Published On 09/01/2021

Direct Sourcing: Meaning, Benefits, and Risks

Direct sourcing meaning, benefits and risks: Direct sourcing is a strategic approach to recruitment that’s becoming much more visible in the modern job market.

The job market of today is increasingly competitive. For brands that want to attract the top talent before their competitors, recruitment has become something of a minefield.

When recruiters publish a job advert, they can be faced with up to 42% of resumes from candidates who simply lack the relevant qualifications and experience. As more businesses report that they are struggling to fill vacancies, finding the best talent is becoming more difficult, and HR teams are looking for alternative ways to find suitable candidates.

Direct sourcing is one of those alternatives. It’s a strategic approach to recruitment that’s becoming much more visible in the modern job market.

Direct Sourcing Meaning

Sometimes referred to as self-sourcing, the concept of direct sourcing in recruitment is straightforward. It refers to when a business identifies potential candidates for a current or future role within the business and uses its own resources to find those candidates. 

That means they don’t use a third-party recruiter or any kind of recruiting consultancy firm. 

Members of a recruitment team might use their own networks to find new candidates or use the internal recruiting resources that they have access to. The goal is to build a list of potential talent without reliance on agencies or third-party recruitment solutions. That list can then be used when the need to hire specific talent arises.

Instead, recruiters head straight to the job market, whether they’re looking for full-time candidates or contingent freelancers with niche skills. It’s more common to use direct sourcing when looking for candidates for temporary roles, which means managing a list of potential hires and communicating effectively when a relevant project arises.

Direct sourcing allows recruiters to take more control over their talent pipelines and makes it easier to take advantage of the talent that’s available via more effective vetting.

What are the benefits of direct sourcing?

Using direct sourcing means that you get a wide range of benefits. By taking more control over the hiring process, recruiters can take advantage of those benefits to accelerate company productivity. The most commonly cited benefits of direct sourcing include the following.

Faster recruitment times

Since HR won’t be relying on third parties to find the best talent, they will instead be using lists of available talent. By having those candidates already on the books, and knowing their levels of interest in working for the brand, the recruitment process is dramatically speeded up. 

When there are skill gaps in a company, direct sourcing means being able to fill those gaps as and when needed. That leads to a much better candidate experience since hiring can be done extremely quickly.

Lower recruitment costs

Recruitment agencies mean paying to find candidates. Those candidates may not even end up being the best person for the role and could end up harming the work environment. 

Direct sourcing is conducted in-house, and that means lots of potential savings. Not only will HR be saving money by avoiding the fees of third-party agencies, but they will also be looking for specific candidates. That’s going to mean less candidate ghosting, lower turnover rates, and more long-term potential for each employee. 

Find specialist candidates

When recruiters use direct sourcing, it is often the result of the need for highly qualified employees or contingent workers. These are roles that require a certain level of skill and capability and are intended to fit into niche positions. 

By adopting a direct sourcing strategy, those recruiters will have a private pool of the talent that they need. They will be able to quickly find and engage the team members that they need when they need them.

Increase referrals

Referrals are always an effective recruitment method, and direct sourcing can play into those strengths. Even for brands that have an existing referral program, direct sourcing means earning access to candidates that might otherwise fly under the radar. 

Existing employees that may be wary of referring a candidate for a full-time contract position may also be more proactive when referring people for contingency positions. That alone can boost direct sourcing efforts.

There are other benefits to direct sourcing. Faster onboarding means candidates can get to work faster, and engagement will be boosted. 

The risks of direct sourcing

Looking at the benefits of direct sourcing isn’t a reason to rush into it. There are risks associated with direct sourcing that recruiters need to be aware of. It’s not a strategy that is suited to all organizations. The following risks need to be avoided and addressed as needed.

Workforce planning

Organizations must have invested in workforce planning before direct sourcing can be effective. That planning makes it easier for businesses to understand their existing workforce and future staffing needs. However, a data-based approach means that there is potential for errors.

If an organization’s workforce planning has resulted in bad data, then recruiting as a whole can be weakened. The wrong skills will be sought out and actively recruited. If hiring managers are kept in the dark about the future of a business, then direct sourcing isn’t going to help find the candidates that the business needs.

The speed issue

Thanks to its many benefits, HR teams often try to rush the adoption of a direct sourcing strategy. That speed can lead to big mistakes. Ideally, integrating direct sourcing into a recruitment process should be a gradual process.

The members of HR will need to be trained to be able to direct source effectively, and may even be resistant to the change if they have preferred recruiting agencies. Going too fast can lead to team members working across each other, so integration needs to be slow and steady to get everyone on board.

Additional risks can include the need for a strong employer brand. If the organization has a negative brand reputation, direct sourcing is going to mean a limited number of candidates. Working on brand reputation is a vital aspect of direct sourcing that recruiting teams often overlook.

Options for direct sourcing

So how do recruiters and HR find the best talent? Direct sourcing means proactively searching for potential candidates, and that means knowing where to find them. Here are the most common places to source recruits. 

  • A talent marketplace: Consider a marketplace like eBay, but replace second-hand goods with people that have in-demand skills. Talent marketplaces are more numerous than they’ve ever been, and they continue to grow in number. From generic platforms like Craigslist to skill-based marketplaces that list specific and niche skills, recruiters are searching online to find the candidates they need.
  • Freelance management systems (FMS): An FMS is a platform that allows recruiters to store lists of potential talent, advertise roles, and even manage onboarding and invoicing. The number of FMS platforms grows year on year, so recruiters have multiple options.
  • Talent network: This will be the list of candidates that the recruiter has already engaged with. There will be an existing relationship with everyone on the list, often stored directly in a talent management tool. That list may be a private one, with each member of the HR team having their own lists. In other organizations, access to that talent network could be company-wide.

Tips for direct sourcing in recruitment

With so many benefits available with direct sourcing, it’s no surprise that it’s becoming increasingly common in HR circles. While it requires some initial work, direct sourcing has a high ROI, has proven its effectiveness, and ensures skills are available when they are needed. 

Use these tips to get the most of a direct sourcing strategy:

  • Engage/Re-engage: It’s important to keep in contact with the candidates on your talent list. Set up regular contact points using your communication tool of choice.
  • Stay legal: Always make sure that you are compliant with local employment laws, especially if hiring remote workers in other locations.
  • Go offline: While most direct sourcing will be done online thanks to the advantages that come with online recruitment, there’s a lot of potential for offline direct sourcing too. Industry events are ideal hunting grounds for fresh talent, but any event where an organization has a presence can be useful for finding new employees.
  • Keep adding to your list: Recruiters should be building their lists of top talent constantly. Direct sourcing isn’t just about finding people to fill the currently available roles but looking to the future. Being able to predict what skills will be needed in a month or a year means having more time to find the perfect person.

Summary

Direct sourcing isn’t something that you can integrate immediately. It’s a strategy that takes time to build, and investing that time will be a major factor in its success.

When it comes to hiring temporary workers especially, direct sourcing is highly effective. For firms that have issues with fluctuating employee numbers or rely on seasonal trade, direct sourcing can be a game-changer.

Direct sourcing not only empowers the recruiting team but can also transform the workplace. Contact the High5 team today to find out more about how we can help you to find and attract the talent you need to help your business grow.

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