Published : May 15, 2024

Unlocking MSP Direct Sourcing Benefits for Contingent Workforce

HR departments consistently face the challenge of building a flexible workforce while staying within budget constraints. If Direct Sourcing is something you are considering, then working with a Managed Service Provider (MSP) may be the way to go. In this article, we explore how busy HR leaders can optimize their hiring and reduce third-party agency costs by unlocking the benefits of MSP direct sourcing solutions.

To fully realize the potential of direct sourcing, partnering with a Managed Service Provider (MSP) is often the optimal approach. MSPs bring valuable experience and proven strategies to the table. This combined strategy helps organizations achieve cost savings, maximum efficiency, and access to top-tier contingent workforce management.

What are the benefits of Direct Sourcing?

Direct sourcing is rapidly transforming the way organizations approach contingent workforce recruitment. While traditional third-party agencies have long played a role in this, their inherent fees can inflate costs and limit access to the best talent. It offers an alternative, allowing HR teams to take control of the recruitment process, build a high-performing contingent workforce, and achieve significant cost savings.

One of the biggest advantages of direct sourcing is its potential to drastically reduce indirect spending. By bypassing traditional agencies, organizations can eliminate or significantly reduce third-party agency costs. This translates to substantial cost savings, with studies demonstrating a typical 15% reduction in contingent workforce management costs within the first year of implementation. It’s crucial to highlight that these savings don’t necessitate a compromise on talent quality.

A study by SIA found that: “Organizations with well-established direct sourcing programs can save an average of 15% to 20% on their contingent workforce costs.”

Optimizing Talent Management

Beyond cost reduction, direct sourcing empowers businesses to build sustainable talent pools. By establishing direct relationships with skilled individuals, organizations create a reliable network of “sticky talent.” These professionals, having experienced a positive working relationship, are far more likely to return for future roles. This reduces the constant need to search for new talent, saving valuable resources.

Direct sourcing also introduces technology-driven efficiency into the hiring process. Platforms automate a wide range of tasks, from job postings and candidate matching to compliance checks. This automation significantly streamlines workflows, freeing HR teams from time-consuming administrative duties. It allows them to focus on strategic talent acquisition and relationship building.

Moreover, direct sourcing platforms often incorporate powerful pre-screening tools. These tools assess candidates for their skills, experience, and even cultural fit before they reach the interview stage. This intelligent pre-screening dramatically improves the quality of candidates progressing through the hiring funnel, ultimately leading to more successful placements and allowing you to improve time to fill.

A report by Deliotte found that, of those businesses that have a contingent workforce program, more than 60% of them are currently using direct sourcing for talent acquisition.

By embracing MSP direct sourcing solutions and their inherent benefits, HR teams can transform contingent workforce recruitment from a cost center into a strategic driver of business growth. They can secure cost savings, build a reliable talent pool of skilled individuals, and streamline workflows, ultimately achieving a competitive edge in the marketplace. While technology plays a crucial role, the optimal approach leverages the expertise of a MSP to ensure a successful and sustainable direct sourcing strategy.

How to Unlock the Potential of Direct Sourcing

While technology undeniably underpins successful direct sourcing, it’s vital to recognize that automation alone cannot deliver results. The human element remains essential for a truly effective strategy. Experienced recruiters and HR professionals bring a specific understanding of your organization’s particular needs, culture, and the subtle qualities that make a candidate an ideal fit.

Even the most sophisticated platforms cannot fully replicate the human touch in areas like in-depth candidate assessment, budget management, seamless onboarding and offboarding, and ensuring complete regulatory compliance. Optimal results that improve time to fill often necessitate a strategic, balanced approach.

The large choice of direct sourcing platforms presents another challenge. These platforms vary significantly in their features, user-friendliness, and overall capabilities. Choosing the right platform for your organization’s specific needs is crucial to maximizing your investment in direct sourcing. Seeking expert advice from experienced consultants is invaluable in this selection process. They offer the knowledge and insight to guide you towards the platform that best aligns with your goals, budget, and existing HR infrastructure.

By recognizing technology’s strengths and limitations and combining it with the expertise of skilled HR professionals, you can create a powerful recipe for success.

How Workspend Can Help

MSP Direct Sourcing Solutions offer a more service-led responsive, sustainable approach to talent acquisition, enhancing cost-effectiveness and transparency within the talent supply chain. With agility more important than ever, direct sourcing systems accelerate the time it takes to secure top-tier contingent talent. At Workspend, we champion the following key advantages of direct sourcing:

1. Cost Savings

Studies have shown that organizations with a strong employer brand can save 15% to 40% compared to typical staffing markups. While cost savings are often a driver for direct sourcing, Workspend will prioritize quality and time-to-fill metrics, with cost savings as a significant byproduct.

2. Increased Quality

Leveraging the client’s brand ensures that candidates in our talent pool align with the high standards and values synonymous with this renowned brand.

3. Increased Candidate Diversity

Our program actively promotes and achieves increased candidate diversity, fostering a dynamic and inclusive workforce.

4. Decreased Time-to-Fill

The curated talent pool enables swift responses to client requisitions, minimizing time-to-fill and providing clients with prompt access to top-tier talent.

5. Reduced Reliance on Third-Party Agencies

By cultivating our talent pool directly, we decrease dependence on third-party agencies, ensuring a more streamlined and cost-effective recruitment process.

We believe the optimal approach is to blend direct sourcing with an outsourced program. This allows organizations to benefit from expert teams with the experience, know-how, and proven track record in running these systems and programs. Even for those determined to implement direct sourcing independently, it’s advantageous to start with a third-party partner during an initial “honeymoon period.” This ensures the technology is successfully implemented and delivering benefits before negotiating a handover process.

Final Thoughts

Traditional staffing models can limit access to top talent and inflate costs. Direct sourcing empowers organizations to address these challenges, creating a more responsive, cost-effective, and sustainable talent acquisition strategy.

While technology is essential, a blended approach that combines direct sourcing with the expertise of an MSP works best. MSPs offer the experience and proven methodologies needed to successfully implement direct sourcing systems, maximizing efficiency and ensuring a seamless transition.

MSP-led solutions allow businesses to reduce third-party agency costs, build strong relationships with skilled workers, streamline processes, and improve the overall quality of their contingent workforce management.

The first step in embracing these advantages lies in understanding how direct sourcing can transform your organization’s specific talent acquisition strategy. A comprehensive program assessment offers the perfect starting point. This assessment provides a detailed analysis of your current talent-sourcing processes, pinpoints the precise skills and profiles you need, and evaluates the potential impact a direct sourcing ecosystem could have on your existing approach.

Ready to unlock the benefits of MSP direct sourcing solutions and  explore how direct sourcing can reshape your talent strategy? Schedule your program assessment today.