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The Benefits of a Direct Sourcing Strategy for Talent Acquisition

The world of work is changing rapidly, and companies that depend on knowledge workers must continue to evolve and innovate how they attract and retain the vital workers they need to get work done. One strategy that is growing in importance is direct sourcing.

Direct Sourcing Defined

Direct sourcing (sometimes referred to in the industry as “self-sourcing”) is the process by which a company leverages its own candidate pool (including current and former contractors, former employees, retirees, silver medalists, freelancers, etc.) to engage as contract workers instead of going to a staffing company or third-party labor supplier. These contingent workers are frequently engaged via a specialty solution provider, like TalentWave, who can appropriately classify and pay them.

Background on Talent Scarcity

We now live in a new era of talent scarcity. There simply aren’t enough skilled knowledge workers available to meet demand, and our educational/vocational training system is not producing enough to replenish those who are exiting the workforce.

Due to a variety of economic and demographic factors, more workers want flexibility and greater control over their careers which has driven the exponential growth of the independent workforce.

In the past, many companies have invested in building an “employer of choice” brand to help attract and retain their regular employees. Strategic companies are now beginning to expand the scope of this effort, and have shifted their mind-set towards becoming a “client of choice” for the growing independent workforce.

Contingent Labor is Your Best Weapon in the War for Talent

Regardless of size or industry, companies are constantly seeking more flexibility and cost-savings. Labor is typically the single largest spend category, so it makes sense that companies want to optimize this cost while also ensuring access to the talent they need.

Since contingent labor offers both flexibility and cost-savings when compared to hiring employees, and also offers significant talent access advantages, it is no surprise that more organizations are focused on building contingent workforce programs.

In addition to the traditional suppliers of temporary labor (e.g. staffing firms) there is a growing set of alternative talent sources for non-employee labor. These include consulting firms, freelancers, independent contractors, online staffing and labor marketplace solutions.

Companies that choose to find and engage non-employee workers outside of agency relationships are, by its simplest definition, direct sourcing.


The sourcing and engagement of contingent workers has traditionally been done through staffing suppliers. While this process is fairly predictable and low risk, it does bring with it high transaction costs (bill rate mark-ups than can reach 60%, or more), long time-to-fill gaps (often measured in weeks, not days) and occasionally questionable quality. These process gaps and solution shortcomings come into greater focus and are amplified when we consider knowledge workers who are often highly skilled experts working on time-sensitive and mission-critical projects. Most of these workers do not want to work through a staffing supplier.

Fortunately, direct sourcing can mitigate the above shortcomings. In addition, this strategy brings the added benefit of providing access to a broader population of talent who prefer to work independently by engaging and working directly with a range of different organizations. When combined with an independent workforce compliance and engagement solution, like the services TalentWave provides to enterprise clients, a company has a turn-key solution to deploy a direct sourcing strategy that both attracts and retains scarce talent.

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