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What Is Direct Sourcing?

Direct sourcing, an emerging trend in the talent and workforce solutions industry, has become increasingly prevalent in a wide variety of managed service programs (MSPs). But what exactly is direct sourcing—and how can it help organizations to optimize their contingent labor? 

Here are some key things to know about this up-and-coming approach to talent acquisition. 

What is direct sourcing? 

Direct sourcing leverages artificial intelligence (AI) to improve talent pipelining and create curated pools of qualified candidates. Direct sourcing reduces time-consuming elements of the recruiting process, such as sourcing and pre-matching, while ensuring sourced candidates are qualified and able to engage in work assignments quickly. The goal of a direct sourcing strategy is to generate vetted and active talent communities for specific locations, job functions, and/or job titles. When direct sourcing is incorporated in an MSP, these talent-related functions can be carried out by the MSP provider without having to engage secondary staffing suppliers. 

One direct sourcing platform, Opptly, says its technology draws connections between “the right workers and the right work”—similar to Uber’s marketplace which connects the right passengers with the right drivers, and Airbnb’s marketplace which connects the right guests with the right hosts. 

According to Staffing Industry Analysts’ 2023 Workforce Solutions Buyer Survey, 39 percent of respondents have already implemented direct sourcing, and 40 percent say they’re likely to seriously explore the strategy within the next 2 years—but not all organizations utilizing direct sourcing already are doing so within an MSP. 

Related: Improve Talent Curation with Direct Sourcing 

How is direct sourcing used in an MSP? 

In traditional managed service programs, providers align staffing suppliers to help fill open positions on behalf of their clients. When new jobs are released, they are equally distributed to all aligned staffing suppliers.  

While MSPs are effective in creating competition among suppliers, this solution can lack a pre-vetted pool of candidates and does not consider candidates who have applied directly to the client’s career opportunities. 

Implementing a direct sourcing approach within an MSP allows providers to identify active candidates that are interested in being considered for temporary or direct employment without having to connect with third-party staffing suppliers. Once pipelined, these job seekers can be curated into specific talent communities based on their unique skillsets, previous work experiences, and long-term professional aspirations. 

Related: Broadleaf’s Jason Krumwiede Discusses the Future of MSP Direct Sourcing 

What are the benefits of direct sourcing? 

Some of the most compelling benefits to incorporating direct sourcing strategies within an MSP include: 

  • Reduced time-to-fill 
  • Improved slate of candidates 
  • Lower recruiting costs by as much as 10 percent 
  • Greater recruitment efficiencies 
  • More positive and consistent candidate experience 
  • More opportunities to promote employer brand 

When organizations curate branded talent communities, they can more easily find candidates who are genuinely interested in working for them and engage with them on a more consistent basis. And when an opportunity arises that matches a candidate’s skill set, employers will be able to find qualified candidates more quickly. Job seekers also benefit from direct sourcing, as it can offer greater transparency than many traditional staffing solutions while expediting the hiring process. 

By utilizing direct sourcing as the primary source for all requisitions within the MSP, companies can reap the benefits of consolidated talent communities for both contingent and direct hire positions. This emerging workforce strategy can bring significant value to MSP programs, regardless of size or scope, and will remains an important trend to watch in 2024. 

Related: E-book: Evaluating and Implementing a Second-Generation MSP 

This blog was written by Jason Krumwiede. 

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