Recruitment Agency Assessment
We are going to make a recruitment agency assessment and whether they are good for the industry or not.
Ask an IT contractor about IT agents and you are not likely to hear anything good. They are the whipping boys of the industry according to contractors’ agency assessment.
Conversely, ask IT agents about contractors and you are likely to get a stream of stories about contractors who let them down.
IT Contractors will say that agents are dishonest, that they phone them up about jobs they don’t have just to spam references, that they have no sense of decency in terms of what they add on to the contractor’s rate, and they understand nothing of the profession in which they work.
You will hear phrases like ‘barrow boys’ and ‘jumped up burger sellers’ in IT contractors’ descriptions of agents.
IT Recruitment Agents’ Views
Agents will say that IT contractors are poor at selling themselves, turning up for interviews unkempt, that they accept jobs and then turn them down when they get a better offer, and that they accept a rate and then get shirty when they hear what the agent’s cut is, slagging the agents off to their customers.
Contractors will tell you that they have come across ‘good’ IT agents in the past. However, if pushed, them most of them would say that the ‘good’ agents account for less than 10% of the agent population. That’s their agency assessment.
IT Contractors’ Views
Many IT contractors say that the industry would be better off without agents.
They say that it is only restrictive Government legislation and clients who seem to prefer to pay through the nose that keeps agencies in business. It stops far more contractors going direct.
In the USA, for example, where there is less restrictive legislation, and different attitudes to taking IT contractors direct, around half of contractors contract directly to clients.
However, contractors and agents are tied together by an umbilical chord.
IT Contract Rates
If there were no agencies would rates be higher or lower?
The presumption is that they would be higher because the contractor would also be getting the agency’s cut as well.
However, this is unlikely to be true.
IT Contractors, in general, are not very good salesmen, and not as good as IT agencies at negotiating.
In the USA, for instance, where half the contractors go direct, permanent employee wages are a lot higher than here. However, the difference between a permie and an IT contractor, in terms of income, is not nearly as much as here.
Also, in any place where I have worked where I’ve seen contractors go direct, and there is an agency fee to be split between the contractor and the IT client, I have usually found that the client gets the major portion of the ‘agency fee’. The contractor gets only a small mark up on the other contractors.
On average I would say that the client takes two-thirds of the missing ‘agency fee’ and the contractor takes about a third.
Agencies Good for IT Contractors
IT Agencies, as salesmen, have been responsible for the historic large premium paid to IT contractors compared to permanent employees.
Although they helped drive the market down to levels that companies would pay during the downturn, they are now helping to push those rates higher again.
One suspects that agencies have actually been good for IT contractors. They are a major factor in the higher fees that contractors get in this country in relation to permies.
However, agents, as slick salesmen, and contractors, who are techies, are unlikely ever to get on.
Our recruitment agency assessment is that they and IT contractors are in the same boat together, though. And until some new business model comes along, they will sink or swim together.
See, also, Agency Types – There are Three Kinds
For an assessment of offshore umbrella companies see Offshore Umbrella Companies