Self-Sourcing & Staffing Agencies are Complementary

Oct 18th, 2016
Self-Sourcing & Staffing Agencies are Complementary

Traditional contingent staffing procurement focused on cost, efficiency and compliance and the tactics involved implementing MSP, VMS, SOW programs and consolidating staffing agencies. As the industry searched for new opportunities, self-sourced staffing of talent has emerged as the most promising new option.

Self-sourcing or direct sourcing in staffing is when a company directly sources contingent workers leveraging its own brand and without intermediaries like staffing agencies. Unfortunately, this has led to misconceptions that self sourcing tactics and tools like freelance marketplaces and freelancer management systems will replace staffing agencies at companies. This is a mistake as these two models are actually complementary.

The age-old Staffing Agency model will always dominate Staffing

First, online platforms work only for standardized tasks like driving, delivery or tasks like translation or customer service. If the required skills of workers are different and the work required is unique (design a website), these automated matching platforms break down as you now need to involve humans. AI platforms can help improve search capabilities but in the end you need a human to speak and get an OK from the candidate.

Secondly, if there is no pre-existing trust between hiring managers and contractors, a role currently filled by staffing agencies, it becomes harder for the buyer and seller to make the jump. Such cases will always require humans and therefore staffing agencies to source, screen, and sell a candidate on the job and the convince the manager on the candidate too.

Thirdly, staffing agencies have been reducing the biggest risk in using contractors for many decades by becoming the employer of record for contract workers. Co-employment risks, worker classification, labor laws, taxes and compliance are such serious issues that any company contemplating using an online platform first considers 'What is the cost to our company's brand, if we were fined by the Labor Dept or sued by an employee for misclassifying independent contractors?'.

 When is self-sourcing staffing appropriate?

So it makes sense that self-sourced staffing is best used in niches and sparingly, only where staffing agencies are unable to meet the demands. Here are some examples of when self sourcing is the better strategy.

Talent not accessible by staffing agencies. The best freelancers can be located anywhere in the world. The best freelancers don’t post their resumes on job boards. If they do choose freelance, they get their projects through referrals or freelancer marketplaces. Staffing agencies struggle with such low volume niche skills because it breaks their model and they ae not used to hiring on marketplaces.

Talent that can only be attracted by leveraging a company’s brand.

The only way to attract high-end freelancers is to present them with very attractive opportunities to work on really interesting projects at great companies. Since staffing agencies can't advertise their client names, and since such talent is not looking at staffing agencies, such talent can only be attracted directly by companies directly. A self-sourcing strategy for this would be to post open contract jobs on the company’s own career site (like Facebook and Tesla are doing).

If you are responsible for contingent staffing procurement at your company, this may be a good time to evaluate areas where self-sourcing may be appropriate for you, which self-sourcing strategies you can adopt and get buy-in from your stakeholders and management- because your competitors already have.

Call us for a free consulting session to discuss your options in using VMS, MSP, Payrolling, freelancer marketplaces, freelancer management systems for self-sourcing contingent talent strategies and how Oncontracting can help.

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