Direct Sourcing of Independent Professionals: What Enterprises Need to Know in 2018 (Part 1)

services procurement

In this four-part series, we focus on what enterprises need to know about the direct sourcing of specialized, skilled independent professionals going forward into 2018. Direct sourcing — engaging contingent workers without the use of a traditional staffing agency or consulting firm — is not a new phenomenon. However, the idea and the practice have taken on an increased importance over the past several years.

Because enterprises will be increasingly engaging independent professionals as a source of critical skills and expertise, it is crucial for services procurement, HR and executive management to (1) understand the importance of a direct sourcing solution in this context and (2) be in a position to identify a fit-for-purpose solution that is fully suited for enterprise use.

In Part 1 of this series, we provide background on direct sourcing and the emergence of technology-enabled direct sourcing solutions and online marketplace platforms for work and services. In Part 2, we will focus on the rise of enterprise-oriented, technology-enabled direct sourcing solutions, which began with the appearance of freelancer management systems (FMS). In Part 3, we will explain why the right (fit-for-purpose) technology-enabled direct sourcing solution is indispensable for enterprises to successfully source and engage independent professionals. And in Part 4, we provide executive decision-makers with criteria to identify a technology-based direct sourcing solution that is fit-for-purpose and that meets the high bar of enterprise requirements.

Putting Direct Sourcing Into Perspective

Enterprises face skills gaps and talent shortages, and they increasingly require a more flexible, agile workforce in today’s demanding business environment. At the same time, they are finding that traditional sourcing channels are not always meeting their needs for talent delivered in the manner actually required (e.g., specific skills/expertise, cost-effectiveness, slot-in project engagements, fast turn-around). Moreover, technology for the first time ever is being used to enable direct sourcing in ways far beyond the ad hoc, manual approaches of yesteryear.

In 2018, technology-based direct sourcing models are no longer revolutionary in the on-demand gig economy, which has been dominated and defined by platforms like Uber and Postmates. In fact, technology-based direct sourcing platforms have been the fundamental underpinning of the on-demand gig economy from its very start.

While the consumer-based on-demand gig economy thrust technology-enabled direct sourcing into the media and legal spotlight over the past eight or so years, its origins can really be traced to before 2005 and the emergence of — what could be considered radically innovative — online freelancer marketplaces such as oDesk, Elance and Guru. The online freelancer contingent workforce segment — now consisting of remote web designers, marketers, writers and others connected to work opportunities through online freelancer marketplaces like Upwork, Freelancer and PeoplePerHour, — has expanded rapidly over the years, driven in large part by SMB demand and, to a lesser degree, by individual users in larger businesses. It is only recently that these large enterprises, as larger scale buyers of contingent workforce, have begun to grapple with how to leverage online freelancer and other similar platforms from which many different types of work and services can be procured.

Talent Marketplace Platforms

Today employees of enterprises globally can directly source talent from online marketplaces to perform many different types of work, ranging from:

  • Low to high skill (e.g., from tagging photos to treating ER patients)
  • Physical to cognitive (e.g., warehouse work to strategic planning)
  • Location specific to location independent (e.g., LAN installation performed at a specific site to translation performed any place around the world)
  • Very brief to extended period (e.g., microtasks in seconds to consulting projects in weeks or months)

In 2018, there are literally hundreds of talent marketplace platforms operating across the globe, aggregating millions of workers (theoretically) able to perform many different types work across the different spectrums. While the actual number of workers that can or would be engaged can be overstated, the potential to source work through these platforms is vast, and the value to enterprises — tactically and strategically — could be significant for businesses that are able to effectively manage direct sourcing from these marketplaces.

Talent Marketplace Platforms and Enterprise Direct Sourcing Solutions

In enterprises today, individual employees and groups are the early adopters of direct sourcing from these marketplaces. And it is only in the past few years that enterprises, at a functional and corporate level, have started to grapple with the problem of how to leverage this potential in a way that is efficient and in line with enterprise financial, legal and technology requirements. At the same time, new solutions that purport to address this problem have been emerging. These new direct sourcing solutions are being brought to market by VMS providers, new software/technology providers, contingent workforce service providers and even some of the talent marketplace platforms.

But the convergence of various emerging, enterprise direct sourcing solutions, on the one hand, and the ongoing evolution of a diverse population of supply-side talent marketplace platforms, on the other, presents many challenges. From the standpoint of corporate and functional decision-makers, sorting out and identifying a direct sourcing solution that is fit-for-purpose and that will satisfy enterprise requirements may be the biggest, most immediate challenge.

In Part 2 of this series, we will examine the emergence of technology-enabled direct sourcing solutions and, more specifically, the relationship to the increasingly important specialized, skilled independent professional workforce.

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