Will Direct Sourcing Disrupt the Staffing Industry?

After a tumultuous 18 months amid the global pandemic that saw job orders plummet at its outset, recruitment firms are seeing a booming market. In fact, SIA recently projected that the US industry will grow 16% this year.

However, with more than 10 million open roles in the US, many firms are struggling to keep up; they simply can’t hire recruiters fast enough — nor do they have enough hours in the day — to work on the volume of new job orders coming in.

The greatest challenge facing recruiters is fillability. SIA’s Staffing Industry Pulse Survey Report has found difficulty recruiting has increased steadily over the past six months. In terms of productivity, 40% of staffing firms are reporting an increase in unfilled orders and “ghosting” by candidates, creating more work.

Direct Sourcing: Opportunity or Threat?

Meanwhile, pressure is mounting on the client side, as contingent workforce program managers are tasked with the urgent challenge of filling roles in a timely manner to take advantage of the economic bounce-back. In response, the most progressive program leaders are looking into direct sourcing as an option to solve their talent challenges.

In fact, direct sourcing is the No. 1 trend in contingent workforce management today. According to Staffing Industry Analysts’ latest research, a staggering 60% of contingent leaders say that direct sourcing will be implemented in their programs in the next 2 years, more than any other workforce strategy.

This begs the question: Does direct sourcing represent a threat, or an opportunity for the staffing industry? And how can staffing firms leverage direct sourcing to drive rapid revenue growth and gain a competitive edge?

PREMIUM CONTENT: US Staffing Industry Forecast: September 2021 Update

Role of the Curation Partner

Early indications suggest that direct sourcing represents a genuine opportunity for leading staffing suppliers. The opportunity is this; 58% of contingent workforce programs outsource their direct sourcing programs to dedicated staffing suppliers that act as “curation partners,” along with a direct sourcing technology provider.

From a definition perspective, direct sourcing is the process whereby companies leverage their own brand and network to attract and engage contingent workers. As such, they create a private talent cloud of candidates for temporary employment roles at their company. This is where preferred staffing suppliers become critical. The candidates in a company’s talent cloud still need to be curated into talent pools and the benefit for innovative staffing suppliers is that enterprise organizations only need one curation partner.

When a staffing supplier becomes a direct sourcing curation partner, they typically gain access to a much larger number of jobs and are able to operate at scale, leading to increased revenue and profitability for the staffing supplier, while also offering reduced fees to the end client. Further still, the curation partner develops deeper relationships with enterprise customers for cross-sell opportunities and has a new innovative service to take to existing customers.

Curious if direct sourcing will get the results your customers are after? According to SIA’s “Achieving Excellence in Direct Sourcing for the Contingent Workforce report, contingent workforce program leaders in this space are outperforming laggards by an average of 4:1 across all measured outcomes. Thus, you can take the direct sourcing solution to your customers, armed with data demonstrating it drives performance, with the kicker that you are best positioned to enable their success.

By offering the direct sourcing solution on an exclusive basis, you have a golden ticket to capturing a large piece of the contingent pie and outgrowing your competitors.

Watson Prather

Watson Prather
Watson Prather is VP of sales, staffing technology for LiveHire. He collaborates with C-level executives at progressive staffing firms to bring innovative direct sourcing solutions to market.

Watson Prather

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