Reply to: Agency Margins v Your fees

My last 2 contracts were :-

1 : Agency were paid 11%. This was set by the client as it was a big company.

2 : The other took 10%.

I asked the agencies and they told me without any problems.

But some agencies don't like this question at all! In fact, asking at the wrong time like before being put forward for interview may cost you the job!

For a permie job, I was told by a company that the agency got paid 10% of the employees salary each month for one year. Paid for by the company of course.

Here we go again

The Employment Agency Code of practice binds the agency to disclose their margin. All my contract since 2003 have the percentage fee written into the contract. The end client will normally stipulate the rate to the contractor and the margin will be charged on top. This way the client knows what quality he or she is getting.

With major projects, the agency is paid a large lump sum up front and your money comes out of this. Otherwise the client will pay the agency within fourteen days.

Re: Pointless

Actually the Client see themselves buying a service, the choice of agent is irrelevant just as the choice of shop would be irrelevant if you were buying goods if the shop provided a better service you may be willing to pay a premium or shop their more frequently. However if the shop takes excessive margin and therefore forces their suppliers to cut their prices to allow them to make their margin then its everyones problem. Agents should differentiate themselves like shops, provide better service, choice and prices.

The minute the agent says 'the client won't pay any more' or the client says 'I'm paying a premium' then the margin is an issue.

Devils advocate - Agents are like shops, there are hundreds in the high street, why should we shop with or supply yours ? More importantly why should we be forced to continue to supply at the same price and conditions year on year when the agent supplies no further service?

I'd like to see transparency on rates and the ability to limit margins in the contract. Don't say it can't be done - I can prove it is being done on far lower margins than available in IT.

Pointless

Because the client pays the margin, the onus is on them to be strict about what they are paying out.

The client sees the agency as providing a service so if contractor X was being paid £40 with the agency taking a further £5 and the client asked "what is your margin?" the agency would be entitled to ask the client "what is the margin on YOUR goods?" He would equally be entitled to respond "The charge to you of me supplying contractor X is £45. Why are you interested in the proportion contractor X gets from that? Are you happy to pay £45 and if not let's negotiate but please don't tell me what to pay my suppliers".

The reality is that the clients see the contractor world differently from contractors. Clients see themselves buying a service from an agency - contractors see themselves as being paid by the agency.

Re: .

Obviously it depends on circumstances but once I know the contract is in the bag I ask the agent for an email confirming that they will not be on a margin of more than 20% ( a figure deemed reasonable even by agents ). With decent agents they have done this without too much prompting. If you later find out they are on excessive margins that email could be handy but its mainly a peace of mind thing for me. I agree with some the more agent slanted posts above that its generally the client who is being took to the cleaners when there is an excessive margin. Once you have built up a relationship with the client manager it is usually pretty easy to find out from them what they are being billed. I have had a few excessive ( rip off ) margins and in a couple of cases the agents wouldnt even budge for renewals, they were desperate for the cash and not thinking about future business, in one case they even backdated some of the margin to me to keep things sweet for future work. The main thing that is crazy all round is the cloak and dagger nature of a lot of the dealings and even with good agents they are reluctant to put the figures in writing. The new regs that came out should of made it mandatory to put margins in contracts and it would of been easier all round and only really effect the dodgy agents. My thoughts on the issue for what its worth !!!!!!!!!

.

Im not getting passionate about it at all actually, I suppose it can across that way without the right number of smilies. Id like to point out however that you have not addressed any of the points I made again.


You said :
"There is a common myth.

That myth goes something like this:-

Contractor on £30.
Agent on £20.
Client billed £50.

Contractor believes the £20 is "out of his pocket" and laughably believes he would have got all £50 had he gone direct."

I said :
"When I went direct with this client they let me know the amount the agency charged for me in the past, and were happy to pay the same direct to me since they had budgeted for this amount."



You said :
"had the contractor had the gumption to work out how to pick up a phone and cold call hundreds of clients to get just one interested, as agencies do"

I said :
"When Ive gone direct it certainly didn't take hundreds of phone calls. I know a reasonable number of potential clients using the technology I am proficient with, and it usually takes a couple of emails to the right people"



I said :
"As a contractor im certainly not impressed by agencies, and neither are any of my clients with whom Ive discussed agencies with. "

You said :
nothing.



You said :
"Try not to make it sound hard?

You have clearly not done any recruitment.
Shame you feel so qualified to comment on it with such passion and so little knowledge but that is your choice."


To this I shall say :

Yes I have recruited staff. It wasn't hard. I am merely commenting based on my own experiences.


As for this passion you read into my emails, allow me to quote you further :
"had the contractor had the gumption"
"an esteemed contractor who posted here worrying about the "financial loss" he suffered"
"Some if you guys have absolutely no idea"
"Best of luck either way because chances are that your competitor will be smarter that that"

Ooooo!! get you!

NoveltySlippers

Try not to make it sound hard?

You have clearly not done any recruitment.
Shame you feel so qualified to comment on it with such passion and so little knowledge but that is your choice.

You also obviously can't do straight sums and comparisons if you truly believe you can recruit using the DIY approach for less than £5k. Again this comes from lack of experience. I don't blame you as most don't actually appreciate the figures involved but as I said I'm surprised at such passion on a subject you clearly have no grasp of.

Such is life.:\

Cojak

Cojak,

Your attitude may not reflect the majority around here but at least it is sensible and you sleep well .

Re: .

Sod 'being competitive' - in my experience it means that the agency is after a bigger margin - particularly if they haven't dropped you the first time you mentioned your rate.

I do have a rate range, but I don't tell the agency that. I decide on the rate depending on the length of contract; whether they want to use my courseware if it's a training role; if it's a managerial role or an analyst's role etc.

I quote £xxx per day or £xx per hour, again depending on above.

And it's non-negotiable. If they don't like it they can get someone else - but they never do...

My rates are not exhorbitant and they get good value for their money.

This attitude has prevented me from feeling bitter and twisted about a job.

PS - I'm not interested in the agency margin, only *my* margin.

.

I said if I were hiring for MY OWN company id do it myself, and I would. Id ignore option 1, but either option 2 or 3 would be preferable to spending an additional 5k+ and dealing with an unnecessary middleman with the misinformation and mistakes that brings. If I were hiring for a company in which I worked however, I would probably use an agency, since its not my money and would save me an afternoons sifting. I notice that once again you exaggerate the problems... there are unlikely to be hundreds of cvs to sift manually after id binned the irrelevant ones with a keyword search, and advertising would not have to cost anyway near 'thousands of pounds'. My personal belief is that the only reason you guys get any business at all is because it often isn't the recruiters money, so to have an easy life the recruiter just gets an agency to do it. Don't be under any illusion that you are adding any value to this process.. and stop trying to make it sound hard!

Re: .

"If I were hiring for my own company Id do it myself. "

I don't blame you for not realising that the DIY approach will cost you much more than using an agency would because in that respect you are with 99.99% of all clients.

Just a quick question - whilst you are spending weeks of effort sifting through hundreds of CV's and thousands of pounds advertising for new employees or contractors, exactly who is doing the actual work you should have been doing during that period?

Just a thought to mull over

My guess is that you will either:-

1)be working 70 hours a week just to ensure your work gets done as well as the CV parsing and interviewing thus disturbing your home life for no reasonable gain
OR
2)the work will be "fitted in as and when you can do it" thus risking your timescales
OR
3)the interviewing and CV parsing will be put on hold thus lengthening the recruitment process and risking losing the one or two good CV's you already have in your possession but languishing somewhere down in a 4 inch pile of paper.

You can choose either of those 3 but I don't envy you.
Best of luck either way because chances are that your competitor will be smarter that that.

.

Interesting points as always oaksoft, its always nice to hear the point of view from the other side of the fence. But the reality you describe is certainly not one im familar with. I have contracted both via agencies and direct with clients. When Ive gone direct it certainly didn't take hundreds of phone calls. I know a reasonable number of potential clients using the technology I am proficient with, and it usually takes a couple of emails to the right people (and by this I mean avoiding HR, who are a waste of space). I have also contracted direct with a client who I was once working with via an agency. When I went direct with this client they let me know the amount the agency charged for me in the past, and were happy to pay the same direct to me since they had budgeted for this amount. In this instance I was paid more promptly and regularly and WITH NO MISTAKES! directly by the client than I was when I used an agency. If an agency is as hard and risky to run as you make out then why would you do it. I think you are exaggerating the problems a little! As a contractor im certainly not impressed by agencies, and neither are any of my clients with whom Ive discussed agencies with. If I were hiring for my own company Id do it myself.

Re: payment

Good point, and actually Oaksoft, every contract I have ever had was paid at the month, while the timesheet I filled in every week was sent to the client on 30 days.

So its more like two weeks you're waiting for.

You've definitely picked up the wiley wordy ways of the rec. con.

Good on yeh, scum.

payment

I had an agency once who paid 45 days (plus a bit of chasing). They told me the client paid 90 days but eventually I found out that the client paid 30 days! Not much cashflow problem there for the agency.

Re: I did

"An agency will be paying out around £1600 per week to a contractor with a client who might take 3-6 months to pay up"

Stop trying to make it so melodramatic!!!

THe majority of clients work on 30 days.