Working for a consultancy for a client project of theres (and rate shenanigans)

[password]

Hello all,

I don't often post on here, but I thought you guys would give will give some interesting insight into my current issue.

Well, I have been approached by a consultancy to work on a large programme for one of their end clients. It is remote with a small bit of travel.

Initial discussions on rate went ok. I quoted my rate and dropped a little amount to the "agreement" of the inhouse recruiter for consultancy. I interview, things go really well. Then recruiter calls me to ask me about my "expectations" on rate. They then go on to propose that perhaps they pay me a reduced rate for the first 3 months then increase to my quoted rate for the remainder of project.. I politely declined that suggestion citing that my rate was reasonable for an established holder of required skillset.

Is this complete BS? How would you handle? It seems like this recruiter is not that well versed with working with contractors, as that behaviour is something I experienced a lot in my permie days.

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Secondly, I am a bit concerned that this kind of stuff is only the tip of the iceberg as it is a consultancy and I am largely a cost centre that they are making a margin on.

Is working for consultancies a bit crap and would I better off just finding a better client?

I know that typical recruitment agents make money in the same way, but it's a bit different I think. Let's not debate that here.

What you guys reckon?

My gut says no, but curious about your approach, given collective experience.

Thanks folks!

[ladymuck]

Whether to take it does depend on how much you want the gig and what you'll get out of it. For example, I'll drop my rate for an industry I've been trying to get into, or a technology I've not had much experience of, or just for something that's more interesting than the usual dross.

It does sound a bit like some game playing could be going on. If the lower rate isn't too bad, you could agree to the terms but make sure it's written into the contract. e.g. Period 1 December 2019 - 29 February 2020 incl at £x +VAT per day and from 1 March 2020 at £y +VAT per day.

[password]

Whether to take it does depend on how much you want the gig and what you'll get out of it. For example, I'll drop my rate for an industry I've been trying to get into, or a technology I've not had much experience of, or just for something that's more interesting than the usual dross.

It does sound a bit like some game playing could be going on. If the lower rate isn't too bad, you could agree to the terms but make sure it's written into the contract. e.g. Period 1 December 2019 - 29 February 2020 incl at £x +VAT per day and from 1 March 2020 at £y +VAT per day.

I am thinking all of the above.

* It's a remote role, which is the benefit to me
* I won't really accept anything lower as the market is strong for my skills and the industry/tech is nothing spectacular.
* They are game playing alright.. I'm not sure if this should be a red flag, or just consider myself to be the supplier that I am and they are just negotiating as par for the course. The problem for me is that I interview and proceeded with process on the basis of my quoted day rate.

I won't accept a lower day rate and willing to walk if necessary, although i'm confident they are only trying it on and i'll get my rate. I could be very wrong though.

The other reservation I have is that it is predominantly a permie company and they might resent the cost of me and think they can work me to the bone / chain me to desk. I guess if that happens I can just walk too.

[northernladuk]

You've done exactly the right thing. You are worth full rate from day one. Your skills and knowledge won't change in 3 months so why take less. Who says they'll up it anyway? How do you know he's going to suddenly drop and inside determination on you etc.

If you've got the choice and can leave this one then stick to your guns I'd say.

If you've been on the bench a long time, decent client, dry market then you've got a decision to make and it's yours alone. Take it and get the money coming in and chance the rate rise. Even a lower rate at ourn figures is putting you way above the average salary. A few extra months on the bench and your gamble to drop it won't have paid off.

Have to look at your personal situation and the market and decide I am afraid.

[northernladuk]

Just to add. Working with consultancies is different to agencies. Agency routes will just be on what the client wants to pay. Dead money out of a massive pot. With a consultancy they have to make a margin on a fixed price so every 100 they knock off is a 100 quid profit for them.

Different model which is why they are trying harder to shave the rate compared to a client paying market rate without much though for the bottom line.

[GhostofTarbera]

Plus the consultancy is probably charging the end client more than double what they are paying you anyway


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[Petrolhead]

How do you know he's going to suddenly drop an inside determination on you etc.

This is an interesting point that needs more visibility I think.

There’s tons of info and talk on here about how things will work from April, and some seem ok about proceeding with new contracts ‘safe in the knowledge’ that a particular determination has been made.

But.

What if, partway into your new contract the determination is re-evaluated? You started on say 15th April happy to be Outside but unbeknown to you on 1st June the client decides you’re inside? But doesn’t tell you until 16th June...

You’ve just worked 2 weeks inside IR35 and everything has changed.

Hang on you all say - there’s a contract - the client wouldn’t do this to you - they’d tell you in advance - they’re professional! Yeah right.

Seems to me contracting carries a much higher risk now of being screwed by client/agency?

[BlasterBates]

The decision should be based on how difficult the market is. If there are alternative offers then obviously turn the offer down. If you've been on the bench for three months and the market is bleak you take it.

When I've faced a rate cut in the past I did a quick calculation, i.e. I took into account how long would it take me to get an alternative contact, what rate would I likely get, and calculated my likely income if I were to reject it and compare the income from accepting and rejecting.

You should always make your decision based on likely outcomes and choosing the one giving you the best alternative. One month on the bench is a 20% cut in your rate for a 6 month contract, so rejecting a 10% rate cut for an extra month on the bench is a bad decision. The optimal decision is to accept and look for a better paid contract in 6 months time.

[MasterBait]

Consultancy has almost 100% margin on your rate.

I worked at Deloitte, day rate £600, agency put 12% on top of that, Deloitte rate to end client (government ) £1200 per day

I know because I had to write the quote for my own extension to the end client

[simes]

It sounds like game playing, and comments about how much you want the gig etc are spot on.

However, I would counter with some of my own game playing and suggest that if they want to drop the rate for the first three months, that will be fine so long as they up the rate to More than what was previously discussed making sure that by the end of the contract, the pro rata rate for the x month contract leaves you with more in pocket.

And when they stammer, stutter, and fumble about, you say you want it written in the contract for signing by tonight. Or, just leave it as is.

And then hang up.