Agency Percentage. Does it matter or not?

[The Agents View]

Other agencies on-site do this for 4%. It's "tick over" business. Yes you've earned a year's commission, maybe 2 years... but how much more? When you place a permie, you get a commission of ~25% of that person's starting salary - you don't continue to get that every year do you.

Firstly, those agents are generally the big boys, about whom you mainly all complain. The reason they don't have people of the calibre you want, is because they don't charge the margin and therefore cannot attract the genuinely quality orientated consultants - it's a viscious circle.

Secondly, to be operating at 4%, you need to have at least 100 people on site to even be able to get close in terms of economies of scale. This is NOT tickover business, it's TURNOVER business (it's there to make the business look good to the city).

We're not talking about Permanent business (which makes up a very small part of an agencies operation generally) we're talking about contracts. Contracts continue to have cost associated with them, for as long as they're running. Do you think these expensive back office systems etc magic themselves out of thin air?!?!

[monobrow]

I'd love to bite on this - but your lack of knowledge, and understanding of the ways of the world doesn't even dignify a real response. If you speak to your IT suppliers like that, you'll no doubt be the next stalker candidate that I speak to......and fyi, fiddling with a few computers vs. understanding the psychology of the human mind, and trying to sell the only product in the world which CHANGES its mind - is no contest really. IT manager my 4rse

Hey TAV, long time no speak. check out my new sig!

xx

[Wanderer]

My client is trying to get the agency to sign a contract in which they have a graduated decrease in margin over the next 18 months, from current % down to 0.

After this the contractor no longer uses this agency.

Considering that I've been at this client for several years through the same agency, and that this agency has done absolutely nothing to secure my constant renewals, I personally see no reason why they should continue to charge the client 20%+ for providing no further added value to this deal. The new client/agency contract thus appears a fair compromise.

That sounds fair to me. An agent recruits someone to a contract job and they take their commission for that over the course of (say) 6 months. After that they've been paid for recruiting the worker and they switch to a small fee to cover the factoring and admin costs which are minimal... And don't go giving me this tulip about it costing sooo much to do the admin - look at these umbrella companies who do a whole lot more work for a hundred quid a month. Yeah, there is the factoring of the invoices but that's not going to cost anything if the agency sorts out it's relationship with the client properly.

I don't grudge the agent their commission for placing me in a contract but if I stay there for a year or more then where does their commission stop? It should be capped, in my opinion rather than the parasitic agency feeding off the contractor, potentially for years.

[d000hg]

I have responded to that "argument". It can also be argued that the agent does'nt do any work once the contractor is placed, so why 6 months has any bearing on how long an agent should be paid for is beyond me. It is a bit like the speed limit. Why is it set at 30? why not 29? why not 31 mph. There is no right or wrong here it is a matter of what can be negotiated -that is business.

My point is that agents do not receive payment for 90% of the work that they do. Contractors pay nothing for agency services, and clients pay nothing to agents unless the bum is on the seat. So whilst it may be galling that the agent is still earning a margin after 6 months, it is how the whole agency/contractor model evens itself up and create the highly efficient system that exists.

Fair point, but contract extension is a logical point to draw a line just like you argue speed limits are a bit arbitrary. Whether the initial contract is 3/6/12 months, once you get to extending what does the agent DO? Of course you're still factoring payments but I think there's a decent argument to be made for switching from a high "placement" margin to a lower "management" margin at that point.

FACT – There is no way in hell you could do my job today. Manage 100+ people, understand the technology I have to, know all the processes, the industry, network of contacts.

Really, you're just putting us all in a bad light with your arrogant attitude. If you can cut out agents, good for you. Everyone else needs them, therefore they do a role the contractors can't, or are not willing, to do.
You're borderline trolling.

[Ignis Fatuus]

We all fit in way above you in the pecking order

The awful thing is that you're right.

[meridian]

You still want paying?

Yes. The client does this. There are rare occasions when the client goes bust, but there are also rare occasions when the agency goes bust as well.

You still want everything administered for you?

Nope. I have an accountant that takes care of the accounts, a solicitor that looks over the contract. Apart from payroll runs, what exactly do you "administer" during the length of the contract?

You still want us to factor payments so you don't go without money for 3 months?

Nope, the warchest should carry me through, like any business.

You still want contracts raised?

I've been direct and it's a piece of p155 - get template off PCG, use template. Never mind that most of your contracts cost us additional time and money anyway in getting them checked over legally.

Oh and I suppose when you want a new role, you want someone to jump through hoops for you, despite the fact that there's about a 20% chance you can be re-placed?

That's what your initial payment for the first 3/6/whatever months of the contract is for.

Stop kidding yourself that we should do it for free

Nobody's suggesting that you do it for free. However, if you advertise and place for a 3 month contract, why should you continue at the same rate for any extensions? If the agency and the contractor are both prepared for the contract to end after 3 months, then unless you do any work to secure the extension why should you continue to receive the increased percentage?

[DodgyAgent]

cost of running a contract

Dont let my esteemed colleague hoodwink you into thinking it costs a lot of money to run a contract. The cost is 1.5% including factoring and assuming you have over 30 contractors out (if less you can do it yourself) that includes the "girlie in accounts".

As far as agency margins are concerned there are no rules moral or otherwise. They are set according to business agreements and can be changed. The only rules that apply are the laws of the land. If contractors have a morality issue with what an agent makes then maybe they should try looking at the morality issues of the companies paying their wages (betfair, The banks, M&S, BP etc)

For contractors to whine about agencies making "too much" then they are clearly not business people. The world is full of "twitchers" who spend their lives worrying about what everyone else is making. The contracting industry has more than its fair share of theses people which is why they have been so comprehensively muscled out by the business focussed Indian software companies.

[lukemg]

Stunningly accurate response DA, wake up people - this is how the world works.

[Dearnla]

I like agents - they get me work. Thanks to them, I have been out of contract for only 2 weeks in 4 1/2 years. They can charge whatever they like if I'm happy with my day rate.

[rd409]

I like agents - they get me work. Thanks to them, I have been out of contract for only 2 weeks in 4 1/2 years. They can charge whatever they like if I'm happy with my day rate.

Could'nt agree more.