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Freelancer Management Systems: How Companies Can Find and Retain Independent Contractors via Direct Sourcing

As technology changes the work landscape, as companies seek more specifically skilled workers and as those workers push for non-traditional work arrangements, companies need to find effective ways to meet those changes. Direct sourcing is emerging as a viable, practical option to fill on-demand and other staffing needs.

When used alongside traditional hiring methods, including third-party staffing firms, direct sourcing allows companies to find and hire previously untapped independent contractors.

Companies are turning to the independent workforce because it offers flexibility and access to a wider range of skilled workers. Recent research in the Harvard Business Review found that by using independent workers, companies can more efficiently scale their staffing to meet changing demands, whether those are due to economic, seasonal or geographic factors. Workers are gaining more control over their own employment situations and the total number of available workers is dwindling, so sometimes the only way to secure a worker with highly specialized skills is to hire them as an independent contractor.

The good news is that the pool of available independent workers remains stable and brings much to the table. A 2019 Spend Matters’ analysis of disparate data on the U.S. contingent workforce’s size estimated it could be as many as 50 million workers, and a related panel survey indicated that executives over the last three years are increasing their use of independent workers. The skilled independent workers also tend to be older and have more experience, which often makes them best-suited for work secured through direct sourcing.

So why adopt one more technology solution?

For decades companies have relied on staffing firms, managed service providers (MSPs), and other internal HR or procurement processes to handle their hiring, so how can they successfully integrate new technologies and methods? A readily available and reliable choice is to enlist a third-party technology provider that specializes in freelancer management systems technology (FMS).  This technology can be integrated into an existing vendor management system, allowing companies to glean data from all sources to support the entire contractor management program.

The technology, generally speaking, revolves around establishing and maintaining labor clouds, populated from various internal and external sources. Regardless of the FMS tool that’s chosen, most will allow users to curate labor clouds, organize information within the clouds based on their business needs, manage many aspects of the freelancer lifecycle, pay contractors and collect data so they can evaluate the program and learn where changes need to be made. An FMS should also provide detailed vetting options that gather credentials and applicant data, group candidates based on company parameters and handle any background checks.

Direct sourcing supported by FMS technology provides unique benefits because companies can easily and quickly reach out to their own candidates to fill specific roles. Procurement and HR personnel can contact alumni, silver medalists, veterans and others already known to the company while adding new potential workers to the list. Establishing a direct sourcing program that is integrated with other existing labor management programs expands the network and establishes more effective relationships with various pools of potential workers.

Compliance is one of the most important factors when hiring independent contractors, and it can’t be ignored. Myriad federal, state and local laws and regulations, which change often and sometime with little notice, must be followed to avoid fines, audits and lawsuits. Adding an FMS to existing hiring solutions can solve that problem.

Overall, companies adopting a management system save more on labor costs, have greater visibility into the performance of their independent workers, get much higher compliance rates with governments or their own internal policies and regulations, and see a nearly three times faster time-to-fill rate, according to the Aberdeen Group.

Next steps to ensure direct sourcing success

Once the FMS is up and running, the focus shifts to optimizing the system through implementation of best practices. While these are still emerging since the technologies are fairly new, conventional wisdom is already suggesting that traditional best practices will not be enough to satisfy the independent worker.

At its simplest, companies should ensure technology users have a smooth experience. Users are seeking secure, safe and simple interfaces that present fair, honest information about jobs and work requirements.

Study after study — see Harvard Business Review, Deloitte, McKinsey and Gallup — shows that independent contractors are focused on the freedom to choose clients, the flexibility of hours and locations, and the feeling that they’re part of a company’s culture. So, companies have to establish systems that meet workers’ needs while still finding the best candidates to fill their open positions.

According to Jeff Wald, of WorkMarket and a Forbes contributor, companies will have greater chances of success with their independent contractor program and FMS if their business culture includes many of the following:

  • Branded labor clouds
  • On-time approvals and payments
  • Clear scope of work
  • Responsiveness
  • Reasonable work requirements
  • Single sign-on-demand/freelancer work policy
  • Technology that keeps track of all workers in one place
  • Labor clouds that recognize alumni and silver medalists
  • Adapt any solutions and programs that serve your full-time employees well, making the programs work for contractors.

Freelancer management systems can also support what is emerging as one of the most important factors for independent workers — to be valued by their employers. They want access to support services and administrative help, reasonable contracts, efficient on-boarding and timely responses to their questions and concerns.

Many independent workers are also seeking job boards showing potential new opportunities, access to training programs so they can expand their skills, and opportunities to participate in networking events and meet-ups with client employees and other contract workers. All of these can be supported with an FMS.

And while it’s important to offer workers what they’re looking for, companies need to be sure they convey what they already offer. Many companies are successfully integrating independent workers into their workforces, using FMS technology to communicate the positives.