Direct-Sourcing Freelancers: What It Is, And Why Fortune 500s Prefer It

By Brenda Do

R391n4 / Pixabay

Between traditional and online options, companies have more ways to fill freelance needs than ever before. One method that’s growing in popularity is direct sourcing. To understand if this direct to talent model may be right for you, here’s a breakdown of what it is, how it works, and its potential benefits.

What is direct sourcing?

Sometimes when there’s a need to meet, you may work with a traditional agency to find the right person. But thanks to technology, it’s easier to find and connect with individuals directly.

You can post the job on job boards, reaching out to your LinkedIn network, and so on. When you do that, you’re filling the post on your own—that’s direct-sourcing. This allows you to cut out the middleman, which often speeds up the project start time and hiring accuracy.

Why self-source freelancers

When searching for employees, companies source from the same general talent pool. But that pool’s shrinking so fast, it’s resembling more of a puddle. In fact, companies were 3x more likely to say hiring was harder in 2016.

Adding to that, more skilled professionals are leaving traditional jobs to freelance. The latest study reports over one-third of the U.S. workforce freelances.

Companies are quickly learning that freelancers don’t just provide much-needed talent. Their flexibility and expertise also provide a cost-effective way for companies to improve efficiency, innovation, and agility.

Thanks to new technologies, companies can connect with talent directly—and reap even more benefits as a result.

On demand talent technology

If you worked with freelancers before, you probably posted jobs and contracted talent through freelance marketplaces like Upwork. These platforms are the first step in self-sourcing technology.

When companies have multiple projects, or they need several freelancers for larger projects, they turn to another type of online platform: Freelancer Management Systems (FMS). An FMS enables you to source, contract, collaborate with, and pay your contingent workforce from a single dashboard.

By consolidating talent sourcing to a single channel, you also gain greater visibility into your contingent workforce spend.

More robust freelancer platforms also provide classification compliance services. Having built-in compliance reduces the workload on your legal resources. Because the system automatically classifies and contracts every person before engagement begins.

Are freelancer platforms worth using?

Direct-sourcing through a platform eliminates back and forth phone calls, and negotiations through a third party. The platform provides your staff a secure channel to source, select, and communicate directly with the talent.

How much can this benefit your company? Here’s what an Oxford Internet Institute (OII) study found.

1. Cost savings

  • One Fortune 500 company realized a 60–70% aggregate savings over their traditional sourcing channels.
  • Another company reported they secured the same high-quality talent for a third of the price.
  • A staff member of one Fortune 500 said they saved 25-30% by avoiding traditional agency markups. And they had accurate matches the first time, which also saved admin costs.

2. Speed and flexibility