Cost savings are likely one of the primary motivations for companies that rely on contingent workforces. Working simultaneously with multiple vendors and markups coupled with a lack of support (among other factors) can make it difficult for companies to save money. However, there are numerous strategies, both internal (in the form of company practices) and external (when dealing with vendors and contractors) that can help companies cut costs.
To achieve genuine cost savings with contingent labor from an external standpoint, companies must first make sure their vendors are working in the most efficient way possible. Other approaches include investigating and reducing vendor mark-ups, as well as ensuring vendors are supporting candidates. Organizations can also rely on vendor management systems (VMS) to save both time and money.
Crucially, companies can make some of their more significant spending reductions internally, and direct sourcing is one of the most robust of these internal cost-saving options.
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What’s Direct Sourcing?
Direct sourcing is the process by which an employer develops its own candidate pool to leverage contract, casual, or freelance workers (collectively known as contingent workers). Direct sourcing—also referred to as “self-sourcing”—can help to remove a company’s reliance on third-party staffing and recruitment agencies, which can offer benefits including cost reductions, faster hiring, and the possibility to engage with proven talent.
While it’s simple in concept, effective direct sourcing is often more complex than it appears and involves a combination of organizational readiness, technology, and program management. Companies that wish to take advantage of direct sourcing should consider how to use it as part of a wider recruitment strategy, and take the necessary time to build and maintain their talent pool.
MORE ON DIRECT SOURCING | ‘The Direct Sourcing Toolkit’
How Does Direct Sourcing Help Companies Save Money?
To reduce costs, organizations must first make sure to understand their vendors and take steps to reduce their vendor population while utilizing direct sourcing as an alternative channel. Because you don’t need to pay fees to staffing agencies to bring in talent, direct sourcing can ultimately lead to lower markups.
Direct sourcing allows a company to save time and costs by filling vacancies with:
- Previously utilized contingent workers
- Manager referrals
- Silver medalist candidates (worthy applicants who narrowly missed out on previous postings)
- Returning retirees
- Boomerang employees (previously full-time workers who return on a contingency basis)
Using a VMS for direct sourcing can significantly ease the process management workload of your human resource teams. When a job is posted, the system gets the requisition, reviews the candidate pool to see if there are any candidates, and then submits it to the job posting if it finds a match.
VectorVMS additionally works with technology partners specializing in direct sourcing and can build a candidate pool based on client needs and requirements. This allows it to build a candidate population that includes ex-workers or gold medalist and silver medalist candidates.
MORE ON THE BLOG | ‘What Are the Benefits of a Combined Direct Sourcing and VMS Strategy?’
Hybrid Vendor Management Programs for Effective Cost-Saving
Cost-savings are one of the key challenges organizations face when dealing with a contingent management program. However, it’s possible to overcome those challenges by using vendor management technology. Organizations can even explore new ways to save through a hybrid vendor management program, which could benefit them if they need an extra hand in their financial processes.
If you think your company needs some extra help to achieve true cost savings, VectorVMS’s Shared Managed Services (SMS) hybrid program can help you. SMS allows your team to manage your program’s finances directly, while they can also count on expert backup to optimize financial processes and drive cost savings.
Do you want to know more about how to successfully manage your contingent labor program finances and save costs? Download our ebook ‘4 Ways to Successfully Manage Contingent Workforce Program Finances’. You can also get in touch to find out more about what Shared Managed Services can offer you.
Meet the Expert
Jay Grissom – Vice President of Account Management & Operations
Jay Grissom has more than 22 years of experience in managing contingent workforce solutions. He leads the VectorVMS team of program managers, who help clients optimize their contingent workforce programs through strategic planning, process improvements, and compliance and operational services. He also manages a team of consultants who lead implementation and ensure VectorVMS clients are able to achieve their workforce strategy with our vendor management system. Jay’s prior experience includes leading HR staffing teams at IBM, where he was responsible for full lifecycle recruitment, implementation of an applicant tracking system (ATS), and driving compliance.
He has developed the overall strategy for and executed vendor management systems for Fortune 500 companies across both the US and Canada. He is committed to working closely with his team to ensure client satisfaction is achieved, and to ensure our products align with, and promote, our clients’ goals and objectives. Connect with him on LinkedIn.
