How to build a direct sourcing machine that cuts costs and lands you better talent

The agency trap

Most companies still rely on agencies for candidate sourcing. And it’s easy to see why: They promise quick turnarounds, stellar shortlists, and less workload for HR teams. 

But that convenience comes at a cost that extends far beyond fees.

For starters, you pay more to get less. Recruitment agency markups can inflate cost per hire by 20%–50%, often adding tens of thousands of dollars per role. Since agency screening processes are typically superficial, you get little insight into candidate quality before the interview stage.

Moreover, agencies are rewarded for speed, not long-term success. Because their focus isn’t on alignment, you’re likely to end up with candidates who look good on paper but don’t have what it takes to succeed in your company. 

And with each one of these outsourced hires, your direct connection with candidates weakens and your employer story gets diluted. The agency tells your story first – or, worse, doesn’t tell it at all.

The most frustrating part is that, despite the significant time and money invested, you still don’t own the pipeline. Once the contract ends, the agency keeps all candidate information. This leaves you with nothing to build on, forcing you to pay the agency fee all over again for your next hiring campaign.

Proof you can leave agencies behind: Why direct sourcing pays off

Breaking free from agencies can feel intimidating, especially if you’ve leaned on them for years. But companies that take the leap to a direct sourcing strategy find the switch pays off almost immediately.

When you build and maintain your own pipeline of pre-qualified candidates, every hire becomes cheaper, faster, and better aligned with your company.

Take Iron Storage, for example. CEO Faraz Hemani tells TestGorilla that his team stopped working with agencies and instead built an in-house talent pool using referrals and social sourcing (more on these tactics later). The result? They cut hiring expenses by 30% and reduced time-to-hire by 20%. 

Aaron Rafferty, Co-Founder of Tech Buzz, had a similar experience. “We completely ditched agencies and built everything in-house,” he says. “We can [now] generate a list of 100–1,000 quality candidates from LinkedIn for free in less than two weeks.” 

Additionally, George Fironov at Talmatic found that using a direct hire strategy deepened cultural alignment. 

“We reduced agency reliance by investing in a specialist in-house talent acquisition function with advanced talent mapping technology and connection to niche candidate pools,” he explains. 

“Via long-term talent pipelines and direct [engagement through] professional networks, we created a more streamlined and brand-focused recruitment process. This decrease not only improved time-to-hire but also raised candidate quality and cultural alignment.”

Similarly, direct sourcing gives companies back control of their employer brand, which is hugely important in recruitment. As Rafferty says, “Actually talking to candidates is the quickest way to onboard top, mission-aligned talent. We get people who fit our culture and also great brand exposure for those who don't pass muster.”

How to build your direct sourcing machine

With direct talent sourcing, each hire makes future hiring faster and more cost-effective. It’s a long-term advantage agencies simply can’t offer. 

Let’s walk through how to build your own direct sourcing machine – and how TestGorilla Sourcing makes every step of the process easier.

Build pipelines you can own

Talent pipelines you own are the key to direct sourcing – the gears to your machine. Once they’re running, you won’t have to start from scratch when a new role opens.

There are five key pipelines for direct sourcing:

“Silver medalists”

These individuals, as Fironov calls them, are those strong candidates who made it to the final round but didn’t get the job. They work well because they’re pre-vetted, culturally aligned, and eager to return. 

To keep them warm:

• Identify and tag top runners-up in your applicant tracking system (ATS) or recruitment spreadsheet, including notes on their strengths and why they didn’t score the job.

• Deliver feedback and invite them to join your talent pool, showing you value their potential.

• Nurture relationships through regular touchpoints, such as company updates, event invites, and brief check-ins.

• Re-engage strategically when a relevant role opens, referencing past interviews so they feel remembered.

• Measure and refine response and rehire rates, then adjust outreach frequency as needed.

Employee referrals

Because referrals come from people who already know your culture, they often stick around longer and ramp faster than cold hires.

A solid referral scheme includes:

• Training for existing employees on the types of candidates you’re after.

• Clear incentives, such as bonuses, time off, or recognition.

• Simple submission, such as through a portal or form, where employees can include skills, availability, and their connection to the candidate. 

• Fast acknowledgement of every referral, plus a thank you to employees.

• Ongoing engagement with referred candidates through welcome emails, company news, and occasional invites to events or webinars.

• Tracking how many referrals convert to hires and how well those hires perform. 

• Rewarding successful referrers to keep the program active and visible.

Social sourcing

Social sourcing helps you find passive talent on platforms like LinkedIn, Reddit, and X, where people showcase their skills and personalities every day.

It’s a powerful pipeline, but you have to approach it correctly:

• Target the right platforms where your ideal candidates spend time online – LinkedIn groups, GitHub, niche Slack or Discord communities, professional forums, etc. 

• Offer prospects real value – such as role-specific playbooks, short demos, or code snippets – to spark interest.

• Qualify and add promising contacts to your ATS or customer relationship management (CRM) tool. Include tags for role type, seniority, or key skills so you can easily find them later.

• Engage consistently with light-touch interactions like newsletters or polls. 

• Track and optimize response rates, source quality, and diversity metrics to see what works and refine your approach.

Alumni networks

Some of your best hires can come from people you’ve worked with before, as they already know your business inside and out.

To build an alumni network:

• Create a database of past employees, interns, and contractors. Note their tenures, skills, achievements, and reasons for leaving. 

• Reconnect warmly with personal outreach, via email or phone call. 

• Add value by sharing company updates, hosting informal reunions, or conducting webinars that they can attend.

• Re-engage directly when roles open up, referencing their past contributions and asking if they’d be interested in applying. Offer as much detail as possible upfront, especially salary information, to make their decision easy.

• Track success by monitoring how many alumni rejoin and how they perform.

Internships

Internships can be a powerful long-term pipeline, but you need to structure them intentionally. Here’s how to do it:

• Source strategically through targeted outreach to motivated students or early-career professionals.

• Design programs with defined projects, weekly mentorship sessions, and a final presentation or demo to give interns the chance to prove themselves

• Convert top performers with job offers before the program ends, and tag others for future roles.

• Nurture internship alumni with updates, event invites, and early access to new job opportunities.

• Measure outcomes like conversion and retention to refine internship programs over time.

How TestGorilla powers every pipeline

Each of these pipelines brings talent into your pool and can strengthen your hiring. But left to manual effort, they come with risks. 

Referrals are susceptible to bias. Social sourcing can be overwhelming. Alumni’s skills can become outdated, interns may be tricky to track, and silver medalists can be hard to pin down. 

TestGorilla Sourcing helps you get around these bottlenecks and headaches. 

It brings all these pipelines together and evaluates every candidate on skills and attributes up front. 

That means your silver medalists and alumni can be tested and tagged for future roles, and your referrals get tested using the same bias-free evaluations that external candidates do. 

You can also easily track your interns with verified evaluation results and get around the noise of social sourcing by filtering profiles into a curated, skills-tested pool. 

Use technology 

Talent pipelines are the gears of your machine, and technology helps keep them turning. 

ATS and CRM systems, as we’ve mentioned above, keep candidate data organized. AI sourcing tools help in identifying patterns, pulling candidate lists, and flagging potential matches. They can even help ensure your talent pool is more diverse and inclusive by surfacing hidden talent that traditional searches can miss. And sourcing automation tools can handle outreach and reminders. 

But technology left to run on autopilot can leave you with a pipeline full of unqualified talent…

Add TestGorilla Sourcing as your engine

This is where TestGorilla Sourcing makes the difference. Instead of building everything manually, you can start with an engine designed to power a direct sourcing machine.

Here’s what TestGorilla can do for you:

• Provide access to a massive global talent pool of more than two million job-seekers, with around 100,000 new profiles added every month.

• Evaluate every candidate using one or more of 350+ scientifically validated tests, spanning job-specific skills, personality traits, behavioral tendencies, and more. 

• Offer direct access to candidates so you can contact them, invite them to interviews, or request that they complete additional tests to further assess their abilities.

• Filter with AI-powered matching, narrowing candidates by skills, location, and salary so you see only profiles that fully match your needs. 

This way, you can build a talent pool that’s not just bigger, but better: validated, selected without bias, and ready to hire.

Don’t dismiss the human touch

Of course, even the best direct sourcing machine can’t run free. While technology can source, filter, and validate, it can’t tell your company’s story, build trust, or spot subtle signs of cultural add. 

As Ryan McCallister puts it, “It is your little details of experience, and personal contact that actually signify that a candidate is fit.” 

So, don’t forget the human layer in your machine. Ensure that recruiters still step in to connect with candidates, persuade them to engage, and make final hiring decisions. 

Prove your machine works

Once you’ve built your direct sourcing machine, you need to prove it works. Focus on these metrics that reveal true ROI:

• Cost per hire: How much are you saving with in-house recruiting compared to outsourcing to an agency?

• Quality of hire: Are new hires performing well, staying longer, and satisfying managers?

• Candidate engagement: How warm and engaged is your talent pool? Look at response rates, assessment completions, and time-to-respond.

You can use your ATS, CRM, or TestGorilla Sourcing to set baselines for these metrics, monitor improvements, and review the data to see what’s working and where to improve. 

Then, use these insights to adjust your outreach, sourcing channels, and overall hiring process. That way, your machine gets stronger, leaner, and more efficient with every cycle.

Take control with direct sourcing today

Every time you go to an agency for your sourcing needs, you’re renting a pipeline you’ll never own. 

Direct sourcing flips that on its head. 

By building pipelines powered by the right tech, you create an asset that grows stronger with every hire – and reduce agency recruitment costs, to boot.

TestGorilla Sourcing makes direct sourcing practical and straightforward. It provides instant, direct access to more than two million job-seekers, evaluates candidates upfront, and offers many more benefits. 

Sign up for a free TestGorilla account or book a free demo today and start building a skills-first sourcing machine you own – not one you borrow.