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6 Steps for Successfully Direct Sourcing Contingent Labor

Maggie Getova | July 27 2022 |

Last year, the staffing industry realized significant growth due to a number of factors, including a shift to more contract work from younger generations and the evolution and multiplication of talent acquisition tools and services. The ensuing talent shortage led organizations to search for improved business models and human capital strategies that were now focused on improving access to scarce talent pools.

One of those models is direct sourcing, the process by which a company leverages its own employer brand to source highly skilled talent without utilizing a staffing agency or supplier. Direct sourcing is seen as a key solution to the talent shortage problem; however, its rapid growth has outpaced the development of accepted best practices, often leaving those hoping to incorporate the approach with little knowledge to build from.

In part one of this three-part blog post series, we’re going to explore a number of direct sourcing best practices and strategies that organizations can leverage to source skilled workers. For a comprehensive step-by-step guide to effective direct sourcing strategies, read our white paper conducted in partnership with Staffing Industry Analysts (SIA) that outlines the groundwork to launch a successful direct sourcing program.   

In this blog post, we’ll cover 6 ways in which businesses looking to get started with direct sourcing contingent labor can:

  1. Create the vision for change
  2. Build the business case
  3. Set data-driven recruiting goals
  4. Define the candidate experience
  5. Prioritize access to talent over savings
  6. Establish clear program ownership

1. Create the Vision for Change

To successfully implement a direct sourcin strategy, you first need to create a strong vision. Outline what the organization stands to gain from using its employer brand to attract and hire contingent workers, and what it stands to potentially lose by ignoring the current generation’s shift to more flexible work arrangements.

It’s critical to lay out the foundations of success beforehand so you know what to measure and ensure the benefits of direct sourcing are fully understood across the organization.  Examples may include:

  • Higher fill rate
  • Faster hiring speed
  • Cost savings
  • Better access to talent

2. Build the Business Case

Building the business case consists of thoughtful analysis of the current state of the contingent workforce and thorough explanation of your reasoning for implementing direct sourcing for contingent labor. Understanding what the future demand for contingent talent looks like and how labor shortages will affect the company’s top and bottom lines is key.

In addition, a good business case provides data on the impact of employer branding in attracting talent, the cost of hiring and retention, and how that ultimately translates into measurable ROI. Read our solution brief to learn more about how leveraging employer branding can help drive cost savings for your contingent direct sourcing program.

3. Set Data-Driven Recruiting Goals

A major component of early direct sourcing success is to generate confidence in your team. One key way to do this is to initially establish modest expectations, and then exceed them. When setting these goals, it’s important to consider several factors for each business unit and role you plan to fill, including:

  1. Location
  2. Wage
  3. Supply and demand
  4. Workforce demographics

Utilize facts and data to determine priorities, empower curation teams to set clear, attainable goals, and move forward from there.

4. Define the Candidate Experience

One of the many benefits of direct sourcing contingent labor is fostering a greater sense of loyalty and commitment from workers and contractors. When candidates apply to your company directly, you know they are genuinely interested in working for you. This means their experience with your company should be smooth and enjoyable at all touchpoints throughout their journey.

Define what this premium candidate experience looks like for your company, and tailor your employee value proposition toward the preferences of each job level or role.

5. Prioritize Access to Talent Over Savings

Because contingent labor isn’t stagnant, you shouldn’t implement a direct sourcing approach with the sole purpose of saving costs. Engaging contingent workers with in-demand skills may require a higher rate, and talent shortages can also often lead to indirect costs. Direct sourcing should first and foremost be viewed and marketed as an access to talent play, not a cost savings play.

6. Establish Clear Program Ownership

Define who oversees your direct sourcing program and has the authority to act and make decisions. Research indicates that direct sourcing can be successful whether it’s managed by HR or procurement, but the key to achieving objectives is whether there is clear ownership of the program, as well as a collaborative relationship between talent acquisition, procurement and management.

Pulling It All Together

As the contingent workforce continues to grow, more organizations are making the shift toward a direct sourcing model to source talent. When laying out the foundation for a direct sourcing program in your company, the six critical steps to developing a workforce strategy that have been outlined here should be completed first to help ensure successful implementation.

Begin by stating your vision for your organization’s future with direct sourcing and use data to set attainable goals for your teams. Follow up by defining the candidate experience and prioritizing access to talent over savings. Finally, be sure to establish clear ownership of your direct sourcing program and make sure everyone understands its purpose and objectives.

To kick-off a successful, results-driven direct sourcing program, download our comprehensive guide with exclusive research conducted with SIA. 

Stay tuned for part two, where we’ll discuss getting the green light for direct sourcing and how to gain support from executive leadership.

If you’re interested in learning more about how Magnit is helping organizations implement winning contingent workforce programs globally, please contact a Magnit representative at

Disclaimer: The content in this blog post is for informational purposes only and cannot be construed as specific legal advice or as a substitute for legal advice. The blog post reflects the opinion of Magnit and is not to be construed as legal solutions and positions. Contact an attorney for specific advice and guidance for specific issues or questions.

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