While the growth of the independent workforce and the related war for talent have boosted the adoption of direct sourcing in recent years, most view direct sourcing as a distinct workforce channel. However, leading early adopters see even more potential — as an enabler to optimize the workforce itself, viewed as an integrated whole.
These leaders have implemented a comprehensive strategy that ensures they have the right people at the right place, time and price to achieve their business goals. Direct sourcing becomes a cornerstone of the workforce optimization framework that utilizes data and analytics to inform talent decisions and align business and people strategies to improve results and profits.
Organizations that have utilized direct sourcing as a pathway to broader workforce optimization have not only gained access to independent workers with specialized expertise, they’ve seen improvements in staffing metrics and deliverables, reduction of risk, and cost savings.
If your contingent workforce program is stuck in second gear, the good news is that you don’t need to figure out the entire path to start thinking differently about talent.
Emulating the initial steps of early adopters can help you unleash the full power of direct sourcing so you can start reaping the benefits of a fully optimized workforce.
Start with Direct Sourcing
In the last few years, direct sourcing has evolved from an unproven concept to an industry-standard process that has been shown to be superior for the benefits it delivers.
In fact, a 2022 MBO Partners report found that while 53% of talent leaders report cost savings as a direct sourcing benefit, equal or greater benefits also include greater access to specialized skills (57%), more consistent work quality (56%), creation of a talent pool/bench for quick engagement (53%) and increased hiring manager satisfaction (52%).
Most importantly, pioneering leaders have leveraged a fully optimized workforce to launch new service and product lines, expand into new markets and negotiate transformations to new business models.
Today, the independent workforce has 64.6 million people, the largest number in history and a 69% jump in size from 2020. Failing to tap this growing talent pool, especially when supply is limited, can put companies at a competitive disadvantage.
“So, the question is: Why limit yourself to just 25% of the available workforce when there’s a human capital scarcity problem and companies are struggling to hit investor returns?” asks Miles Everson, CEO of MBO Partners.
Recruit an Executive Sponsor
Achieving a fully optimized workforce requires a permanent mindset shift that empowers hiring managers to move beyond thinking about recruitment as full-time employees augmented by staffing firms. In the absence of a sponsor or compelling evidence-based case study, even the most well-designed workforce optimization initiatives will struggle to succeed.
To that end, advanced leaders outlined the need for change, obtained executive support and then embedded the direct sourcing of independent workers into an agile talent management framework that inspires managers to change the way they think and behave.
“Many executives don’t understand that they have broader options for acquiring talent,” Everson notes. “They need education.”
Some contingent workforce leaders address this need by presenting executives with a formal business case that explains the benefits of pursuing a workforce optimization plan, its potential for cost savings and why it should be executed. Understanding the trends that are fundamentally changing how work gets done and how workers want to engage can help executives embrace your vision and provide funding, resources and support for taking a new approach.
However, other leaders took the opposite approach: They educated executives on the systemic changes in the labor market but placed the greatest emphasis on the risks and costs of staying the course.
With businesses already failing to deliver products and services on a daily basis due to talent shortages, the ability to attract and retain top talent and the potential for cost savings provide a powerful argument for engaging in direct sourcing as part of a workforce optimization framework.
Regardless of the approach, the most impactful discussions with executives focus on education, including technological advancement, outsourcing and changing worker attitudes and values.
“The really mature companies recognize where society is going,” notes Bob Lucas, SVP corporate development for MBO Partners. “They want to make sure they can adapt, attract and retain the right type of talent.”
Embed Direct Sourcing Into an Agile Talent Management Framework
After receiving the green light from executives, pioneering leaders drive change by embedding direct sourcing into an agile management strategy and framework that aligns talent curation and selection to the organization’s business goals.
For example, proactive demand forecasting has become a defining feature of programs that have moved up the maturity curve to workforce optimization. It allows them to predict the future needs for specific skills, identify shortfalls and scan the global labor market to identify the most cost-effective sources of talent — including independent contractors, SOWs, freelancers, staffing firms or even full-time hires.
The workforce planning process also helps managers break down projects into component tasks in order to facilitate the flow of talent and the alignment of skills to high-priority work.
Finally, leaders provide a robust decision support system that enables managers to compare internal and external sources of talent, cost, availability and geography to determine the best source of talent for each position and project.
Over time, workforce optimization has become the new normal at leading-edge companies. Leaders report that managers have identified new opportunities to utilize independent talent and now use flexible resourcing to enter new markets and blaze paths to renewed growth.
Most importantly, they now have the knowledge, processes and technology to make informed decisions about whether to build, borrow or buy talent to drive business growth.
To learn more about MBO Partners’ approach to direct sourcing and workforce optimization, visit its website or read its latest custom research report: Unleashing the Power of Direct Sourcing: A Pathway to Workforce Optimization.
