Much has been said about direct sourcing in contingent workforce programs. Many staffing providers are touting its benefits, and enterprises are excited about it as well. According to an upcoming custom research report commissioned by Raise Recruiting and LiveHire, and produced by Staffing Industry Analysts, only 16% of contingent workforce leaders say that direct sourcing is already effectively implemented, yet 60% expect to have direct sourcing in place within two years.
Amid this boom in direct sourcing, we spoke with Edwin Jansen, head of corporate development at Raise Recruiting, a newly launched division of Ian Martin Group, to focus entirely on delivering managed direct sourcing solutions.
Why is there so much buzz around direct sourcing right now?
It’s a big trend because it can get dramatically better results. Direct sourcing uses the employer brand as a magnet to attract and proactively talent pool candidates ahead of the job requisitions. It delivers this rare combination of value that we like to call the “trifecta.” Direct sourcing can make contingent hiring better, faster and cheaper — which flies in the face of business wisdom that says new services can only deliver two of those three.
The fourth big driver is that direct sourcing also provides a superior candidate experience — and we all know how important that is these days.
Why did you launch Raise Recruiting and what is its mission?
In 2019, Ian Martin Group began offering a completely managed direct sourcing solution and it really took off. We’ve seen so much success that we decided to create Raise Recruiting as 100% focused on delivering managed direct sourcing and volume-hiring solutions. We’ve seen that direct sourcing is the best way to get significant improvements in contingent hiring, so it’s our mission to use this strategy to raise the standards that employers and candidates can expect from a staffing supplier.
How did Covid-19 affect direct sourcing?
Covid-19 presented a very good use case. Contingent workforce programs immediately saw the value of having a direct line of sight with contractor talent, and many needed to be able to quickly ramp-up hiring when things opened back up. This is exactly what direct sourcing is designed to do.
We used direct sourcing for urgent and high-volume, pandemic-response hiring. For example, using programmatic job advertising and direct sourcing technology, we were able to recruit and place more than 2,000 contact tracers and vaccine schedulers very quickly. We used direct sourcing to custom-build a recruitment machine — actually, we call it “the factory” — that quickly delivered a large quantity of candidates, without sacrificing quality.
What evidence exists that direct sourcing will lead to better and faster hiring of contingents? What cost savings can contingent workforce managers expect to achieve?
The key driver of benefits in direct sourcing is that you’re able to be proactive instead of being reactive to the job requisitions. And we’ve seen pretty dramatic results. When it comes to hiring better, we have found that you need a third of the number of shortlisted candidates to make a hire because they’re pre-qualified. When it comes to speed, you’re able to hire up to 60% faster on average because those candidates are pre-identified before the jobs come out. And then the cost savings, which is generally the first thing that people ask about, are also quite significant.
Because we’re able to get high placement volume through direct sourcing, we’re able to lower our staffing markups by 30% to 50%, which then eventually drives total program savings in the neighborhood of 5% to 10% once we get to scale. When you’ve got a multimillion-dollar contingent workforce program, those savings can really add up. And by the way, there are no implementation costs for our managed direct sourcing program, so every placement we make is a net cost savings.
If direct sourcing is so valuable, why aren’t more programs already doing it?
Direct sourcing is still in the early phases of adoption, so to answer this question fully, we’re working with SIA on a comprehensive direct sourcing market and best practice study, which will be published in May. For that study we did a large market survey and found that while only 16% of contingent workforce programs are effectively direct sourcing now, 60% of them will be implementing it within the next two years.
We also asked about the biggest barriers for implementing direct sourcing among non-adopters. What we learned was that not having enough time, resources and budget to implement — and lacking a clear and compelling business case to drive the mandate — are holding programs back.
But we also saw evidence that these barriers are more perception than reality, as the survey found that the early adopters didn’t see these resource and budget challenges, and for them the business case for direct sourcing is very clear. It’s also important to note that early adopters of direct sourcing outperform the non-adopters across a wide range of performance and business outcomes. That’s the business case for getting started with direct sourcing asap.
What are the critical success factors in implementing a successful direct sourcing program?
Well, the most important metric is the percentage of placements; you want to get as many placements as possible through the direct sourcing program, because each hire is a cost savings. And so, with the launch of Raise, we decided to share everything we’ve learned in the form of our Direct Sourcing Playbook. It’s a free e-book that we designed to be the ultimate how-to guide for the implementation of direct sourcing. In this playbook, we describe in detail what we see as the three critical success factors for direct sourcing success.
Number one is fully leveraging the power of your employer brand as a magnet for talent.
Number two is implementing a systematized forecasting of job needs, and then “talent pooling” — placing candidates in pools based on skillsets — ahead of those needs.
Number three is utilizing specialized direct sourcing technology. There’s only a handful of technologies that are customized to deliver a direct sourcing program, and it’s important to use the most advanced tech if you want to get scale.
How should people decide between doing internal “self-sourcing” vs. outsourcing to a managed direct sourcing partner?
Well, self-sourcing— or DIY “do-it-yourself” — can potentially create the most cost savings. Because you’re doing the recruitment and curation work in-house, you can get the lowest potential payroll markups. But you also have to bet on yourself, so there’s a risk involved. To make a smart bet, companies should only try to do self-sourcing if they have all senior stakeholders on board, the budget to buy the software, and have someone in-house with experience in talent pooling to hire and manage the people to do the direct sourcing curation — which is different than corporate recruiting, by the way. If you don’t have all these things in place, then your direct sourcing program could actually end up costing you money and not getting the results that you’re looking to achieve.
Companies that don’t have those key factors in place are better off going with a managed direct sourcing solution, which is what our market survey found is the majority choice. Going the managed route means it’s faster to get started; there’s no upfront investment or any costs; there’s no major program or process changes; and most importantly, there is no risk of wasting your time and money. You also get an experienced partner that is accountable for the results, and they’ll take on all the work and any hassles of implementation.
What’s your advice for contingent workforce program leaders who want to get started in direct sourcing? Where should they begin?
Once you’re ready to get started, the most common goal is to get as many placements as possible through the direct sourcing program, because each hire is a cost savings. We recommend initially focusing on filling roles that I like to call the lowest-hanging fruit, such as jobs for which you have multiple repeatable hires, or those high-volume or surge hiring projects. This is where job advertising using the employer brand is going to make a big difference in effectively attracting candidates.
The best way to initially fill your talent pools is to invite candidates who previously applied for your traditional employee jobs, and are just sitting in your applicant tracking system. We have found that 40% of full-time employee applicants are open to contract roles and 27% will accept the invitation to join a company’s contractor talent pool. This costs nothing and will immediately jump-start your talent pools. Then you can move on to inviting alumni and retirees, and creating a referral program for your employees. You’ll be amazed at how quickly your talent pools grow.
What can CW managers realistically expect out of their first year of direct sourcing?
We have found that if you have gone after the low-hanging fruit, you should expect direct sourcing to become your leading supplier and get the highest percentage of placements by the end of the first year. You should be able to get anywhere from 25% to 70% of the placements.
When trying to set those first-year targets within this wide range, we look at key variables like how repeatable and concentrated the rules are by type and location, how accurate a company’s workforce hiring forecasts are, and finally, what percentage of the roles are able to be filled by active candidates that are coming via job advertising versus passive-candidate sourcing for those harder-to-fill roles, which takes longer and takes more resources.
Any final advice about direct sourcing?
Just one thing. Don’t fall into the F.E.A.R. — false expectations appearing real — about direct sourcing. We found in the market survey that there are many myths and misconceptions here. The biggest misconception is that it requires a lot of resources to implement, and changes to your program processes. The best thing you can do is talk to people who are actually doing direct sourcing, and you’ll learn that this strategy is ready for roll-out.
For more information on Raise Recruiting’s direct sourcing solutions, or to book an exploratory call with a direct sourcing consultant, visit: www.raiserecruiting.com. To download the free Direct Sourcing Playbook, and register to receive the SIA’s upcoming custom research report on direct sourcing, visit: www.raiserecruiting.com/resources/.