Reply to: Agency Lies

[Taita]

Taita and Boo warming up for handbags.... Two of the least likely contenders I can think of. This is gonna be good.

I think Boo is off Hooing somewhere.

[socialworker]

WES.

And you'd be amazed to know how much they're prepared to spend in order for them to take as little responsibility (over anything) as possible...

That too.

[ITPRO2]

Boo, you are very much entitled to your views.

Clients recruiting directly is probably one of the biggest threats to the recruitment profession. Many large corporates have already set up large sourcing teams and work like internal agencies.

I actually think that the crux of the matter as to why clients use agencies is because it is not a skill that recruiting managers need to learn or devote time to. There is a healthy market out there which regulates both price and quality of service.

Your point about kickbacks is pretty wide of the mark. That said being nice to customers and creating warm relationships (and yes I include lunches and corporate hospitality in that) is Sales 101. Individual contractors don't have the bandwidth either financially or time wise to compete here.

I personally think it comes down to the size of the company and value of the resource.

Large blue chips usually just use agents as the cost to them is insignificant in the big picture sense, irrespective of the contractor rate.

I've seen several small consultancies hire directly, as they're relatively dynamic and can perform this activity at a fraction of the cost of an agent (i.e makes a real difference to their bottom line). This is especially important if they are taking on high value contractors (700-1000/day). If a company was only having bums on seats subbies (<300-400/day), then it prob wouldnt be worth it.

[Taita]

IMO the process is corrupt, nobody is stupid.


So what do you do for a living, Taita ?

Boo2

I usually project manage some excellent people...... and some Oiks... Perhaps, we have met?

[Taita]

Taita and Boo warming up for handbags.... Two of the least likely contenders I can think of. This is gonna be good.

I was going to offer you a ringside seat but I see you are already settled in! Thanks for the laugh.

[cojak]

No its simply a case of spending money to be able to pass on the responsibility game.

WES.

And you'd be amazed to know how much they're prepared to spend in order for them to take as little responsibility (over anything) as possible...

[eek]

To people on here with an entrepreneurial mindset it may be hard to believe, but they would rather throw money at agencies than understand and control the process themselves, and probably believe an agency provides a magic cloak of protection against ...something or other.

No its simply a case of spending money to be able to pass on the responsibility game.

[socialworker]

I'll stick my two pennorth in here. In my area which is health and social care, clients wil only use agencies for bum on seat type roles. Although I have many criticisms of management, brown envelope type corruption is not one of them. I have never heard a sniff of anything like it over the last 30 years.

Obviously then the client does think the agency adds some value, and the client is paying the bill. I think the reasons are as follows:

Public sector managers are terrified of dealing with individuals on a B2B basis and are incredibly risk averse.

HR departments are very shrunken these days and do hardly any of the recruitment process, it is all dumped on hard pressed operational managers.

They would rather allocate a chunk of money to a manager and say recruit your own staff but you must use an agency, even though with five minutes consideration they could understand they would be equally protected using a limited co. contractor with PL insurance etc. and save a lot of money.

Some even use a further layer of expense by using something called Comensura, which as far as I can see charges to check that the agency is doing what the agency has to do by law anyway and which the client could easily check themselves with a half decent procurement process. It's a complete rip off of the taxpayer.

They have no one competent to look at a contractor's contract and approve it or not. They regard all legal paperwork as dangerous and magical; even in commissioning departments there can be no one with a basic knowledge of the law of contract.

To people on here with an entrepreneurial mindset it may be hard to believe, but they would rather throw money at agencies than understand and control the process themselves, and probably believe an agency provides a magic cloak of protection against ...something or other.

[Andy Hallett]

Agency Lies

Boo, you are very much entitled to your views.

Clients recruiting directly is probably one of the biggest threats to the recruitment profession. Many large corporates have already set up large sourcing teams and work like internal agencies.

I actually think that the crux of the matter as to why clients use agencies is because it is not a skill that recruiting managers need to learn or devote time to. There is a healthy market out there which regulates both price and quality of service.

Your point about kickbacks is pretty wide of the mark. That said being nice to customers and creating warm relationships (and yes I include lunches and corporate hospitality in that) is Sales 101. Individual contractors don't have the bandwidth either financially or time wise to compete here.

[northernladuk]

Taita and Boo warming up for handbags.... Two of the least likely contenders I can think of. This is gonna be good.

[Boo]

Why then are the vast majority of permies and contractors engaged through agencies? Have the end users got money to burn and are they stupid?

IMO the process is corrupt, nobody is stupid.

Perhaps I should be a 'rec con'. From what you say it has got to be easier than being an IT'er.:

So what do you do for a living, Taita ?

Boo2

[Taita]

Why do you make that point ? Are you a rec con ?


Agencies charge 30% of the first year's salary for permies and anything from 15-30% or more of a contractor. If you are saying that figure can remotely be justified as "avoiding a little hassle" then you are a rec con and I claim my £5.

Boo

Why then are the vast majority of permies and contractors engaged through agencies? Have the end users got money to burn and are they stupid?

Perhaps I should be a 'rec con'. From what you say it has got to be easier than being an IT'er.:

[Boo]

I think you would find it very difficult to demonstrate that kick backs from agencies are rife in the UK contracting industry

Why do you make that point ? Are you a rec con ?

The truth is that for the average corporate entity it is easier to find and engage contractors through agencies than it is to do it direct and the company is prepared to pay a little more to avoid extra hassle. Furthermore, the middle man provides a buffer against the strictures of employment law allowing greater flexibility of worker deployment.

Agencies charge 30% of the first year's salary for permies and anything from 15-30% or more of a contractor. If you are saying that figure can remotely be justified as "avoiding a little hassle" then you are a rec con and I claim my £5.

Boo

[Taita]

That was not my point. It can be put very simply : the agent provides no value to the client.


A more interesting question is to enquire as to the reasons clients use agencies at all ? The answer is because the agencies provide kickbacks to the HR and other senior managers not otherwise directly involved in the sourcing process. This means, in effect, that the agencies say to the clients "I will give you a proportion of this person's earnings if you allow me to act as an intermediary in the recruitment process. A fundamentally corrupt position, and another reason why it is easy to see that the agency provides no value.


Boo

I think you would find it very difficult to demonstrate that kick backs from agencies are rife in the UK contracting industry but I am sure many of us here would love to see some of your evidence. If you have any credible proof, why not 'out ' the perps and strike a righteous blow for the contracting fraternity?

The truth is that for the average corporate entity it is easier to find and engage contractors through agencies than it is to do it direct and the company is prepared to pay a little more to avoid extra hassle. Furthermore, the middle man provides a buffer against the strictures of employment law allowing greater flexibility of worker deployment.

[ITPRO2]

An agent would say that though, wouldn't they? I don't subscribe to this point of view.

I really can't get my head around it how some people think that the agency can rape the client and contractor alike and that's just the way it is. As boo points out the relationship between the contractor and the client can and does still exist without an agency. The client has a certain pot of money to pay out and as a business man, I'm looking to get as much of that pot as I can.

However, I think that Boo is a bit harsh because agencies do have some value in that they provide a job finding service and payment factoring. However, the bottom line is that they are a middle man and as a business man I'm always trying to cut that middle man out. Sometimes I can't and I have to deal with agencies or consultancies but where I can I will try to go direct to the client. I want to know what their margin is and if it's a big one then I'm going to want a piece of that. It's just good business.

I totally agree with this. However, the agent value is very questionable. I hardly think 10% of my day rate is worth a basic payrole service and the agent "finding" me on linkedin.

Cutting the middleman out is the way to go. Like you said, the client only has a certain size pot. Reducing my overhead by negotiating with the agent, or cutting them out completely, serves to maximise my return. This is good business sense.