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Unleashing the Power of Direct Sourcing

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4 © Crain Communications Inc. | All Rights Reserved | Unleashing the Power of Direct Sourcing | September 2023 Executive Summary The changing nature of work and the workforce has fostered the rapid growth of direct sourcing in the last few years, from an approach that few could define to one that is practiced at a "mature" level by nearly half of the marketplace. The purpose of this report is to share learnings from organizations that have utilized direct sourcing as a pathway to broader workforce optimization. We outline their approaches and challenges, and provide a practical pathway for implementation in your own organization. During this growth, direct sourcing has steadily evolved, with direct sourcing 2.0 incorporating talent curation, employer branding, and tech platforms, while direct sourcing 3.0 focuses on scale through automation. As of early 2023, nearly 80% of large organizations either have a direct sourcing program in place or expect to explore the approach within the next two years. Direct Sourcing A term commonly used to refer to the process by which a company leverages independent contractors/ consultants, temporary workers and third-party experts sourced from an internally developed pool of talent to perform work as contingent/ temporary employees. Historic direct sourcing Direct sourcing 2.0 Direct sourcing 3.0 17% 36% 36% 11% 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Cumulative % of market Direct sourcing 1.0 Half of the market practices 'modern' direct sourcing Followers: 53% • 'Historic' direct sourcing • Payrolling Leaders: 47% • Curation • Employer branding • Tech platform driven Maturity % evaluating their direct sourcing programs at each maturity level Source: SIA research report, "Direct Sourcing 3.0" As of early 2023, nearly 80% of large organizations either have a direct sourcing program in place or expect to explore the approach within the next two years. 4 11%

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