[Provider Insight Report] Direct Sourcing Solutions for MSPs

This article contains excerpts from the recent provider insight report published by Talent Tech Labs about direct sourcing solutions for MSPs. The highlighted sections of this report lay out the current state of the world of contingent labor and analyze elements of the direct sourcing process. While these excerpts are filled with actionable insights, they are just a drop in the bucket of what the entire report reveals. 

A Primer on the Complicated World of Contingent Labor

The world of contingent labor is complex because there are usually several different players, and these may play overlapping roles. The diagram below shows how the enterprise that needs a contingent worker might be connected to that worker.

The reason this shows up as a cloud instead of a neat set of boxes and lines is that there are many ways to organize the pieces. For example, it could be an internal VMS run by the enterprise, or it could be owned by an MSP that offers it as part of their solution.

Internal, Outsourced, and Hybrid MSPs

There are advantages and disadvantages to both internally run programs and MSPs. Internal programs direct control over internal IT staff and procedures. An internal team can become familiar with the company, the product, and all the details in play. By working with an internal team, you can directly discuss changes, implement changes more quickly, and ensure continuity throughout your business.

The world of #ContingentLabor is complex because there are usually many different players. See how @TalentTechLabs breaks down this concept in their recent blog, and corresponding provider insight report: Share on X

However, internally run vendor management programs are also costly: not only are you paying additional employees, but also the cost of hardware, software, certifications, etc. You also have direct control over your data without needing to give access to a third party. This is a benefit for some organizations, although having direct control over your data also means you are responsible for things like backups and redundancy, data security, and encryption.

With an outsourced solution like an MSP, you must go through their employees and management to discuss changes to your system, new apps, or other service changes. Additionally, an MSP is more capable of scaling service during periods of rapid growth. The total overall cost of outside services covers a wide range, but almost universally, the MSP will be cheaper than setting up and maintaining an internal vendor management program. Fortunately, MSPs are no longer an all-or-nothing option. Increasingly more organizations are seeing an advantage to pairing their in-house resources with services offered by an MSP to get the best of both worlds.

The importance of Direct Sourcing technology is that it provides a path to contingent workers without having to go through a staffing agency.

There are other related parts of the recruitment puzzle, such as:

  • Labor Market Intelligence (LMI): These systems have a lot in common with VMS, however, are optimized for hiring permanent rather than continent labor.
  • Recruitment Process Outsourcers (RPO): These service providers are similar to MSPs, however, are focused on hiring permanent rather than continent labor.
  • Employment Partners: These such as an employer of record (EOR) or professional employer organization (PEO).
  • Talent Curators: These provide systematic and tailored candidate curation by role, industry, and skill through a combination of automation and human services, which can enhance the use of direct sourcing technology.
  • Freelance Management Systems: These create a different path between the manager who needs a contingent worker and the contingent worker. They connect the manager to “gig worker” platforms (such as Upwork and Fiverr) which have a pool of contingent workers.

The simplest model is to presume the MSP uses direct sourcing technology on behalf of an enterprise to create an additional pool of talent that they can access without going through a staffing agency.

A #DirectSourcing solution is only as good as the talent pool it makes available, so it’s important to grow that #TalentPool. See more tips from @TalentTechLabs in their blog and recent provider insight report: Share on X

The Components of the Direct Sourcing Process

A direct sourcing solution is only as good as the talent pool it makes available, so it’s important to grow that talent pool. In fact, if the talent pool is too thin and takes too long to grow, stakeholders may lose interest in the direct sourcing approach.

Kickstarting the Direct Sourcing Talent Pool:

The fastest way to kickstart the pool is by populating it with pre-identified talent–workers that your organization has already contacted. This could be former contingent workers, former employees (often referred to as “alumni”), retirees, and applicants who were good but not hired (often referred to as “silver medalists”). All these prospective candidates could potentially be a good fit for contingent work at the company. Ideally, all the relevant information will exist in a VMS or ATS. Whether the information is in one database or many will vary from organization to organization, and there is a risk that the information is incomplete, inaccurate, or out-of-date.

Understanding what data you have about contingent workers and what will be involved in migrating it to the direct sourcing software is one of the first things an organization interested in direct sourcing should investigate.

On an ongoing basis, companies will want to track the information of all the contingent workers they work with so that they will be in the pool for future projects. They will also want to capture information about contingent or permanent workers that they almost hired, the so-called “silver medalists,” that is, workers who were assessed to be of high quality but just missed due to an even better worker being available.

Talent Sourcing:

Another means of getting talent into the pool is called talent sourcing. Talent sourcing plays to the traditional strengths of MSPs and staffing companies. Traditionally, when a job opens, the MSP reaches out to talent marketplaces to find suitable candidates. Using a technology partner with an AI-driven chatbot adds a personalized experience to automated discussions with candidates while freeing up recruiters to focus on higher-priority tasks, such as building relationships. Not only will this lead to filling that job more quickly, but it also becomes a way to build up the direct sourcing talent pool.

Talent Marketing:

Whereas talent sourcing is like fishing with a baited hook, talent marketing is like casting a net. When a company has determined what kind of contingent talent they need and where in cyberspace that talent can be found, then it can deliver marketing messages in that direction, which encourages people to join the direct sourcing talent pool.

A company’s own managers can play a role in talent marketing. Many managers have a good social media presence, this presence can be used to attract candidates to join the direct sourcing talent pool.

The Power of Referrals for Sourcing:

It is well known that employee referrals are an excellent way to find permanent employees. The same is true for contingent workers. An organization wishing to build a direct sourcing talent pool would do well to build referral programs from people in its current pool.

Establishing a referral program is more challenging than it first appears. When someone makes a referral, they will want to know what, if anything, became of it, and if the person is being considered, then what stage that process is at. If two people refer to the same person, then you will need to know who made the referral first and inform them. At the end of a successful referral, an appropriate payment needs to be made to the person who made the referral.

The administrative challenges of running a referral program are great enough that it leads back to the direct sourcing software. If the software has a well-designed referral system, then that can lead to rapidly building a high-quality talent pool.

A Robust Direct Sourcing Talent Pool:

The range of methods described (using existing contacts, talent sourcing, talent marketing, and referrals) should be used together to create a robust direct sourcing pool. This pool is the foundation for a successful direct sourcing program and leads directly to the next step: talent curation. Curation involves a combination of key elements, such as matching skills to open jobs, proactively building the talent pool with critical skills to meet current and future needs, and screening, assessments, and interviews to ensure quality and fit.

Direct sourcing is coming of age as an important element in hiring contingent workers. There is now sufficient technology and experience using that technology that the opportunities and issues are known. Perhaps the most important takeaway is that direct sourcing needs to be carefully implemented as part of a contingent worker strategy. It is not simply a matter of plugging in technology, and it’s not a one size fits all solution.

Thank You

Thank you to WorkLlama for assistance with client case study information.

Download the full provider insight report to uncover the importance of direct sourcing and how its role will undoubtedly change and evolve for hiring contingent workers. Gain a full view of this subject by claiming your copy of this report here.