is a good thing. Because you don’t want people to be fake, you want them to be who they truly are. While it seems obvious, the world didn’t use to be that way. The more those separate work and home personalities go away, the better.

CD: Crystal ball for the second half of the year into 2023?

BH: With respect to our industry, you’re going to continue to see an emphasis on the worker themselves and giving the worker good experiences because so many people want to work in this way. You know, permanent employment isn’t really a thing. Even if you take a so-called “permanent job,” your tenure is 18 months on average…or even less now. We’re focused on several things around that to make sure the worker can continue to advance their career in the ways they want to. You’re going to see a lot more of that.

JT: With obvious recession concerns, we’re going to continue to see organizations be more cautious. It’s about hiring and making very intentional decisions to get in front of that. There will probably be a curb in the aggressive hiring that we’ve been seeing over the course of this year. And then absolute radical growth in our travel MSP clients. Travel is returning to pre-pandemic levels and certainly out pacing their expectations. There will be some growth there despite the recessionary concerns.

A recession is an economic trend and part of the cycle. It’s going to happen, it’s just a matter of when. This recessionary period will be a bit more interesting for our business because there will be some contraction but also some expansion in certain categories as well.

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There’s So Much More to the Future of Work

Business LeadershipDirect SourcingHRTechnology and Innovation by Christopher J. Dwyer on

There’s so much more to the Future of Work than what we’ve experienced thus far.

Around two years ago, during the very first summer under pandemic-era living, we had all had a strong taste of what the so-called “Future of Work” had to offer: remote work became a normalized attribute of the modern business, corporate leadership was consistently changing in the face of survival, and digitization proved to be a competitive differentiator as enterprises moved operations as a direct plan of attack against transformative times.

Since then, we’ve collectively learned to “live” with a life-changing virus whilst embracing the major changes in the way we address how work is done. While some businesses have instituted “return-to-office” plans, many others have settled on models that work well for both productivity and the satisfaction of flexibility for the workforce.

More so, businesses are operating in environments that are increasingly more digital and more human, two vastly different elements that are shaping the Future of Work for organizations across the world. The Future of Work Exchange has covered these aspects since its inception, however, there is so much more to this movement than what we’ve experienced thus far over these past two-plus years:

  • The (continued) transformation of talent acquisition and the power of “open talent.” The extended workforce continues to grow. Freelancers and contractors, sparked by The Great Resignation, are “resettling” into new and different (and most importantly, flexible) roles that better suit their needs and purpose. The technology behind how we find and engage talent has been centered on innovation more now than ever before. We haven’t even begun to truly think about how functionality like blockchain can change the Future of Work game; just look at an organization like the Velocity Network Foundation, which blends digital wallets, blockchain-fueled credentialing, and a truly foundational, evolving “rulebook” that guides candidates/talent and businesses.
  • The real-deal application of artificial intelligence within the confines of “work.” Just because an organization currently leverages a flavor of AI does not mean that this translates into a true application of the technology. AI can become even more of a Future of Work gamechanger when organizations apply deeper elements of its powerful reach, including driving efficiency in hiring, powering predictive and prescriptive insights, and enabling stronger DE&I efforts in recruitment. Platforms like HiredScore, Glider.ai, Eightfold.ai, and ModernHire are taking AI in talent acquisition and talent management to a new and exciting era in today’s frenetic labor market.
  • The rise of conscious leadership. The realm of conscious leadership follows a similar path to the one paved by empathy, in that nearly every facet of human contact between an executive and his or her colleagues and staff is rooted in a meaningful, genuine purpose. A leader’s core approaches involve them becoming more aware of their actions, more aware of how kind and, yes, conscious, those actions and insights may be perceived by the organization’s workforce.
  • Strategies that began as extensions of extended workforce management that will become table stakes for the world of talent and work…particularly direct sourcing. Direct sourcing experienced its biggest spike in both prominence and utilization since the beginning of 2020 and there are no signs that businesses will slow how they leverage talent pools and talent communities to inject top-tier talent into their organizational projects and initiatives. Direct sourcing technology is evolving, too, in such a way that “Direct Sourcing 2.0,” which follows AI-fueled, digital recruitment-led functionality (as well as next-generation talent curation), will become the prominent form of direct sourcing as businesses progress their utilization of these critical platforms. Providers such as WorkLLama, LiveHire, Prosperix, Opptly, High5, PRO Unlimited (Direct Source PRO, which has recently integrated WillHire into its solution), and AMS are all contributing to the Direct Sourcing 2.0 revolution.
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The Impact of Direct Sourcing (and Direct Sourcing 2.0) Beyond 2022

Direct Sourcing by Christopher J. Dwyer on

In the throes of year of Year Three of a pandemic, historic inflation, and an uncertain economy, the labor market is the very definition of “volatile.” Today, there is a powerful undercurrent happening in the business world that promises to permanently transform the way work is done: the growth, power, and impact of the extended workforce. Enterprises are on the cusp of a permanent change in how works gets done, accelerated by a pandemic that has pushed direct sourcing to the top of HR, talent acquisition, and procurement executives’ priority list.

The sudden shift to remote and hybrid work models forced businesses to pivot their work optimization strategies while simultaneously managing ongoing operations amidst a wildly uncertain present (not to mention, the most severe public health crisis in a century). Two major workforce priorities came to light directly as a result of 2020’s challenging times: the “reimagining” of workforce management (84%, according to Ardent Partners and Future of Work Exchange research) and the greater need for contingent labor (82%).

The era of social distancing, citywide curfews, and global lockdowns have had a profound effect on how businesses find, engage, and manage their workforce. In-person interviewing, scheduled recruiter meetings, collaboration between HR and hiring managers and other “taken-for-granted” procedures became nearly-impossible to perform due to new coronavirus restrictions. In direct response to the biggest public health crisis of the last century, business leaders developed new and innovative approaches to recruiting and hiring.

Too, the increase in utilization of non-employee labor (43.5% of the total workforce in early 2020 vs. nearly 47% of total workforce today) is a leading indicator of where the world of work is heading, and, more importantly, why direct sourcing will become a dominant form of talent acquisition well into 2023 considering that enterprises were required to rethink and “reboot” their workforce management processes. And, as the need for non-employee talent increases, direct sourcing makes ideal sense as the gateway to better staffing processes and superior talent.

Even basic direct sourcing programs can drive value through a combination of on-demand, plug-and-play talent, and hard-cost savings. But the pandemic’s impact on the workforce has dramatically accelerated market shifts. Today, talent is scarce and comes at a premium. As a result, workers are demanding greater flexibility from their employers. They are more focused on work-life balance, while also desiring greater independence.

Among many things, the “Talent Revolution” indicates a seismic shift in power towards the worker and away from the employer…meaning that businesses require a more powerful, more flexible, and more scalable version of direct sourcing. Enter “Direct Sourcing 2.0.”

Now is the time for “Direct Sourcing 2.0,” the next generation of sourcing strategies that blend innovative solutions with a renewed focus on the candidate experience and an ability to use talent pools to populate the key projects and roles that require expertise and experience. Today’s business climate has accelerated the need for a reimagined approach to candidate engagement. As the market for talent continues to tighten amidst the lingering pandemic and a surging number of resignations, businesses find themselves in a new kind of “war for talent,” one that is far more extensive and complicated than anything experienced pre-pandemic.

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The Link Between Direct Sourcing and Talent Sustainability

Direct SourcingTalent by Christopher J. Dwyer on

Many HR, talent acquisition, and contingent workforce program leaders overlook particular phases of direct sourcing, especially talent curation and segmentation, since they have been conditioned to manage their processes within the confines of a traditional contingent workforce management (CWM) initiative that follows more procurement-oriented procedures (i.e., supply management, heavy cost focus, etc.). Even under a centralized CWM program, the most critical direct sourcing strategies and capabilities require more time, focus, and resources than what is typically available with non-employee workforce management.

For example, talent curation is a critical piece to the direct sourcing puzzle and is considered crucial to the entire hierarchy of the process. In a direct sourcing program, recruiting expertise (via an MSP, talent curation partner, etc.) curates talent for the business, ultimately helping its client build a deep talent cloud or community using a series of augmented approaches, including branded job portals, targeted ads and recruitment marketing campaigns, and artificial intelligence-led candidate matching. The solution that is leading the direct sourcing program can also leverage the organization’s brand power to attract potential candidates, as well.

While some enterprises maintain deep pools of talent that are more “general” in scope, these may not be effective from an agile workforce perspective. Organizations typically overlook talent pool segmentation and maintain a single repository of talent pool candidates; this failure to segment is a missed opportunity to build a nimbler approach to finding candidates based on geography, skillset, role, etc. Talent pool segmentation enables enterprises to better “organize” their candidates for easier, faster, and better alignment with future requirements, as well.

A typical first step in talent community segmentation is to conduct due diligence around candidate skillsets, past work history, compensation, proficiency, and overall enterprise hiring alignment. Segmentation is what allows a business to be more dynamic in how it addresses its talent needs. It also answers many current sourcing challenges while fostering relationships with candidates with emerging and new skillsets or expertise.

By spending more time in the initial phases of direct sourcing (and, subsequently, executing consistent maintenance of internal talent communities/pools), businesses are able to build a more seamless bridge to “talent sustainability,” which the Future of Work Exchange defines as a by-product of leveraging workforce solutions (such as extended workforce technology, VMS, etc.), direct sourcing channels, and both private and public talent communities, etc. to build self-sustaining outlets of talent that 1) map to evolving skills requirements across the enterprise given product development and the progression of the greater organization, 2) reflect existing expertise and skillsets across the enterprise that can be leveraged for real-time utilization, and, 3) allow hiring managers and other talent-led executives to leverage nurture and candidate experience strategies to ensure that all networked workers are amiable and open to reengagement for new and/or continued projects and initiatives.

The Great Resignation has become more volatile, and with its wide-sweeping ramifications playing critical roles in how enterprises structure their workforce in the second half of the year, it is crucial that strategies such as direct sourcing contribute to overall talent scalability. Leveraging the power of direct sourcing’s key elements (and associated technology) can assist businesses in maximizing the positive elements of the “Talent Revolution” and parlay them into means of attracting the best-fit, highest-quality talent. Talent sustainability will be the way businesses thrive in the near future…and direct sourcing is a direct link to get them there.

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Digital and Human Convergence: The Art of Managed Direct Sourcing (MDS)

Direct Sourcing by Christopher J. Dwyer on

Sixty percent (60%) of organizations actively blend digital and human recruitment processes, according to Future of Work Exchange research, reinforcing the notion that direct sourcing must unify traditional talent acquisition methods with innovative direct sourcing technology. This is exactly the foundation of “managed direct sourcing,” which entails a multi-phased series of strategies, underpinned with technology, that drives a continuous flow of candidates who can be engaged and hired in an on-demand fashion. MDS differs from traditional direct sourcing in the sense that it is more controlled, repeatable, and, most critically, highly-scalable.

MDS is typically offered as a services-based solution through a Managed Service Provider (MSP) and augmented with direct sourcing technology offered by an ecosystem of platform partners. An MDS offering will typically drive talent curation and other key program elements, while the direct sourcing platform partner will enable a series of repeatable processes including referral campaigns, nurture strategies, messaging and collaboration, and diversity engagement. What sets MDS apart from traditional direct sourcing is its symbiotic relationship between full-lifecycle, human-led services and agile digitization.

What enables MDS to stand out from traditional direct sourcing programs is its “beating heart,” comprised of a technology stack that can build on the human-led strategy and transform hiring processes to be repeatable and scalable, while establishing new prospect channels for hiring managers. As described earlier in this report, the major differences between MDS and traditional direct sourcing are the factors that frequently impact how the whole of the business finds, engages, and sources its top-tier talent. Businesses with direct sourcing automation are able to execute on “deeper” elements of this talent-led program. With less dependence on traditional, resource-heavy sourcing and recruiting approaches, a “digital-led” direct sourcing program that relies on deep CWM expertise can drive superior talent outcomes.Businesses that have tapped into direct sourcing automation are able to improve their programs with scalable processes that can drive superior talent engagement, help nurture top talent, and boost the overall candidate experience:

  • Direct sourcing automation is an ideal tool to improve candidate matching and talent engagement. A technology-led model requires less dependency on internal staff, drives greater “talent funnel” generation, while also improving the identification of and engagement with high-value candidates. For example, human curation is an excellent strategy for businesses that requires a high-touch approach towards talent pooling. However, the impact of direct sourcing automation adds additional value by improving the overall targeting of candidates by enhancing the alignment of enterprise requirements and available skillsets, and, most importantly, by enabling direct sourcing processes and strategies to be streamlined and standardized across the enterprise. Best-in-Class direct sourcing solutions also offer robust candidate referral functionality that can drive additional talent engagement without the organization spending significantly more time and resources. These capabilities are generally available and optimized within a solution’s mobile application
  • Direct sourcing platforms enable repeatable, collaborative processes with key candidates. The most overlooked aspects of direct sourcing are within its “secondary” phases, particularly talent nurture strategies and candidate communications. While MSP leaders in a managed direct sourcing program will guide businesses to craft/use the messaging they will need to engage candidates after they have been curated and locked into talent pools, the direct sourcing platform can transform these processes into repeatable campaigns that involve both email and SMS/text message communications, ensuring that all candidates feel valued and “in touch” with what is happening within the greater
    organization. This is a key element in fostering an environment of connectivity, openness, and inclusivity. These attributes are becoming more critical for today’s evolving workforce and they allow independent workers to better align their skillsets with specific projects and pick-and-choose how they want to work.
  • Direct sourcing solutions enable users to tap into the power of their brand and culture to attract the best candidates. Compensation is not the only aspect that today’s workers (either traditional or contract) value in a potential employer. Aspects such as culture, diversity and inclusion, and the overall corporate social responsibility of a businesses are crucial factors that can determine whether a candidate wants to be engaged with a potential project or employer. Direct sourcing solutions offer functionality that can help users build “job portals” that leverage the enterprise’s brand, colors, and other unique, marketing-specific attributes. Candidates that align with a company’s brand are more likely to opt-in to receive news about job postings, new roles, upcoming projects, etc. This can be an incredibly powerful lever for managed direct sourcing because it taps into the power of an enterprise’s culture to attract star workers and candidates. This can also foster greater loyalty between contingent workers and their employers, something that is often missed by legacy talent acquisition models.
  • Direct sourcing automation enables holistic reporting that can cascade into other talent acquisition strategies. The intelligence gleaned from direct sourcing platforms and MSP-driven direct sourcing programs can be harnessed for greater workforce planning, particularly when forecasting future utilization of both contingent and full-time talent.
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Procurement’s View of Direct Sourcing

Direct Sourcing by John Yuva on

The role of procurement is ever-evolving. Chief Procurement Officers are executing strategies in a world wrought with immense volatility and unpredictability. While the scale of disruption is unlike anything witnessed in a century, procurement serves as the rudder for many enterprises, helping navigate this uncharted territory.

It is a position that CPOs are accustomed to — think back to The Great Recession from the not-too-distant past. Times of change and uncertainty are when procurement takes center stage. Amid current supply shortages and extended lead times, procurement’s sphere of influence has expanded to talent acquisition and the Future of Work.

What kind of scene did procurement walk into? It’s well-documented how the pandemic forever-altered workplace dynamics when tens of millions of workers shifted from on-premise to remote working. And as the pandemic abated, The Great Resignation took hold with millions leaving their jobs or the workforce entirely. It’s also important to mention that the workforce itself is transitioning from what was mostly full-time employees to nearly 50% contingent workers. The Future of Work Exchange (FOWX) cited in its recent article, Where Does the Extended Workforce Go From Here?, that “FOWX research pegs contingent labor at 47% of the average company’s total workforce, a statistic that is only expected to grow in the months and years ahead.”

Enterprises are now waging a war for talent amidst a highly competitive recruiting environment where traditional recruitment methods alone are no longer viable. It requires a several-pronged approach and internal ownership using direct sourcing to plan, execute, and manage a talent pipeline for the future success of the organization. It’s nearly table stakes to operate with agility and resiliency. The competitive differentiator is attracting talent that brings new outlooks and outcomes to your global market and envisions markets and lines of business yet to be explored. Procurement should be right at home in this environment, adjusting to the intricacies of talent acquisition and the concept of direct sourcing for recruitment.

According to Ardent Partners’ The Direct Sourcing Toolkit, “talent pool creation and development” was the leading priority for talent and workforce management in 2020. And, in 2021, Ardent and FOWX research pointed to talent and skills access as a core priority heading into 2022. The question remains, then: How can procurement approach talent acquisition and a direct sourcing strategy?

First and foremost, it requires collaboration with HR to understand the talent needs of the enterprise. Where are there gaps in specific departments? Are there major initiatives with vacancies in key roles? Does the organization need additional support for promotional or seasonal purposes?

Procurement complements HR in this effort because of its cross-functional relationships and deep understanding of operations and ongoing product development. Leverage those relationships to glean insight into talent issues and where the organization could use support. It may be necessary to form a talent committee with representation from various business units. Communicate the new direction for talent recruiting and the shift to direct sourcing. Since the enterprise is curating and managing its own talent pipeline, leaders should be encouraged to recommend prospective candidates — both passive and active — from their own networks.

As the talent pool(s) builds with new and on-demand candidates, such as alumni, silver medalists, and former freelancers and contractors, they can be segmented based on their skillsets and competencies for various types of roles. Procurement can collaborate with IT to ensure recruitment and talent management applications and platforms [e.g., applicant tracking systems (ATS) and vendor management systems (VMS)] integrate well with the larger enterprise network.

Many enterprises utilize external partners to meet their contingent workforce management objectives. Monitoring various talent channels is resource-intensive and requires a dedicated team. Procurement can lead the search and selection of a Managed Service Provider (MSP), for example, which has access to supplier networks for talent needs across the enterprise and supply chain. Expertise with supplier selection and relationship management pays dividends when procurement leads this effort — cost awareness, contract management, and relationship building with the MSP. It also ensures procurement’s continued involvement with the direct sourcing program and the opportunity to influence its future direction.

Technology is critical to a direct sourcing program. An ATS and VMS are core to attracting and managing a contingent workforce. However, Industry 4.0 solutions (e.g., artificial intelligence (AI) and predictive analytics) are now being utilized with direct sourcing initiatives to fine-tune potential candidate placement and predict talent needs. These technologies are integrated into many manufacturing operations, so it’s no surprise that talent management is now benefiting from a human perspective as well. Here again, procurement is well-versed in the use and potential of AI and predictive analytics. Where are there opportunities to further leverage AI to achieve talent management objectives? How far can predictive analytics provide mitigation against critical talent shortages or succession dilemmas? Imagine using a digital twin to simulate the workforce needs in the next decade?

Procurement has a vital role in today’s talent management initiatives. Leading direct sourcing programs alongside HR is not only good for business, but a necessity in today’s frenetic labor market.

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The Link Between Diversity and Direct Sourcing

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Today, diversity is no longer a “check-a-box” factor for many enterprises around the world; rather, it has become a cultural movement within business that emphasizes the depth of talent pools, talent communities, and talent networks without bias or barriers. The truth regarding diversity, equity, and inclusion (DE&I) is that direct sourcing programs (and extended workforce/contingent workforce programs) that are diverse tend to be more successful. If businesses can embed a spirit of inclusion within their direct sourcing processes and act in accordance with this mindset, they can broaden the existing talent landscape and improve upon it with new ideas and opportunity.

And, while established diversity programs previously existed in many enterprises, the events and civil unrest of the past two years have driven many businesses to develop and communicate more purpose-driven goals which are linked to societal, economic, technological, and sustainable shifts. To achieve these goals, a large number of businesses are trying to harness the power of a diverse workforce.

The Future of Work Exchange has long progressed the notion of “Direct Sourcing 2.0,” in which traditional direct sourcing phases and operations are “supercharged” to transform this strategy into a repeatable and scalable (not to mention more digitized) series of processes that can drive true talent sustainability:

As the overall labor market evolves in the wake of rising worker resignations, smart businesses will prioritize the need for deeper assessment and validation of skillsets and place a greater emphasis on the candidate and hiring manager experience. The starting point for most will be to build on their existing direct sourcing capabilities and work to develop Direct Sourcing 2.0 capabilities.

Simply put: much like the greater Future of Work movement, there is so much more to this than just automation and technology. Direct Sourcing 2.0 isn’t just a scalable strategy that is driven by next-generation software, but a program that relies on both technology and humanity to be successful in the face of an evolving labor market.

Layering DE&I into direct sourcing is about changing behaviors and removing hiring barriers and unconscious bias from talent engagement and talent acquisition. Utilizing technology to help guide and enforce a new mindset can be extremely valuable and create awareness that the deepest talent pools are diverse talent pools. Using direct sourcing to hire diverse talent gives HR teams a direct ability to link purpose with DE&I efforts. For example, businesses can opt to tap into professional networks that were already designed for diverse workers from various backgrounds, cultures, and genders and link these to talent curation efforts. Direct sourcing initiatives can also benefit from “diversity automation” that is enabled from direct sourcing platforms that have partnerships and integrations with diverse job boards and networks. They can also offer anonymizing functionality that can hide specific information about different candidates.

Diversity, as stated above, is more than just an objective; it is a facet of the new world of work that sparks new ideas, catalyzes innovation, and enables a business with the necessary skillsets and expertise to thrive in changing times. Direct sourcing, then, can be an effective gateway in developing a more diverse workforce.

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Revisiting the Core Tenets of Direct Sourcing

Direct Sourcing by Christopher J. Dwyer on

Direct sourcing has a permanent place here at the Future of Work Exchange. As businesses face the massive transformations of the world of work and talent, they will continue to require advanced strategies and solutions for finding and engaging top-tier skillsets and expertise. While we’ve spent a fair amount of time discussing the next phase of direct sourcing (“Direct Sourcing 2.0”), there are still many organizations that have yet to undertake the direct sourcing journey.

In the 2020 research study, The Direct Sourcing Toolkit, Ardent Partners and the Future of Work Exchange unveiled a series of recommendations and guided strategies for successfully developing and implementing a direct sourcing program. With so many organizations yet to undertake this journey, it is imperative to revisit these guidelines for direct sourcing success:

  • A deep understanding of total enterprise skillsets is required. No matter the industry, each organization is comprised of a collection of skillsets that, in aggregate, contribute to how work is done. Direct sourcing programs thrive on “skillset intelligence;” without it, initiatives lose their flair. If hiring managers understand which skillsets are in abundance or in high demand and which will be needed in the near future, building initial talent attraction strategies will be much more effective.
  • Integrated procurement, HR, and talent acquisition competencies are necessary for early-stage direct sourcing. The capabilities of these three units are required for a direct sourcing program to succeed: 1) procurement’s influence will drive hard cost savings through talent channel optimization, 2) HR’s impact will guide hiring managers and stakeholders to engage the strongest candidates, and 3) talent acquisition will drive the strategic vision for how to source talent based upon current and expected needs.
  • Focus on both brand and experience. The employer brand can be powerful in today’s labor market; many candidates want to ensure that they work for organizations that share their cultural and societal values. Also, the omnipresent notion of the “candidate experience” should guide direct sourcing processes such that job recruits experience a positive journey no matter if they are merely sitting in a talent pool or actively engaged for an open position or project.
  • Segmentation is more valuable than it initially seems. Segmenting talent pools may seem like a basic strategy; however, it can pay incredible dividends. Talent pool segmentation, be it via geography, compensation, skill, remote or in-person, certification, etc., allows hiring managers to quickly focus in on the talent required for a highly-complex project or initiative. Taking the time during the front-end of the direct sourcing process to segment talent pools can be hugely impactful to the overall program.
  • In direct sourcing, selecting and utilizing the right solutions is job one. The inherent power of today’s contingent workforce, human capital, and digital staffing solutions provides enterprises with the ability to automate crucial aspects of talent pool development and integrate these sources into the business’ broader talent acquisition processes. MSP solutions, VMS technology, and direct sourcing platforms all contribute to create a human- and technology-led direct sourcing program, helping to launch the initiative and ensure that all hiring managers have the ability to quickly access available talent pools.
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The Ultimate Value of Direct Sourcing

Direct Sourcing by Christopher J. Dwyer on

Successful direct sourcing programs have made a large impact on the quality of the overall workforce by achieving better alignment between an organization’s needs and the best available talent than alternate recruiting methods. However, the competitive advantage in talent recruitment that the early adopters of direct sourcing have gained will begin to yield as more new programs are launched each year.

The 55% of businesses that are currently running some form of direct sourcing programs today are utilizing talent pools and talent communities as a viable means of building talent pipelines, reducing talent acquisition costs, ensuring strong skillsets and expertise, and structuring a truly dynamic workforce. Direct sourcing enables a business to act as its own recruitment firm and leverage the power of its brand to attract desired workers to its centralized talent pool. The process also helps enterprises engage candidates directly, increasing the chance of building stronger, longer-lasting relationships with top-tier talent.

While the pandemic has turned job interviews into a more and, sometimes fully-, virtual process, the human elements of conversation, bonding, and interpersonal connection are not completely lost. Direct sourcing bypasses intermediaries and allows the candidates to develop direct connections (hence, “direct” sourcing) with hiring decision-makers. Candidates that are not hired initially can, nonetheless, become candidates for other positions in the future. By eliminating the agency or middleman, enterprises are better able to tap into a developed bench of previously engaged talent and cut lengthy time-to-fill rates. The same holds true for other candidates that have been vetted in some form and are “known” by the hiring team (i.e., “silver medalists,” retirees, past contingent workers or freelancers, etc.), or were targeted for curation based on their current job experience.

Beyond the candidate relationships, direct sourcing allows a business to leverage (and manage) its culture and brand to attract recruits that are easily engaged for future projects and initiatives. Hearing long-employed (and loyal) HR and business professionals discuss the traits and culture of their organization is a more significant and credible way to learn about a potential employer than through the words of a recruiter with a commission on the line. The informal testimonials of the internal hiring teams can effectively build engagement and ultimately, worker loyalty.

While the talent curation part of direct sourcing typically takes time to develop, most organizations possess an innate ability to identify strong cultural fits and highly-desirable skillsets. Additionally, the ability of internal recruiters, HR, and hiring managers to collaborate and tailor job searches to a unique team, manager, project, or location is unmatched when dealing with outside recruiters. The level of nuance can be akin to the difference between a surgeon and a butcher. The ability to increase recruiting precision can be particularly valuable when businesses are managing specific diversity, equity, and inclusion initiatives.

One other notable attribute of direct sourcing is that it avoids the heavy price of fully-loaded talent acquisition costs charged by outside firms. While successful direct sourcing programs reduce talent acquisition friction and costs in the short-term, as businesses continue to devote resources to it, they will find these programs can also transform how work is done. And, in a world that has become more digitized (especially in the HR and talent arenas), direct sourcing is fast becoming table stakes for businesses that are actively pursuing workforce agility.

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