Why the time is right for Direct Sourcing and how can you leverage the trend to your advantage.


Praneeth Patlola: I'll start with some introductions with myself. My name is Praneeth Patlola and the CEO and co-founder for WillHire HR tech person, developer, turn head HR per tech person, for a period of time in the staffing game. A long story, but I'll keep it short. My primary focus as a company, as we are, and personal focus is enabling direct sourcing in contingent staffing world and looking at making it successful with that.

We have an amazing panel. I'll start with Mike. Mike walnuts who is the CEO of GRI geometric results. One of the large MSPs and significantly non MSPs in the space Mike has a tremendous amount of experience in MSP world for twenty-five years in contingent workforce world in, in total in multiple leadership and talent acquisition leadership roles and he has led performance managing team high-performing teams and driving more new innovations and executable approaches into making companies successful. And he is passionate heavily on direct sourcing. Love to hear his take on this year. Thanks, Mike. Thanks for being part of this.

Mike Wachholz: Yeah.

Thanks Bernice and Jonathan, Swanzey great to see you guys. We've all had the chance to work together in different capacities. All four of us. Over the year, so excited to share an hour together.

Praneeth Patlola: Awesome. And go to Jonathan, Jonathan Jonathan Kestenbaum who is the MD of Talent Tech Labs. He's a lawyer by education and he is the most sorted out of speaker in the HR tech industry I would say given his research and publications, they do wonder the talent tech lab, which is a research organization. Anybody looking for an in depth research around the space in talent X space. Jonathan is the go-to guy. Obviously it's a cost, not for free. But thanks a lot, Jonathan.

I know from your point of view, we have been seeing the trend and the research access you guys have you probably have seen what has happened in the HR tech world and keeps happening and the prediction for the future. I would assume that based on the conversations we had in the past and you with your team, that sourcing is become also your hot topic in your research and kind of closely monitoring that you know, thanks for being here and looking forward to getting your insights.

Jonathan Kestenbaum: Yeah, I Know, thank you for having me super pumped to be on a panel with such amazing people. And to your point direct sourcing is top of mind for, for all the folks that we're dealing with. We're actually, our next trend report will be on direct sourcing. So,

Praneeth Patlola: Yeah, I'm super excited about that. Well, next, uh, uh, the mastermind David's Swanz who, uh, is part of IBM.

David has been in the HR tech space in the talent acquisition space for several years and he kind of leads and is part of the IBM talent and transformation division where he leads and engages clients in digging into what ifs and whats, why not and what how to transform, the process around people, transformation, talent from acquisition to learning and also workforce development and skill.

There is a huge mix of all that. And I think I might take about half an hour to explain all of that introduction, but the fun part is he has hands-on experience on a direct sourcing side of in the industry and went through some iterations in his career in implementing and sees a huge importance of it.

But, uh, he's also uh, martial arts professional has a black belt in it. He got his nunchucks next to him, so be careful. But, uh, with that thanks a lot, David. Thanks for being.

David Swanz: Yeah, thanks Praneeth. Thanks for having me. And it's always good to, to see everyone here. I think all of you have I consider good friends to, uh, well help each other in some capacity.

And we'll probably continue to do that in some way. And hope to share a few thoughts with the crowd out there that can help them in, their career journeys and business journeys as well. So.

Praneeth Patlola: Awesome.

Awesome. Great.

So, let's kick this off uh, Little bit of a high level context, because many, a times there's always a confusion around what is direct sourcing, why direct sourcing there's a lot of vice and what's still the industry. One side of the industry where we have been educating my favorite and Jonathan already through our educational journeys of enterprises, and also from an MSP, all the maturity models are keep building up and it's still kind of clarity and confusion mission. Is it my mic?

Jonathan Kestenbaum: I just muted Dave, the feedback's coming from Dave's mic. So Dave, when you speak, just unmute yourself.

Praneeth Patlola: So just real quick. So we'll start with like, what is direct sourcing as a high level? I'll kick it off in my own words and, you know, give it around. So each of us can contribute and talk about that. In, in, in typical words of direct sourcing, how I am pursuing that is more of an ability to attract and engage talent in a contingent program statically, it is not just restricted to contingent program. It's beyond that for talent, the technique of engaging talent directly using brand enablement, talent pools strategies, and several other mechanics of known new and, you know, unknown talent, kind of that is like a high level summary I got from my end, but I'll give it to the group of experts here.

And you guys can take it over kind of like, what is direct sourcing?

Jonathan Kestenbaum: Shall? I could start with the definition, like talented lifestyle.

Praneeth Patlola: Go for it

Jonathan Kestenbaum: We direct sourcing is as we see it, you know, we look at the technology, so there are direct sourcing technologies you know, direct sourcing technologies enabled, procurement. to hire, um, candidates without having to leverage necessarily in MSP or the talent acquisition, internal talent acquisition team. I think there's uh, what we've learned is it's, not just about the technology cause you need service layers in there. And so I think as the direct sourcing spaces evolving, you're starting to learn the pieces that can't procurement can't provide on their own.

And I think we'll get to unpack that today, but as core as we see it you know, there, there are new series of technologies that are enabling procurement to directly source and engage candidates without, you know, without much help.

Mike Wachholz: Hey, Jonathan, I'll, I'll sort of build on that a little. Okay. I think about direct sourcing and the contingent in the contingent world in this context, as a company, engaging directly with a candidate, engaging directly with the contract worker, and there's a million different manifestations that can go along with that engagement.

Who's the employer of record? Is it purely a technology engagement? Is it a technology and sourcing endeavor? To me, all of those variances are what's created the lag in an uptake in direct sourcing strategies by companies that I'll know we'll dig into. But you know, for me, if I boil it all down, when, when I'm talking to clients that are engaging in or want to engage in a direct sourcing model, it's how do they leverage their brands? Their culture you know, their own attraction strategies, if you will, to engage directly with a worker that, that wants to work with them and in this case in a contract basis. So again, all the different nuances about how you engage, who's the employer of record. Are you using a technology and a coursing solution?

There's, there's a lot of different levers to throw. And that's what I think is so interesting and exciting about the journey we're going to be going on as this model develops. But boil it all down, you know, that's it, it's a client branded strategy to develop and build a talent pool that they can directly engage with.

David Swanz: I was good as well

Jonathan Kestenbaum: Mike, with for me, it's

there you go. I need it yet.

Mike Wachholz: His wife had the same function installed in him.

David Swanz: Me, it's always been about brand. Actually my, my career journey started in consumer products goods consumer product goods in general, and you know, brand and consumer behavior are always facets that can really influence buying decisions. And it's the same with candidate behavior in general.

And you know, it's a real attraction mechanism. Especially when we saw real shortages of talent, pre pandemic to attract candidates to come work, everyone has some type of perception, especially of particularly, big brand names and fortune 500 brand names of, what those brands might mean to them. What the kind of experiences they can actually get from uh, joining a company like that, whether it's permanent or non-permanent and what that means to their experience overall to be able to use at that company or elsewhere as well. So, for me, it's always been about what does that candidate experience, how's that going to leverage, being able to attract somebody to come, you know, bring their unique skills to the table and, and leverage that the side benefits around speed, quality and costs are something that comes as a result of that attraction mechanism

Praneeth Patlola: Awesome, Awesome. That's a really good cake and just to build a little on top of that uh, if, uh, and this goes back to the HR tech journey or the HR technology adoption journey from a process and technology combined, the way you look at it why now is becoming like, why now? What is this? Why is this a prime time for direct sourcing is kind of becoming a bigger question and the way we are looking at this is if you look the journey of HR technology in the past several years I think everyone probably has seen the consolidation and the days where the email, when you click on a list of links of jobs daily listed on the career site, it goes to an email where you have to email your resume to an email address, a Careers@companyname.com. That's where like the journey of digital talent acquisition kind of start at the beginning is how we'll see from the paper based classified as a paper-based or offline referrals and transforming that referrals into a completely online version of a game where it went a complete revamp of highly complicated landscape of ATS, which then progressed into talent CRMs, which now enabled with the candidate experience, employer branding, re-engagement, skill based strategy, but all that is happening even in today's In today's world if being in Austin for more than 16 years and almost in my backyard, if I want to work for an enterprise, we all know the largest enterprise in Austin to, to go and find which particular contract job is open. Nobody has an answer. Today, the talent experience always is you'll search in indeed you'll search in LinkedIn.

The whole consolidation of talent acquisition traction is fairly well-defined in the talent world, but there is no direct mechanism to be engaging with an organization directly. The candidate experiences, like as Dave you mentioned, still a really critical component for direct sourcing which still fairly missed out and that's where, like Mike mentioned employer branding strategy is such a key element for part of the direct sourcing, which enables us to ensure you are attracting and engaging, but also creating that real right candidate experience and filling that gap today, and I have this analogy and then a customer asks, why should I use this when I have everything going on the way it is, which is fairly generation next level, generation maturity model, with all the systems in place and all the processes and all matured non for this, would you want to use a, a knife, a Nokia 3315 phone in the generation of a smartphone and that, that is what from my point of view, I'm looking at are the kind of a general premise derived from direct sourcing right.

now, so while direct sourcing is kind of pick up pace and becoming mainstream, one of the big questions is why now, eh, and what has changed in the last three years or in the recent time where this has become a big attraction for enterprise.

Mike Wachholz: I'm happy to, to jump in. So I I'll tell you what hasn't changed for better, for worse and that is the same question that I reflect back on early days, that that, uh, Doug and I at beeline dealt with was we weren't getting phone calls from companies saying, Hey, we really like a VMs and an MSP. We were getting phone calls from companies saying, shockingly, we want better, faster, cheaper and so I don't think that's changed at all. Companies want better, faster, cheaper, so that that paradigm has not shifted. But what has changed I think in why now the time is right and we're seeing adoption with direct sourcing is the complexities around answering and solving for those three areas have changed dramatically and pretty few hit on a, on a really good one, which is. That engagement and connectivity and intimacy between somebody seeking meaningful work and how they connect to a brand and a company and, you know, we all know firsthand, there are millions of talented people out there that want to have a career that is a consulting based career, and it may be with one or two leading brands and, you know, you may want to work for two or three companies in Austin during a 10, 15, 20 year time period and having the ability to control that connectivity by the, the worker is equally as important to have it controlled by the company in terms of being able to, to represent their culture and their brand and build a relationship and, and some you know, connectivity and loyalty between that worker.

And I think that the, the continued emergence of the requirements and the demand for contract workers. Certainly accelerated through the pandemic that we've experienced is making that even more and more for tomorrow. And so being able to have a platform that helps make those connections real is one of the drivers of why now, and this is where there there's a gap in the current staffing model that, that exists.

I think that's an opportunity for staffing companies to figure out how to close that gap and improve the outcomes for companies. So to me, a big piece is that that that engagement model has shifted, and this is a way to help solve and, and close that relationship gap. The other piece I'll share, and then I'll pause.

We'd love to hear y'all's perspectives is the technologies and the service models in the platform are now I think at a point that they're working. And so, we all been looking at this and talking about this for at least five years and the message was confusing. The models were conflicting.

People didn't understand. Well, the I've got a VMs and I have an MSP and who's the employer of record and who's the Candidate engagement platform. And wait, who does the sourcing and procuring. And so this complexity of available platforms and disparate processes just created inertia in the marketplace. And now there, there are simple ways for, for companies to consume this new model.

And so I think the, the better, faster, cheaper with the complexity of the answer, and now the realization that platforms and services are working, that we're going to see acceleration

Praneeth Patlola: Absolutely very well put together. And yeah, you know, I let David and Jonathan, take,

Jonathan Kestenbaum: I'll just, I'll just so I agree with everything you said, Mike.

I think to add another layer on top of it you know, I think that There's still a flawed assumption around the fact that people think that, like you could just plug technology in and it's going to solve all your problems in direct sourcing. Like you don't need the sourcing, the recruiter anymore, or you don't need a payroll or anymore.

I think there's still this flawed assumption. I think to your point, it's getting clearer how a direct sourcing platform fits within the mix of your MSP and your VMs. And I'm super excited, but how things are evolving, because I think it's, it's it's evolving in a way where there's, you know, it's adding value for everybody in the picture.

But I, but I do, I do think there's still flawed assumption. These technology's definitely not into place. Anywhere within the town function where it can fully source to hire onboard a candidate without human involvement. So I think, that's, that's still a piece of information that needs to get clarified over the next year or so.

David Swanz: Yeah. There's there's. Race here at IBM is that you know, the AI we design is meant to be uniquely human and it's not meant to replace anyone's job, but it will replace that person that doesn't choose to adopt it. Right. And I think of that in the, the context of direct sourcing as well, where we've seen huge transformations in the recruitment business overall, whether you're a staffing provider, RPO provider, MSP provider, there's been this influx of change and dynamics that have happened, you know, first of all, it's the outsourcing industry overall.

Over the last 10 or 20 years as companies have become more global, they've seen that there's different dynamics, whether it's regulatory or, or delivery mechanisms that you might see as your programs go global. There's been a proliferation of technology. Part of that's due to the fact that you can actually develop a technology relatively cheaper than you could 10, 20 years ago.

And introduce something onto the market immediately. And I think there's also just this proliferation of clients seeking innovation. Overall, is there a better way that, that model of MSP, if you will, or other types of vendor neutral delivery mechanisms you know, there's, there's sometimes.

Innovation that can happen in there. You know, Vendor neutral is not necessarily the only way to deliver talent overall, and that's just something that it had been embedded in the industry. And I think clients were realizing, wait a minute, we don't really need vendor neutral. As part of our delivery mechanism, we can look at other mechanisms to get the talent we need in the door better, cheaper, faster, if you will.

So I think it's a conglomeration of many different forces coming together. And you're seeing that accelerate, especially in the last several years, as in, in this market, as other clients in the, in the market have said, you know what? I've tried, this I've been successful with it. So more and more and more willing to take them.

Praneeth Patlola: Absolutely. And yet slowly moving away from you know, the, the, the trial versions are all complete. Many customers have seen a fully adopted direct sourcing programs where about 80% of the programs are now 70, 80% are successfully direct source. And there's new models around a very specific vertical, like light industrial direct sourcing is completely different.

You can't just patch work the professional side of that sourcing into light industrial, just like that. So there is the operational models are all for different. There is a lot of clarity like Mike, Jonathan, you mentioned multiple components, but that actually also takes me to the next question. And after that, we'll take a little pause to answer a few questions, which people are posting in the forum so that we can set the baseline with this next question is like, To bring clarity around direct sourcing.

What are those critical components which baseline or what are, what are the baseline of a direct sourcing components? Like from a technology point? The way we are looking at this that is tech platform oriented approach, but there's also process and people. As such from, from, from who's building the talent, or employer branding strategies or talent sourcing strategies from acuity, which is that prac strategy.

And then the curation strategy is like, all this talent traffic is generated. Now you have the curator then better uh, at a more cost-effective way. You can't just throw hundreds of dollars for qualifying a few applicants and then end up hitting the bottom you know, troubling the bottom line, but also engagement like the payroll.

How are you engaging them or managing the candidates on a payroll? So technology attraction, the curation aspect of it, and then the managing of the candidates is how I see it. And I want to give it to the group here to take a stab at that because that each is a large amount of a function in itself like talent acquisition as attracting talent itself is a larger function.

Uh, so each one uh, Let the three of you kind of chime in on that core competence.

Jonathan Kestenbaum: Yeah. So look, I think we're moving to a place of to Mike's point better, even cheaper, even faster, branded like that. So we're going from better, cheaper, faster to even faster, even, you know, even cheaper and branded out.

So the whole experience is branded, I think, to get there what you need. So to get the branded part, right, you need the ability to inject your employer brand into your Contract jobs. So there's a piece of technology that needs to help you do that. Do you need a separate team to, to supply the employer branding concept?

Probably not. Probably using it within your organization already. So I think you need a piece of technology to help you get that out there. I think in terms of faster and cheaper, it kind of goes in the same you need technology to help pull people together. Maybe leverage referrals be able to scalably get these jobs out to the market, not just through staffing channels.

You know, and I think you still unfortunately will need the other components, which I've. Shining my light on, you know, which is payrolling these people. And then actually, there's a reason why recruiters exist, which is, you know, sourcing you know, like finding out if a candidate is ready or interested or even available, right.

So you still need those two components for a program to be successful. Now I think technology is going to make a meaningful impact in those two areas over the next five years. But for now, I think you still need suppliers to step in, in those two areas.

Praneeth Patlola: Awesome.

Mike Wachholz: I'll jump in a little bit, John, if that's all right, Jonathan, I have a chance to sit in on your session earlier today and I love the fact that, that you talked about how, you know, managed service providers absolutely have to continue to adapt and advance and innovate because we are being disrupted and, and that's, that's healthy for the marketplace.

So, you know, my take on this and, and pretty thought gun jump, Brian McGuire. She shot us a question about, should the direct sourcing program sit under an MSP. This is, you know, my world in my view, I think it has to. And the reason I believe it has to is because it really is just a component of the supply chain.

It's not going to replace a hundred percent the use of staffing companies of online platforms of direct hire of outsource engagements. It's just another component that I think is going to help advance the whole supply chain. You know, it'll be good for everybody. And my belief is, is that, and our model at GRI is it's native to our MSP offering.

And so I see this as, and we're delivering it as a, as a partner of solution where we have a partnered approach that encompasses technology. So we're seeing in candidate engagement and employer of record all under a single seamless offering. And that's because the complexity of breaking these pieces down creates confusion.

And I think we'll, we'll create sort of dissonance in the model. It doesn't mean that you have a single partner doing all of those things, but I think delivering it and orchestrating it as a seamless platform is, is incredibly important. And the, the go no-go decision for a company to leverage a direct sourcing solution begins with brand.

This has to be a customer branded client branded engagement. Otherwise it's just not going to have the success of the engagement model that you want with, with the workforce in my word,

Jonathan Kestenbaum: I just wanna uh, uh, sorry, Dave, oh, I have one. Yeah, there's one. I think that there's a world where this lives under MSP.

But I do think there's one conflict that needs to be sorted out. And the conflict is you know, how are you going to tell the staffing suppliers that, you know, this is a job that's going to a direct source, you know, direct sourcing instead of, you know, that they submit it, how are they going to feel comfortable that when they submit a candidate, it's not just going into a talent pool.

And I think that there's still right now. You know, a lot of, a lot of people, I guess there's a lot of people that are uneducated about what could possibly happen in that scenario, which is making them a little innocent to the situation. But then at the same time, I think once they get educated, based on the way staffing firms generally react this.

Oh, my candidates, my candidates. I don't want to share them, you know, and I think there's going to be this Robyn. I think the, what I've been hearing from MSP as well, it's like, we just say the company tells us when to do, you know, the it's up to the company. Like they tell us, do we want this job direct source or through the MSP?

And so I think. That I think there's a solution. And I, so I totally think that there's a way it works and I, I would love to hear my count and you guys are gonna figure it out. And I think there's a lot of other great things that you guys are doing that adding value, injecting value with the data that you provide.

But I, I just think that it's also creating an opportunity for a direct sourcing player just does direct sourcing to come out and create, you know, a unique, differentiated value.

Mike Wachholz: Yeah, I'll I'll let me add a couple of thoughts and swanz. I know you want to jump in for sure. So y

David Swanz: You, know, I know martial arts better.

Mike Wachholz: I've got to figure out how to do it virtually, but

You know, let out at some point

it's rules of engagement and really clear program guidelines that put that really it's about putting the, the candidate experience. First, to be honest with you, and that I think is where the, this, this model helps align that.

But you know, there's a couple things. One is that there's gotta be clarity. And I think part of the talent pooling value is it's, it's sort of learning over time of where should companies leverage this. I'll give you an example. It's really difficult for a staffing organization to respond within 48 or 72 hours with a pivot in a sourcing strategy change.

If a company says, Hey, we need to hire. This type of resource in this market very quickly to be able to invest in pivot in a different social media campaign or different engagement model, or to really shift a sourcing and recruiting team at speed is tough to do because in the typical MSP model, the staffing companies are responding to a single or maybe multiple requisitions at a time.

So the economics just don't make sense in that model. That's where our direct sourcing model makes a lot of sense. And so I think of it as more of a, almost sort of a surgical approach within the program for particular sourcing and recruiting needs. So I don't think that the staffing companies are going to be are going to be completely disenfranchised with this model.

My belief is, is that this is going to allow staffing companies to really lean into their strengths and focus on delivering in the programs where they want to deliver in and really focus on the areas that they can most successfully bring in the best game. And drive the right economics, you know, for their business.

But it's gonna require change. And, and we we've put in place SLA's around candidate submission and who has the responsibility to represent the candidate for a period of time in these models, but in my world, and my, my view is that's driven by the candidate. It's not driven by the staffing companies. It's not driven by, by our client.

The candidate is in control of, you know, who is representing them. And I think that's a really important aspect, but it's gotta be transparent and fair. And, you know, there were models early on that really were sorta like temp, nabbing, and herds, all sorts of things that were going on. And that's what this model is not it's for me, it's an attraction and retention strategy for companies to be able to leverage, you know, their strengths.

Praneeth Patlola: Awesome.

David Swanz: Yeah, absolutely. I, you know, just to add onto a few things that were said is, is you know, from, from where we sit and what we see, a lot of his clients are still trying to figure out how do I buy, build or borrow and in terms of a talent strategy overall, and you know, some amazing facets to is that almost 80% of data in an organization goes on taps.

And you see that in the world of talent acquisition overall in terms of the amount of applicants that come through on the perm channels. And then they get ghosted and that data is never leveraged to actually be used because maybe some of those people that are applying for permanent jobs might actually be interested in, in contingent opportunities.

They just don't know where to go. They don't know how to channel themselves to A job board with a staffing provider that might have a generic job description because they're bound by rules that say, you can't use our logo, you can't use our name, you know, and it's just an attraction strategy that says come work for this multinational corporation and the, and the candidates left guessing as to who that is.

So, you know, there's gotta be an easier mechanism for candidates to navigate their way to organizations. There has to be an easier mechanism for companies to figure out how to leverage the data that they already have. I agree with Jonathan too. I think there there's, there needs to also be sort of this aspect of expectations of once they become an employee of employee of record.

What's that experience look like for them as well in terms of pay frequency. You know, engagement in different aspects, such as that, other than just getting a paycheck every couple of weeks. I think there's more to it than that. And so these are just different facets that can be solved for, and then in the world of suppliers, I think what's really interesting is you know, from a, from a organizational point of view why should I go to staffing suppliers?

If I can fill a particular requisition pretty easily with my own recruitment team, for example if the talent's readily available and I can do it better, cheaper, faster that way. Why do I need a staffing provider? And I'm just being thought provocative. I'm not trying to offend anyone, but in theory I would, the role for suppliers is what do you specialize in.

What are you good at? That's what companies need the most and lean into that. And in theory, obviously the it space you know, there's a, there's a parole violation of a skills gap. In particular years ago, we saw that when machine learning skills were hard to find you know, and there's going to be continued.

Proliferation of technology to come from where we sit, you know, there's, there's proliferation of quantum technology coming out more and more organizations are getting into this. And these are types of skills gaps that companies need help with what are companies like staffing organizations out there preparing themselves to do, to say, you know what, I'm gonna, I'm gonna lean into those kinds of opportunities overall.

But maybe you are somebody that is a little bit me too. What makes you better than somebody else is really what organizations want to know in particular and why should they give that requisition to you over somebody else? Some of it might be geography. I deal with a lot of clients, for example, that have really remote locations that you know, nobody readily wants to cry.

You're the expert at those particular locations or roles. You know, those, so those are aspects that you can lean into overall. If you're a staffing supplier, that's.

Praneeth Patlola: Awesome. I think this was like absolutely amazing. And I, in a layman terms, I tried to correlate this experience to like, if you have seen what has happened to the travel agency, businesses across the world while the consolidation of that online travel agencies and the consolidation of the travel market has completely gone online.

The specialized, the segmentation of travel agencies for very specific segmented services still has their own businesses, which are, and even today in programs that is tiered segmentation like David, you mentioned the skill-based or a geography based segmentation is still there. The ones, which are like obvious and the ones which are for which you already have talent, the real deployment of talent strategy that falls into the direct sourcing bucket is how I see it.

But then there is also like niche based segment, which is an, a very well practiced mechanism to select suppliers in today's world. It's like, what do you specialize in which category should I add you in which category tier, because almost all their supplier onboarding process, they get to. One sheet or one document that says select only first three, even though there's unlimited number of categories, you got to select only three and you have to be careful in selecting what you want and everybody wants where you get more market.

But that kind of is now going to change because there is a competitive landscape that needs to be optimized and delivering still a model. And sometimes you need to pick and choose and that there is going to be an impact. But I think the impact is going to enable the overall ecosystem from an optimization an end to end optimization.

That that's awesome. I go ahead.

Jonathan Kestenbaum: Well, I was just going to say I have, I have one thing I would add to both what Mike and Dave said Uh, so, so I, when I, when I put my investor hat on I have like one thesis that I invest through in the HR space, both on the corporate side and the staffing side and it's transparency.

And by that, what I mean is the internet has brought rapid transparency to the world. And so that means that candidates know a lot more about companies than they did before. That means companies know a lot more about candidates than they did before. That means that the noise uh, that's going to happen between the process is going to be a lot louder, which to David's point means your differentiator to get the best talent is going to be how well you are engaged with them.

And to do that, you need to hyper-focus and be able to find a niche group that like you can engage because that's how you can get the economies of scale. That for neat disgust of like being able to cheaply do it. And I think this is a driver um, what's going on in direct sourcing you need to bring the brand into direct sourcing to more effectively get candidates engaged with your organization.

So, you know, I think that in engagement is a key driver you know, moving into the future and something that I think we all have to be thinking about, you know, companies implementing direct sourcing strategies and companies that are suppliers to, you know, MSPs or, you know, staffing first mortgage.

Praneeth Patlola: Yep. And, and program management of that sourcing is a new evolving function to which is very critical and uh, you know, Mike's company and GRI has tried to champion that already in kind of how do you enable the talent experience, talent engagement, being an integral part of the supply chain pool for customers kind of that is really still evolving.

And I think it gets matured as we move forward with that. I want to take a few questions here. I know Mark McClellan. Hey mark. Who was just, we were talking through in the procure con, it looks like every day there is an online event. We are participating in the same gang comes in. So mark, uh, from BP has a cushion where our clients are you seeing client companies leveraging common talent pools for both temp and permanent recruiting for direct sourcing purpose

David Swanz: I feel like I have to jump in first this time. Cause Jonathan and Mike always get the, yeah.

I do hear of that. But the whole notion of direct sourcing is that you're leveraging a client's brand, which, and, and the candidate pools are their own intellectual properties are intellectual property of the company. So, I think you said mark was from, from BT. You know, that that talent is attracted to your logo in particular.

And that supplier who's doing the direct sourcing is in theory, leveraging that logo to attract that talent to your organization. So that's your intellectual property? So I would say, you know, why would you want to share, share that with, you know, Exxon mobile or Baker Hughes or anyone else down the street from you?

I, you know, I don't know unless there's some other uh, type of reason now I do see a lot of different types of talent pools. I know they exist out there in terms of different types of roles in your industry, in particular, in oil and gas Whereby, you know, it's, it's, it's probably more independent contractor driven in particular where you might want to do that.

I've also seen it in the consulting space as well, where you might see people jumping around from UI to KPMG, to Deloitte, or what have you. But they're, they're not necessarily doing true direct sourcing if you, if you would. It's just a component that's, that's different and I don't know what you would call it in general, if there's a term for that, you know, there's a proliferation of terms, which is another thing that I think you sometimes need to define in this industry, but you know, those shared talent pools would, I would not consider direct sourcing.

Praneeth Patlola: And just to build on that, just on that and especially the technology piece. And I think it's slowly coming together, like, I've, I've talked to several companies in the consolidation of HR technology analytics, which is the people analytics metrics, which is a bigger initiatives and almost all the organizations.

And you'll see that almost all the people, analytics companies today are so matured in bringing all sets of HR analytics, data people, and text data together into a single fold. One thing we haven't seen is none of them actually even touched the VMs space. So you basically go wider 35% of your analytics of talent.

You have no idea what is what that is, and that gap is still there. But uh, everybody's now starting to realize that we have to bring that together in terms of a singular centralized talent pool. I think we still haven't transformation journey to go through in the next couple of years, either through an integrated approach, which is kind of connecting your ATS HRS and the VMs and the known or public and private talent pool into a single centralized talent pool approach.

But that needs integration. And I think people are always scared when it comes to integration projects, because everyone thinks like that it's a couple of million dollar project, but today providers on the platform have a talent pool. Providers are going to be making that much more easier with the connectors which are built.

There is no cost to the customer. Unless your HRS provider charges for that, which we have seen that happens sometimes. So that technology differentiation is something which I personally seen which is one of that critical step. But if you have uh, uh, if you if you are an SAP shop and if you have a success factors, you can still leverage the centralized talent pool because they have already ventured into that.

And having that conversation with that group will enable you to create a centralized talent pool already. I'll stop there to give it back to Jonathan and Mkel on that

Jonathan Kestenbaum: I think you're hinting at a Gustav World, Staffing Summit, 2021 panel called why the time is right for total talent management. Cause I feel like that's the term that folks are wrapping around that concept.

Uh, totally agree that, that data is is, is important to corral in one platform. I think there's lots of folks trying to do it. I think you're right to, to hint that the data being more accessible potentially now than it has been in the past. You know, I, I you're starting to see, so, you know, we do a lot of work with on the corporate side, as well as the staffing side.

And on the corporate side, you're starting to see applicant tracking systems, also build vendor management functionality. So you have ATS, FMS, VMs functionality in one system. The idea being that they can go to a company and be the provider of their ATS and their VMS. And they're FMS potentially.

And so, but, you know, to the extent that they would get deployed, you know, like an Avature in that capacity in an organization, you know, that data would start to become accessible in one platform. But I, I, you know, that that's, it's not gonna happen quickly there. You know, we, we do think there's going to be a third party.

That's going to be able to get this data together in a more meaningful way. We, we, we think it's going to happen in, in, um, the recruitment process automation world. So like a RPA analytics platform combined and RPA would be a 20, 20 threes conversation. But you know, I think there's, I think there's it, you know, definitely some interesting work being done there.

Praneeth Patlola: Awesome.

Mike Wachholz: So I'll add a, just a quick thought. So, I think that this this. Cross pollination is happening. I know it's happening today. The what's what's exciting for me and is as good for all of us, whether you're a technology provider, staffing provider managed service provider is this model in particular is facilitating the conversation around talent acquisition.

Perhaps for the first time as a real strategic priority for companies, when they think about their contingent workforce, it's not just a procurement initiative, it is about talent acquisition and, and Praneeth you and I know this firsthand, I have success with these programs. You have to have engagement with HR and, and branding and, and the it department, because, you know, we're talking about having a contractor careers page alongside a a, um, permanent hire career page.

So these things are happening now. You know, we've got programs where we're leveraging now data out of the applicant tracking system to attract candidates into the contingent labor pool that either are former workers or silver medalists. And and so I think that, that it's, it's really important for us as guides for our customers to help them think about what's the right model and path for the candidates that they want to attract.

We're able to do this for internal mobility. And again, for a lot of companies, you can see that they've got you know, strategies on both sides, which are, Hey, we actually wouldn't mind seeing some of our valued value workers, maybe convert to the, to the contract labor side and still want to be engaged with us.

From a career perspective. Likewise, we have plenty of customers that are wanting to use this as a model for temp to perm. And so I think that the value of this can flow both ways. You know, the real key piece here is you've got to get TA and HR and branding and, and risk and legal, everybody lined up because it's still a journey.

And I'm just happy that I feel like we're finally over the hurdle. Now I know I'm gonna say this. I'm going to have a conversation probably with another customer tomorrow that will bring it up. Is it leveraging brand creates co-employment issues, which it does not, you know, there's still just a bunch of education going on, but these important conversations are happening.

And that's what I think is really exciting for them.

Praneeth Patlola: Absolutely. And you touch that important point and confusion. We are still trying to clarify. And in many of the round tables in the industry for the past two years, I've sat down. This question comes up and my only answer is, do you have a payroll provider.

Yes. Okay. If you don't have a co-employment respite, your payroll provider, you don't have a Direct Sourcing. Simple. And there is also one important burning question. We always try to widen this conversation, especially in the larger context is mark has asked this question, how do you see direct sourcing impacting the typical staffing agency model?

This is the question, and I think we kind of touched base that it is going to be an impacting, but maybe patch at a high level,

Mike Wachholz: I'll hit one piece and then I'll turn it over to you guys. Because you know, we're seeing staffing companies thinking about, do they pivot into a sourcing recruiting capability around, around direct sourcing, and there's going to be growing demand for that in the marketplace.

It comes down to your philosophy with the candidate because in a direct sourcing model, you're delivering the candidate. Helping deliver the candidate to the client's talent pool. And so you need to be thinking about the economics of that. You know, I think the days of look, we've got a, we've got a talent pool and a candidate database of a million candidates that feels awfully dusty in our head for me.

And it probably does to everybody on the phone. And so thinking about your relationship management strategy and your engagement strategy with the talent is important because it's a different model and I think you can't do both. I think you need to make a decision. Do you want to be a sort of traditional staffing engaged model provider, or do you want to be a sourcing and recruiting engage model in a direct sourcing paradigm?

Yep. Yep.

Jonathan Kestenbaum: I'll I could add. Yeah, completely agree. I think there's huge opportunities for a hundred, $200 million staffing firms to kind of dive in head first to the direct sourcing Trend and be a supplier. I think it's like, you're the perfect size to kind of solve some of those challenges. You have the resources to just focus on the sourcing.

You have, or the selection, you know, you potentially would take on the payrolling business. You know, you're not too big where you're gonna screw up a deal because your MSP might get pissed at you for supplying uh, through a direct sourcing platform. You know, but, so I think there's a huge opportunity for here for folks to dive in.

You know, I, and, and, you know, I think it's just taking, you're going to take it. You know, what you typically do and break it into pieces and just be able to make money on those pieces, you know, whether it be payrolling or selecting the candidate and get paid transactionally for that value that you're providing and hopefully the right amount of value for the value that you're providing.



David Swanz: I would just add, I mean, every business fright in any single part of the economy is just being touched and disrupted in, in massive ways, you know, our political climate, our social climate no matter what country you're in is all been massively disrupted in, in many, many different ways.

And I think that's where there's chaos, there's opportunity. And I think part of that as business owners out there is trying to figure out and leverage you know, what are your strengths? How do you turn those into comparative advantages and, and, and go for it and go into it and or, you know, diversify in, in many ways as well.

You know, maybe what you're doing today, isn't really working, you know, what do you need to augment what your service is with something else, you know, it could be a technology and service play. Those are just different things you need to think about as far as your business, too. Differentiate in a crowded field uh, to, to push forward.

Praneeth Patlola: Absolutely. And th this I actually could experience, and I do experience this almost in real time. And as Jonathan said about the larger, our staffing organizations have already seen that this is inevitable and it is an impact to the business. That's the truth. And that is going to be the, in the next few years too.

So how do we contribute into that as become a question? And we now are collaborated with 17 of similar companies who in one fashion and other were staffing focus, but now they've either channeled out and opened a new payrolling segment because at the end of the day, they do have the payrolling built part of a staffing services model.

So now they're channeling payrolling as an independent business. And collaborating with the direct sourcing are contributing into the direct sourcing newer market by either bringing a platform into the place so that they can Co-sell co-brand or even in a mutual collaborations, getting into the deals with a mix of platform, curation, MSP in that combination, Mike, you've seen that payroll companies already kind of getting much closer into the mix and you're seeing more of this transformation happening.

It also is starting to happen where you'll see more. Payrolling company is forming out or branching out of the divisions and segmentations within that as somebody who's specializing only in light industrial, because they've realized that while direct sourcing can actually enable on all sites, there is still a really critical pain in the components.

Payrolling the light industrial workers, which has the higher workers' comp and impact of claims. So you definitely need somebody who has specialization on that and can actually still collaborate on that brick and mortar. That's still not going away. Hopefully at someday will be a hundred percent gone out of that.

But the, the, there are two new opportunities and I wouldn't be surprised if in 2021 and 2022, there'll be at least a hundred platform, new companies coming out to compete from agencies because agencies have always been, you know, try to, as David said, chaos creates more opportunity for the business.

So, I, I think we're already seeing that on the plate. So, uh, th th that's it I have a few more companies from most important for, for people to understand very high level we'll patch, because we have like eight minutes, I believe from a curation point of view one, one topic which always comes in direct sourcing is, what is curation? What is this new terminology? Right. And in the morning, we had a panel addressing what is curation, but one of the key components where the whole process of the success of direct sourcing can also be enabled is to have that curation figured out who, where and what which is very critical of this component.

Right. I'll give it back to you guys to talk through that. And also how staffing, organizations can contribute into that.


Jonathan Kestenbaum: No, I mean, I, I look at I use like ready, qualified, interested. Like those are the things you need to understand about a candidate to under, you know, figure out if they're a good fit for a role.

So I think, like you don't have to do is spend the money to find the candidate because it's provided so you don't have to spend the money to find the candidates. You saved some money there, but you do have to in partnership with technology RQI, you know, find out if they're ready, qualified, or interested.

And I think, you know, probably technology can help by narrowly. You understand if they're ready, you know, or interested qualified this where we're, you know, the most work has to go in, and that's probably the curation piece that you guys were talking around to foster youth.

Praneeth Patlola: Awesome.

Mike Wachholz: Yeah. One of the areas that I think issue that Jonathan's really important, that that I think gets lost in the exuberance of a new model is that this is a long game.

And so we want to have a town. And I don't like using curation by the way. I try not to say it, you know, mangement model a candidate engagement model, because look, when a worker rolls off a program, they're going to have a cooling off period, you know, 60, 90 days, whatever the timeframe is and chances are, they're probably going to get, get, get engaged with another organization, not yours, they just left.

But what I want to make sure as for our clients is that, that great candidate they want to engage with. Again, when they're, when they're ready to reengage, maybe it's nine months, six months, 12 months down the road. That they are ready to come back. And so for me, the candidate engagement is more important.

It's almost this notion of a career coach, a career guide or career Sherpa for the candidate that has always been missing. I think in the staffing model, if you can really develop a relationship management approach and you know, that that really talented developer accountant, you know, marketing executive you know, who could be a forklift operator, whoever they are, they're going to want to come back to you.

And so I think that that's, that's really important. And John, I love what you said, you're right. Assessment, you know, talent, pooling identification, you know, market, all those things. You know, the wonderfull technologies today do so much of that, but it's, you know, I love getting taxt and I'm happy when I get a text to stay warm from somebody.

But at the end of the day, I still want to talk to somebody at some point. And that, that human element, just as critically.

David Swanz: Yeah. Yeah, I totally agree. I mean, if you talk to any organization today, I mean, they've spent years and continue to invest on improving that customer experience. And unfortunately the employee experience has not caught up.

And if you think about that in the context of, of talent, you know, there's a lot of things to fix out there. Overall, whether you're an existing player or a contractor of what that experience is like once you're actually working at an organization, but in the context of a curation again, can we replace that word with experience of what do you want that experience to actually be like, do you want somebody to just apply and sit there and wait to hear from you?

You know, when somebody applies, they want some type of experience because they took the time and effort to put the resume together and submit that to you. And the least we can do is acknowledge it. How many people get frustrated when they walk into a store. And they're looking for some, some help to ask somebody a question and nobody's around.

Right. You know, the same thing should apply in a virtual application world whereby I can talk to somebody to seek help. It might be through a bot or whatever, but at least there's some type of responsiveness in that process that makes me feel engaged in that. Somebody actually cares about me or to Mike's point is giving me advice along the way, even if there's not a job available now something that shows that they're interested in me because I'm equally showing interest

Mike Wachholz: in them.

Praneeth Patlola: Absolutely. Well, that's a great rundown. I want to close the session with one final question, a more of a question, but more of an opinion in a very short form. What are your predictions for that accessing in 2021?

Mike Wachholz: Yeah, I think we're going to see significant market uptake in the model. Absolutely. And, and I think that we're going to see more adoption, internally with companies between talent, acquisition and procurement that unlike we've seen in the past, I think that the, the time of HR talent, acquisition and procurement being separate around talent planning and talent management is thankfully in the rear view mirror force.

Praneeth Patlola: Awesome.

Jonathan Kestenbaum: I'll just add, you know, I started the conversation with our next trend reports, direct sourcing our next gen reports, direct sourcing. We just launched town intelligence today or next week. And so three months from now it's direct sourcing. You know, I, I think there's going to be significant investment in the space.

Praneeth, call me when you opened your seat.

I just also want to say super thankful and blessed to be here with all of you guys. You know, really lucky that to get, to sit on a panel with both Mike and Dave underneath and have deep conversation about this topic. So, excited and thankful

Mike Wachholz: Yeah.

David Swanz: Likewise good connecting with everyone, hopefully in the real world next time,

Praneeth Patlola: they kind of final words for 2021.

Our personal goal is kind of, I call it that Uberization of that shift of worker categories, our primary goal that we're going after, because we have seen the challenge of non-professional and we are seeing a huge amount of adoption and I think light industrial process, models, which have not barely been touched from an enterprise world.

I think that will give big, big, heavy transformation in industry. There'll be a bigger shift. That's my prediction because I'm going after that. But thanks a lot, everyone. Thanks, Mike, John David, always a pleasure to collaborate and, uh, thanks a lot for amazing insights. And I think people have enjoyed it enough.

Known faces Julie, Hans, I think it's the same gang. We just go from one event to other nowadays and hopefully take a break and do it again sometime again. Thanks a lot,

Jonathan Kestenbaum: guys.

Praneeth Patlola: Have a good day.

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Praneeth Patlola

David Swanz

Mike Wachholz

Jonathan Kestenbaum




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