What is direct sourcing in recruiting and how does it affect your procurement efforts?

When it comes to purchasing and supply chain management, sourcing plays a pivotal role.

Sourcing is a key component of procurement. It impacts to cost, employee turnover, production as well as the overall bottom line.

There are two types of sourcing involved – direct and indirect – and both are required for a streamlined operation.

Let’s take a closer look at direct sourcing in procurement and its primary advantages.

What is Direct Sourcing?

The Chartered Institute of Procurement & Supply (CIPS) defines sourcing as the operation that:

“…seeks to find, evaluate and engage suppliers to achieve cost savings and best value for goods and services which can be done through a tender process.”

With a grasp on what sourcing is, we can explore the meaning of direct sourcing.

It can be said that direct sourcing in procurement has a twofold meaning. 

Drawing from the CIPS definition, the first meaning of direct sourcing is that it is the process whereby a buyer procures goods and services directly from the source without going through a third party. 

The second meaning of direct sourcing regards the search for new talent to fill in a position within the company. HR can either source the talent from within the organization or from crowdsourcing platforms. Because this process does not require the assistance of a recruiting agent it is therefore deemed direct sourcing. 

Advantages of Direct Sourcing in Recruiting

What are the associated advantages of direct sourcing when recruiting? Here are three of the best reasons that demonstrate why direct sourcing is a great idea.

Save on employee salaries

Not every industry requires full-time staff. Some positions may be seasonal or even temporary. In this regard, it would cost far too much to work with a recruiting agency each and every time you needed a temporary staff member.

Today, we live in a gig economy. And thanks to the abundance of crowdsourcing platforms such as Fiverr.com, Guru.com, and Freelancer.com, finding the right person to get the job done is now easier than before.

You can find freelancers on such platforms at a fraction of the price you would pay if you hired a headhunter to help you find a suitable candidate for your post.

The amount of money you save by going this route can be significant.

Quicker onboarding times

Crowdsourcing platforms provide you with the ability to connect with literally thousands of independent contractors in a matter of minutes. From this diverse pool, you can create a ready-to-hire roster of qualified candidates.

This is particularly useful when you need to fill posts quickly. Because direct sourcing bypasses the head hunter stage, your hiring cycle is cut short.

There is less to review so less time is wasted and managers are able to spend their time on other more important issues.

Lower employee turnovers

Nothing is as strenuous on teams as high turnovers. Because this means repeating the hiring and onboarding process over and over again.

With direct sourcing, re-engagement with previously contracted workers tends to be high leading to lower turnovers. This is a win-win situation as it gives you the chance to work with top freelance talent in your industry.

The fact that you found them independently means that you can go back to them whenever you require their services. This isn’t the case with indirect sourcing. Legally, you may need to contact the recruiting agency first in order to get to the contractor you want.

It is clear to see that direct sourcing’s advantages allow companies to move forward and get work done even on a very tight budget. 

Conclusion

Direct sourcing in procurement enables sourcing teams to establish reliable supplier and independent contractor networks which can, in turn, keep costs low.

And having robust communication channels and systems that handle technicalities such as contract management goes a long way in improving your direct sourcing efforts.

ProcurePort prides itself as one of the leading providers of cutting-edge innovative procurement software and is trusted by enterprises and organizations such as UNOPS, HUD.GOV, and conEdison.

If you would like to discuss procurement software with a consultant, or to schedule a demo, contact us today.

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