what is direct sourcing?

Direct sourcing, sometimes known as “direct fulfillment,” is a way for companies to acquire and deploy contingent talent by minimizing or eliminating third-party suppliers. This is often done through the use of a branded talent pool that the company develops on its own or with the help of a managed service provider (MSP). By directly identifying and acquiring contingent resources, companies can receive a host of benefits. 

This approach offers a more agile and talent-centric model of engaging with and deploying flexible workers by creating a closer relationship between the business and the people you need to get work done. At the same time, companies are able to realize greater cost savings and cost avoidance through these direct contingent recruitment relationships.

A direct fulfillment model in MSP typically includes critical suppliers that play an essential role in delivering niche and specialized skills. This approach allows you to directly engage and acquire a majority of your contingent workers, so the organization can more quickly fulfill hiring manager needs at a lower cost. 

Another key feature of a direct sourcing program is the retention of critical talent suppliers, who will be asked to play a more strategic role going forward. The goal of direct fulfillment is not to reduce access to talent – which would happen if your most pivotal suppliers were not retained. Rather, it aims to optimize the supply chain to complement internally sourced talent.

No. On the contrary, direct sourcing in MSP is structured to help reduce your talent costs. Because you are not paying the markup costs that third-party suppliers likely charge, you potentially can cut your contingent talent spend by double digits. 

The spend you have with retained suppliers will also be more predictable since — as strategic partners — they will be asked to standardize rates, whether they are delivering talent in Memphis or Mumbai. 

The costs to set up your MSP direct fulfillment program, including your branded talent pool, are typically recovered by the MSP through placement fees.

By creating a talent pool that leverages your organization's employer brand, you capture a host of immediate and long-term benefits to elevate your talent strategies. 

Branded talent pools ensure the contingent resources you deploy are familiar with your business, fully engaged and committed to their assignment. Silver and bronze medalists from your permanent recruitment efforts can choose to join the talent pool to be considered for all future roles, regardless of work arrangement. Having a robust pipeline of ready talent will lower your talent costs, reduce time to deploy and result in a higher quality of talent.