Risks Associated with Direct Sourcing & What to Do About Them

risks associated with direct sourcing

From small and midsize enterprises to mega corporations, top talent is an asset to any organization. However, employers still struggle to fill vacancies in the increasingly competitive labor market. As businesses re-evaluate their hiring structures, many companies are choosing direct sourcing for efficient recruitment.

Describing Direct Sourcing

Before delving into the advantages and risks associated with direct sourcing, let’s define this recruitment method. Also known as self-sourcing, this strategy allows independent hiring to avoid the limitations of third-party recruiters.

Direct sourcing benefits you in several ways. First, you can build a relationship with candidates. While staffing agencies have strict talent re-engagement policies, direct sourcing eliminates legal issues when you reconnect with former workers.

Strong relationships also create a sense of culture to increase productivity. Not to mention the time savings. Because you already have a talent network, you don’t have to turn to third parties to fill every opening. 

Challenges of Self-Sourcing

With proper implementation, self-sourcing remains an effective strategy to secure talent. However, there are some risks associated with direct sourcing. These include:


This is when more than one business qualifies as an individual’s employer. Co-employment raises several issues. The first one is the misclassification of independent contractors. By mixing up staff roles, you create an overdependence on independent contractors, which invites workflow issues. Moreover, you interfere with contractor freedom when you don’t regard them as business entities.

Change Management

Direct sourcing could affect employee relations and business operations. By ignoring change, you waste time, incur unnecessary costs, and sabotage the success of the self-sourcing strategy.

Tech Overreliance

Although technology accelerates recruitment, it doesn’t guarantee quality candidates. By automating hiring processes, you lose the human touch necessary for judging an applicant’s character. Candidates can also manipulate software to approve their résumés.  

Overcoming Risks Associated with Direct Sourcing

You need to rethink your hiring strategy to manage the risks associated with direct sourcing. Here are some measures to take:

Proper Talent Classification

You can minimize co-employment risks by clarifying the engagement terms to independent contractors. This involves establishing boundaries and stating the expected deliverables in advance. Likewise, keep up with co-employment laws to avoid legal problems.

Define Your Technology Requirements

Rather than jumping on every new technology, determine what you need and the anticipated costs. Necessary manual processes include candidate controls, payment negotiations, and screening interviews.

Business Readiness

Map the recruitment process and align it with your business needs. Instead of focusing on the solution, identify your pain points and how direct sourcing can resolve them. Looking back is also important. You could observe the previous year’s hiring patterns to estimate your talent needs and recruitment difficulty.

It’s a Process 

You can transform your workplace with direct sourcing if you’re struggling with workforce fluctuations. However, you cannot implement the strategy immediately–it takes time to build a reliable talent pool. Do you want to overcome the risks associated with direct sourcing? Contact us for tailor-made workforce solutions.

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