On the face of it, direct sourcing sounds like money lost from a staffing firm’s perspective, but it’s really not. It might seem counter intuitive, but helping buyers with their direct sourcing efforts could be great for staffing firms’ bottom line. Hear me out.
Buyers are all talking direct sourcing of late. “It’s hard to have a conversation [with a buyer] these days without direct sourcing being brought up,” says Chris Paden, director of contingent workforce strategies and research, Americas, at SIA. A survey last year of large client companies by SIA found 26% already had a direct-sourcing program in place and 41% planned to seriously look at one over the next two years.
There are several things driving the trend, Philip C. Cooper, VP of global client strategy at direct sourcing platform TalentNet Inc., explained to me. First is cost savings. Client companies can realize savings, in the IT space for example, of between 10% to 15% and time-to-fill cut by 20%, Cooper says. Another is direct access to the appropriate talent without having to rely on third parties. And third, direct sourcing can create a total talent gateway, allowing companies to recruit for traditional employee roles in addition to contingent.
Fitting in. But staffing firms don’t need to be left out of the loop. There are some direct sourcing arrangements that call for staffing firms to handle the curation of workers for talent pools. Cooper says TalentNet is working with staffing firms interested in these types of arrangements. In exchange, staffing firms could demand exclusivity on placements for clients, and while the amount per placement may be lower, the firms could ultimately come out with more business.
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In addition, with direct sourcing, a large buyer of temporary staffing will create its own talent pool of contingent workers to draw upon. And the workers are often placed on the payroll of a third-party payroll provider. Payrolling firms as well staffing agencies providing payroll services stand to benefit.
Benefits for all. But it’s not just about money saved or made. Buyers’ interest in direct sourcing also stems from the fact they get more control over which workers they use, resulting in higher-quality talent. MSPs are also jumping on the bandwagon offering to help the buyers, Paden says. Some are offering to create client-branded direct-sourcing strategies for contingent labor, while others are managing the different providers and helping keep them compliant with the MSP program.
Ultimately, where the buyer goes, others follow. Sourcing methods, aside, if there’s value and money to be had for providing high-quality workers, vendors will sit up and take notice. Buyers already have.