Building a Business Case for Direct Sourcing

The world of work is shifting fast. Businesses are grappling with talent shortages, rising costs, and ever-evolving compliance challenges. At the same time, skilled workers are demanding more flexibility, autonomy, and direct engagement with employers. This perfect storm has led to a major rethink in how organisations source and manage contingent talent.?

One solution gaining significant traction? Direct sourcing.?

But for HR, procurement, and talent leaders looking to make the case internally, the key question remains: How do you build a compelling business case for direct sourcing??

I recently sat down with Derek Sanders and Michael Leacy to discuss just that. As industry veterans, they’ve seen firsthand how direct sourcing can transform workforce strategies. Here’s what we uncovered.?

What is Direct Sourcing? And Why Now??

Direct sourcing is the process where companies build and curate their own private talent pools—engaging contingent workers directly rather than relying solely on third-party staffing agencies.?

Traditionally, businesses have outsourced contingent workforce recruitment to Managed Service Providers (MSPs) and staffing firms. While this approach has benefits, it often comes at a high cost and reduces employer control over the hiring experience.?

With advances in technology, shifts in worker preferences, and economic pressures, more businesses are now reclaiming ownership of their contingent workforce strategy through direct sourcing.?

Why is Direct Sourcing Gaining Momentum??

?? Cost Savings – Direct sourcing can cut agency mark-ups, reduce time-to-fill, and improve overall workforce spend.?

?? Access to Top Talent – Companies can develop their own talent communities and engage contingent workers more effectively.?

?? Employer Brand Strengthening – By interacting directly with candidates, businesses can build stronger relationships and enhance their employer brand.?

?? Greater Compliance & Visibility – Direct sourcing provides better oversight of workforce compliance, pay equity, and hiring data.?

?? Speed & Agility – Organisations can reduce hiring times by accessing pre-vetted, engaged talent pools.?

The Business Case for Direct Sourcing?

Convincing leadership to invest in direct sourcing requires a clear, data-driven business case. Here’s how to structure it.?

1. Define the Problem: Why Change??

Most organisations struggle with some or all of the following:?

• High costs from third-party staffing agencies?

• Slow time-to-fill for critical contingent roles?

• Limited visibility into contingent workforce spending and compliance?

• Poor candidate experience, leading to disengaged talent?

• Inability to re-engage past contractors efficiently?

Start by analysing current contingent workforce costs and performance metrics. Ask:?

? How much are we spending on external recruitment fees??

? How long does it take to fill contingent roles??

? Are we losing great talent due to a poor candidate experience??

If these challenges resonate with your organisation, direct sourcing could be the answer.?

2. Quantify the Benefits: What’s the ROI??

A solid business case needs hard numbers. Consider these potential savings and improvements:?

• Cost Reduction: Companies implementing direct sourcing typically see savings of 10-30% compared to agency-reliant hiring.?

• Time-to-Fill Acceleration: A well-managed talent pool can reduce time-to-fill by 40-50%.?

• Increased Re-Engagement: Past contractors often re-onboard faster and deliver immediate impact.?

• Improved Compliance & Risk Mitigation: Direct sourcing enables better classification, pay equity, and adherence to local regulations.?

If you can attach real financial figures to these benefits, your business case will be hard to ignore.?

3. Show the Competitive Advantage?

Organisations adopting direct sourcing aren’t just cutting costs—they’re gaining a strategic advantage.?

?? Leading businesses in finance, healthcare, tech, and professional services are already leveraging direct sourcing to gain better control over their talent strategy.?

?? With the rise of freelance marketplaces, talent platforms, and AI-driven matching, companies that don’t invest in direct sourcing risk falling behind competitors.?

Position direct sourcing as an essential step in future-proofing your workforce strategy.?

4. Address the Challenges & Build a Roadmap?

While the benefits are compelling, leadership will want to know: What are the risks??

Here’s how to tackle common objections:?

? “We don’t have the technology.”? ? Many direct sourcing solutions integrate seamlessly with existing VMS and HR platforms.?

? “We lack the internal expertise.”? ? Partnering with a direct sourcing specialist (like CXC) provides the necessary support and expertise.?

? “Won’t this take too much time to implement?”? ? A phased approach—starting with a pilot program—can demonstrate quick wins before full rollout.?

Outline a realistic implementation plan that includes:?

?? Pilot Program – Start with a select group of roles or regions.

??? Technology Integration – Ensure the right tools are in place to support talent curation and engagement.?

?? Change Management & Training – Educate internal teams on the shift in strategy.?

?? Performance Metrics & Review – Measure cost savings, time-to-fill, and talent engagement.??

Final Thoughts: The Time for Direct Sourcing is Now?

As we discussed in our panel, direct sourcing isn’t just a trend—it’s a smarter, more strategic way to manage contingent talent.?

The case for direct sourcing is clear:?

? Lower costs?

? Faster hiring?

? Better access to top talent?

? Stronger employer brand?

? Greater compliance and visibility?

But success requires the right strategy, technology, and partners.?

For organisations looking to future-proof their workforce, direct sourcing isn’t a nice-to-have—it’s a business imperative.?

So, the real question is: Can you afford NOT to explore direct sourcing??

If you’re ready to make the case internally, let’s chat. I’d love to help you navigate the journey.?

Download CXC’s guide to Making the Case for Direct Sourcing.?

Connor Heaney is the Managing Director of CXC EMEA, helping businesses unlock the full potential of their contingent workforce. Connect with him on LinkedIn.?

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