Direct sourcing strategy

Direct Sourcing for HRs. The brief and simplified version

Published on January 1st, 2023


Welcome to direct sourcing 101. In this segment, we will cover every important aspect related to the benefits of direct sourcing and how to adapt to a new generation of employees.

Here is a sneak peak into the current scenarios that you should consider before opting for direct sourcing.

According to Glassdoor, about 86% of employees want to keep working remotely or want hybrid working models. A majority of job seekers, 89%, view their mobile devices as crucial for their job search and nearly half, 45%, use them on a daily basis. SHRM suggests that 84% of companies use social media for recruiting. According to LinkedIn, the majority of the global workforce, 70%, are passive job seekers, with only 30% actively searching for new job opportunities. About 83% of companies are finding that their experience with remote work has been positive, as per Pwc. About 61% of recruiters prefer video interviews. Around 90% of hiring managers feel that remote work needs to continue, as it provides flexibility and improves productivity. According to Flex jobs, 95% of employees say that their productivity has increased or remained unchanged. 51% of those employees also feel that remote work makes them more productive. Upwork’s survey suggests that about 22% of the US workforce will work remotely by 2025.

So, these figures are an indicator that the global workforce is already in the midst of a paradigm shift. And having an effective recruitment strategy can increase hire retention by 82% and productivity by 70%, whereas a poor recruitment strategy can make the recruitment process twice as long. Now that we’ve established that, let’s see how to keep up with the global workforce with direct sourcing.

What is direct sourcing?

Direct sourcing in recruitment refers to the process of finding and recruiting candidates for a job opening directly, rather than relying on third-party sources such as job boards or recruitment agencies. This can include reaching out to potential candidates through networking, social media, employee referrals, and other methods. The goal of direct sourcing is to find high-quality candidates who may not be actively looking for a new job, but would be a good fit for the open position. This can help to reduce recruitment costs and increase the diversity of the candidate pool.

In today's competitive job market, direct sourcing has become an essential strategy for companies to identify, attract, and retain top talent. With unemployment rates low and many industries experiencing a shortage of skilled workers, it can be difficult to find qualified candidates through traditional recruitment channels. Direct sourcing allows companies to tap into a wider pool of potential candidates who may not be actively looking for a new job, but would be a good fit for the open position.

Additionally, direct sourcing allows companies to increase the diversity of their candidate pool by reaching out to underrepresented groups. This helps companies to improve the chances of finding qualified candidates who may not have been considered through traditional recruitment channels.

Direct sourcing also helps companies to reduce recruitment expenses by avoiding recruitment agency fees and advertising costs on job boards. This allows companies to allocate more resources to other areas of the business.

Advantages of Direct Sourcing

1. Cost-effective solution

Direct sourcing can be a cost-effective solution for companies looking to recruit new talent. By reaching out to potential candidates directly, companies can avoid the fees associated with using recruitment agencies or advertising on job boards. By sourcing candidates directly, companies can quickly identify and reach out to qualified individuals, rather than spending time and resources reviewing resumes and interviewing candidates who may not be a good fit for the open position.

2. Access to a wider pool of potential candidates

It allows companies to reach out to potential candidates who may not be actively looking for a new job, but would be a good fit for the open position. This can help companies to find high-quality candidates who may not be found through traditional recruitment channels.

3. Increased diversity

By reaching out to potential candidates from underrepresented groups, companies can improve their chances of finding qualified candidates who may not have been considered through traditional recruitment channels.

4. Cost saving

Companies can reduce recruitment expenses by avoiding recruitment agency fees and advertising costs on job boards.

5. Better control over the recruitment process

By conducting direct sourcing, companies can have more control over the recruitment process and ensure that it aligns with their specific needs and requirements.

6. Increased employee engagement and retention

It can also increase employee engagement and retention by giving employees an opportunity to refer friends and colleagues for open positions within the company.

7. Better understanding of the talent market

It also allows companies to keep a better track of the talent market, understand the current trends and proactively identify the best talent available.

How to Implement Direct Sourcing

Defining your target candidate

Defining your target candidate is an important step in the direct sourcing process. It involves identifying the specific characteristics, qualifications, and experience that a candidate should possess in order to be a good fit for the open position.

To define your target candidate, you should consider the following factors:

Job requirements Company culture Team dynamics Future potential Diversity

Identifying potential sources for direct sourcing

Once you have defined your target candidate, the next step in the direct sourcing process is to identify potential sources for finding those candidates. Some common sources for direct sourcing include:

Employee referrals Networking Social media Professional associations College and university career centers Internal database Recruiting events Cold-calling or Cold-emailing

Utilizing technology and tools to streamline the process

Automation: Using software and robotics to automate repetitive tasks, such as data entry or assembly line work.

Process management software: Tools that allow teams to document, track, and optimize their processes, such as workflow software or business process management (BPM) systems.

Communication and collaboration tools: Platforms like instant messaging, video conferencing, and project management software that enable teams to communicate and work together more effectively.

Cloud computing: Utilizing cloud-based software and storage solutions to access and share data and resources remotely.

Business intelligence and analytics: Software that can analyze large amounts of data to identify trends, patterns, and insights, and make more informed decisions.

IoT: Utilizing Internet of Things technology to connect and collect data from devices and machines to optimize production, reduce downtime and improve efficiency.

Artificial intelligence and Machine learning: Utilizing AI and ML to automate decision making, improve predictions and forecasting, and streamline business operations.

Creating a direct sourcing strategy

A direct sourcing strategy should not only focus on identifying and recruiting candidates directly, but also on several other factors like adapting to the industry trends and retaining hires. Some key steps to creating a direct sourcing strategy include:

Determine the types of companies and industries where your ideal candidates are likely to be working. Develop a process for identifying, attracting, and engaging potential candidates over time, even if they're not currently looking for a new job. Utilize social media platforms, professional networking sites, and other online tools to find and connect with potential candidates. Encourage current employees to refer qualified candidates from their networks. Ensure that your company has a strong reputation as a great place to work, as this can help attract top talent. Establish relationships with universities and colleges to identify and recruit recent graduates. Keep track of the success of your direct sourcing efforts and make adjustments as needed to improve your strategy over time. Keep an eye on the market trends and be prepared to pivot if necessary.

Best Practices for Direct Sourcing

Clearly define and communicate your sourcing needs: Clearly identifying and communicating your sourcing needs to suppliers will help you attract the right suppliers and ensure that they understand your requirements.

Use a competitive bidding process: Using a competitive bidding process, such as a Request for Proposal (RFP) or Request for Quotation (RFQ), can help you identify the best suppliers and negotiate the best deals.

Conduct thorough supplier evaluations: Conducting thorough evaluations of suppliers, including on-site visits, will help you identify potential risks and ensure that the supplier can meet your needs.

Establish clear terms and conditions: Establishing clear terms and conditions in your agreements with suppliers will help to ensure that both parties understand their obligations and reduce the risk of disputes.

Manage supplier performance: Regularly monitoring supplier performance, including delivery times and quality, will help you identify issues early and take corrective action as needed.

Continuously re-evaluate your sourcing strategy: Continuously re-evaluate your sourcing strategy to ensure that it is still aligned with your business goals and that your suppliers are still meeting your needs.

Leverage technology: Utilize technology such as e-sourcing platforms, supplier management software, data analytics, and automation tools to streamline the sourcing process, increase efficiency, and reduce costs.

Challenges and Solutions

Challenges that companies may face when implementing a direct sourcing strategy for recruitment include:

Lack of access to a large pool of candidates: Direct sourcing relies on the company's own networks and resources to find candidates, which may be limited compared to using recruitment agencies or job boards.

Difficulty in identifying the right candidates: Without the support of recruitment agencies or job boards, companies may have difficulty finding candidates with the right qualifications and experience.

Time-consuming: Direct sourcing can be time-consuming, as it requires the company to actively search for and engage with candidates.

Difficulty in managing the recruitment process: Without the support of recruitment agencies or job boards, companies may have difficulty managing the recruitment process, from screening candidates to scheduling interviews.

Solutions to these challenges include:

Utilizing employee referrals: Encourage employees to refer qualified candidates from their networks.

Using Social media and professional networks: Utilize social media and professional networks to reach a larger pool of candidates.

Creating a strong employer brand: A strong employer brand can help attract the right candidates to your company.

Building a Talent pipeline: Building a talent pipeline can help companies have a pool of potential candidates ready when needed.

Leveraging technology: Utilize recruitment software to automate and streamline the recruitment process, such as applicant tracking systems (ATS)

Partnering with external agencies: Companies can also partner with external agencies to help with specific aspects of the recruitment process, such as background checks or skills assessments.

Why do companies shy away from direct sourcing?

If direct sourcing is so awesome, why do some companies shy away from it? The following are some of the reasons.

Lack of expertise: Some companies may not have the expertise or resources to effectively manage direct sourcing in recruitment, such as identifying potential candidates, negotiating agreements, and managing relationships with candidates.

Risk of candidate failure: Direct sourcing can involve working with many different candidates, which can increase the risk of candidate failure or non-compliance. This can be a concern for companies that rely heavily on a small number of candidates for critical roles.

Lack of control: Some companies may be concerned about losing control over their recruitment process when outsourcing to many different candidates. They may be worried about lack of transparency, quality control, and compliance with regulations.

Costs: Direct sourcing can be more expensive than other recruitment methods, particularly for smaller companies that may not have the leverage to negotiate favorable terms with candidates.

Difficulty in adapting to changing market conditions: Direct sourcing can make it more difficult for companies to adapt to changes in the recruitment market, such as changes in demand for certain skills or qualifications.

Complexity: Direct sourcing can be a more complex process than other recruitment methods, requiring more resources and expertise to manage effectively.

Recruitment management: Companies may not have the capacity to manage multiple candidates and the complexity of recruitment management.

How Hire Quotient can help you with direct sourcing? At Hire Quotient we offer premium HR services that allows you to effectively tap into the talent pool. For starters, you can try our free-to-use JD generator, which will help you write effective descriptions with little to no effort. You may also try our ROI calculator to calculate exactly how much you need to spend to make the right hire. Our other services include SaaS and consulting. Get in touch with our team to know more.

In conclusion, direct sourcing is an important strategy for companies to find and recruit top talent in today's competitive job market. It allows them to tap into a wider pool of potential candidates, increase the diversity of their candidate pool, and reduce recruitment expenses. Companies that employ direct sourcing strategies are better equipped to stay competitive in the market by identifying, attracting and retaining the best talent.

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