Question for Pimps: Hiring Costs?

[NotAllThere]

...Hire a freelance HR advisor to find you someone, still cheaper than £10k.

Ah - but where do you get your freelance HR advisor? From an agency of course!

Why do big companies still use agencies? is it not within the realms of possibility to task existing HR bods with the process of advertising roles on jobswerve through to paying invoices each month?

It's called "outsourcing". You may have heard of it.

Given that much of recruitment consultancy is done via phone calls, I wonder how many of the big agencies have offshored that part of their business? Then you'd only need to retain a few suits to meet the clients. And a few wideboys to buy the odd pie and a pint for the contractors.

[d000hg]

Do you mean everything in total? On top of the actual 'salary':

For a contractor you will pay ~10% (maybe 8, maybe 15) forever. Let's say £75/day, about £15k/year based on 200 days.

For a permie I was always told that one month's salary is a good indicator, so about £10k, but you pay this only once, not every year. But then of course you have employer's NI. That's be about £10k/year, wouldn't it?

edit: I don't think the point of this thread is to discuss if agencies are useful. That's a separate discussion.

[northernladuk]

Can't believe we are asking why clients don't do their own hiring. They get in outsourced companies and contractors to do their IT to do away with much of the legwork, they do the same for cleaning and coffee duties. Why not their contractor hiring. Makes sense to me, especially when the agencies spend time finding highly qualified suitable candidates <cough>

They pay more per head but less in back office costs and dealing with the crap that comes with bad contracts.

[SueEllen]

Why do big companies still use agencies? is it not within the realms of possibility to task existing HR bods with the process of advertising roles on jobswerve through to paying invoices each month?

HR people don't tend to be the smartest tools in the box particularly when it comes to technical words and terms.

Having been hired direct before (and helped others out in hiring) it's actually the PMs and technical people in the team who:
1. Write the job advert
2. Do the majority of the CV filtering work.

Hence HR think if they use an agency they are less likely to get a load of CVs without the skills required or people who can't work in a specific location.

Plus it was never the person who recruited me who paid my invoices it went through at least two groups of people including the accounting and finance team.

This level of abstraction is suppose to stop people acting in a fraudulent way in a company. Though of course it doesn't stop the head of finance from being a crook but if they are a chartered and/or certified accountant they will have a lot to lose.

BTW freelance HR advisors aren't cheap.

[GillsMan]

Slightly playing Devil's Advocate here (but only slightly): but could we not argue that it's possible that agencies are keeping rates high for them as well as for us?

If all big companies advertised direct for contractors, might it be the case that they would get exposed to a deluge of CVs/offers, many from people offering to do the gig for significantly less than what we'd like to charge?

With no agencies involved, a Clientco who used to pay £500pd to an agent for his contractor (who might see £425pd of that after the agency's cut) might think that as he's cutting out the agency they'll save money and advertise straight at £425.

Then, you'll have all the Bobs and chancers who'll come in and say, "I can do that for £300pd". "Hmmmm," says ClientCo, "£300pd is still a reasonable whack, so they can't be tulip". And hey presto, the rate is knocked down.

If more agencies went direct, I can see that rates might tumble. After all, the ClientCo is going to look to save money on agency fees as much as we're looking to gain money by not having agencies take a cut, right?

Also, it might be the case that agencies, with one eye on their margins, advise clients that they aren't going to get anyone suitable if they advertise a job with a low daily rate. Without that barrier, clients might advertise at a low rate for all but the most niche jobs with the non unreasonable assumption that someone will be desperate enough to do it at the low rate.

[monobrow]

Why do big companies still use agencies? is it not within the realms of possibility to task existing HR bods with the process of advertising roles on jobswerve through to paying invoices each month?

they don't. at least the smart ones don't. at least not as much as they used to. such a crying shame

[Mephisto]

Why do big companies still use agencies? is it not within the realms of possibility to task existing HR bods with the process of advertising roles on jobswerve through to paying invoices each month?

[The Agents View]

crikey 15%.....he's having a laugh
more like 8% and for a big company with a lot of clout 4%

Any agent worth their salt (And therefore likely to do a good job for you) will charge you 15% for any of that.

Go to your big company, pay 8% (you'll not get 4% unless you have 300+ roles coming out per year) - Don't expect to get the top candidates for 8% though - they go to the people who pay what the job is worth. Pay peanuts, get monkeys.

FYI - I've previously been expected to charge a MINIMUM of 23%. Nowadays I have a bit more control over it, but I wouldn't work on a one off opportunity, for less than 15% - it's not worth my (or the Companies) while.

[Sockpuppet]

How much is it going to cost me to hire a perm developer on (say) a £75 salary?

How much is it going to cost me to hire a contractor on (say) £600 p/d?

About £600 p/d. Plus one off costs for an advert. Why pay for agents, they have access to the same talent pool (i.e. job boards) as you do.

Same with the £75k. Hire a freelance HR advisor to find you someone, still cheaper than £10k.

[Olly]

crikey 15%.....he's having a laugh
more like 8% and for a big company with a lot of clout 4%

[The Agents View]

Just doing a bit of independent research, I need a second opinion on something.

How much is it going to cost me to hire a perm developer on (say) a £75 salary?

How much is it going to cost me to hire a contractor on (say) £600 p/d?

At an industry standard (ish) 15% - you're talking about £11,250 in fee for a 75Ker. You might get lucky and find an agency who will do it for 10% (£7500) - but you might find the quality isn't as good as someone who charges a fair price for a good job.

The cost on top of a contractor at £600 pd is likely to be about £105 - that's based on a 15% margin. If it's a big company, with opportunities elsewhere, you MIGHT be able to get that down.


HTH

[moorfield]

Just doing a bit of independent research, I need a second opinion on something.

How much is it going to cost me to hire a perm developer on (say) a £75 salary?

How much is it going to cost me to hire a contractor on (say) £600 p/d?