The Importance of Direct Sourcing

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Many large companies are using or are planning to use a direct sourcing program that optimizes the acquisition of new and pre-identified talent through the creation of a private talent community of qualified resources. It’s a great way for companies to proactively find the talent they need for temporary contract roles without requiring them to rely just on reactive, inbound applications. Companies can instead reach out to the best prospective talent that has a great interest and awareness of the company’s brand due to them receiving highly relevant communications based on their career interests to form a relationship with the company’s brand. Rebecca Cenni-Leventhal, CEO of Atrium, says that “As the modern workforce makeup evolves, the strategic use of contingent workers has steadily increased, and uncertainty only gives further momentum to this trend.” Christopher Dwyer, Manager Director of Future of Work Exchange, agrees stating that “Direct sourcing will demonstrate its enduring value as a foundational talent acquisition strategy that also serves as a talent sustainability engine, solidifying its role in the workforce management landscape of tomorrow.” 

The best way to use direct sourcing effectively is by cultivating talent pools. This can be done by ensuring candidates have the necessary skills a company is looking for, are ready to deploy, are engaged, and include talent that are known and new as well as those who are active and passive job seekers. Talent pools should be curated on an ongoing basis to ensure they are constantly relevant and effective in meeting the talent needs of a company. Constant engagement with talent pools can be done through newsletters, job alerts, events, social platforms, networking sites, and industry-specific forums. 

But even though 60% of large companies are considering using a direct sourcing program in some shape or form, 40% of companies have not even considered implementation yet. Leaving direct sourcing out of a company’s talent acquisition strategy could possibly prove detrimental as direct sourcing is more than providing simple convenience to companies. It is a robust, dynamic solution that prepares businesses for the ever changing challenges of the modern workforce. Direct sourcing can help companies interested in offsetting talent shortages and increasing talent recruitment expenses, among other problems. In fact, 50% of staffing firms say that labor shortages were the biggest problems of 2023. If this issue is not addressed, it could lead to $8.5 trillion in unrealized revenue by 2030. Direct sourcing can assist companies in finding the talent that can resolve this issue. 

Direct sourcing is also a great way to address the rise of the contingent workforce in recent years. In 2020, more than 30% of companies hired contract workers with almost 30% of the U.S. labor market being part of the gig economy. This workforce trend is very likely to continue, making direct sourcing an essential tool for companies interested in staying competitive by leveraging this growing population of workers. 

Growing employment expenses is showing that new hire pay is about 9% higher than usual, which means that cost-effective recruitment is incredibly important now more than ever. In fact, 98% of businesses have attributed their cost savings to their direct sourcing efforts, which for many companies using a direct sourcing program result in savings averaging between 10% and 15%, proving that these programs are effective and will be used for a while. 

Today’s labor market has increased the need for talent access and faster hiring. But with direct sourcing, companies are able to  quicken the hiring cycles while being able to save on costs, gain higher quality talent and candidates, and better “humanize” the candidate experience. What’s more, direct sourcing can even improve and boost a company’s employer brand, build stronger relationships with candidates and talent, and improve the diversity of the candidate pool. 

Direct sourcing is able to maximize a company’s ROI (return on investment) as well by being able to focus on attracting and retaining top-quality candidates. The ROI can be measured in various ways, but one metric that should be tracked is achieving high levels of conversions from temporary to permanent employees. Direct sourcing can help by providing a strong pipeline for permanent hiring. Pairing direct sourcing with client-provided forecasts and historical requisitions can allow direct sourcing providers to improve the population in labor categories where there are definite needs which can further optimize ROI and increase temporary to permanent employee conversions. 

Direct sourcing is a beneficial tool for companies that want to stay competitive in the modern workforce. By cultivating strong talent pools and reaching out to known populations who are engaged with and invested in the business, companies can find the talent that fit their needs quickly and cost-effectively. Not implementing a direct sourcing program to find the best talent in the workforce for your needs could be putting your business at a disadvantage.

About the author


Brian Wallace

Brian Wallace is the Founder and President of NowSourcing, an industry leading infographic design agency based in Louisville, KY and Cincinnati, OH which works with companies that range from startups to Fortune 500s. Brian also runs #LinkedInLocal events nationwide, and hosts the Next Action Podcast.  Brian has been named a Google Small Business Advisor for 2016-present and joined the SXSW Advisory Board in 2019.