Reply to: What Is A Normal Agency "Cut"?

[DirtyDog]

Not really. What you fail to mention is that clientco have more than one agent pushing people, so agent that brings the more cost-effective cheap candidate will get the sale, hence the commission.

I'm glad I don't need to deal with clients and agencies who operate on this model. I have a few trusted agents that I deal with, and the clients that I work with want quality rather than cheapness.

Maybe you should reskill into a market where you don't get constantly shafted?

[DirtyDog]

Thank you all for the interesting replies and debate The 21% agency cut does seem high from what you are saying- I'm not complaining, but was looking to find out if thie was high, low or average.

Bear in mind that for some roles, the percentage taken may be higher than "normal". This is fairly typic for lower paying roles, since the fixed cost element of the agency business remains the same regardless of the rate being agreed with the contractor / client.

I've just started this 6 month contract (on what's likely to be a 2 year project), so I'll certainly look at renegociating at the end of the initial 6 month period.

When I do this, would an increase in rate from me come out of the agent's margin? Or, do you think the agency would try and push it on to the client, telling them that I'm looking for a rate increase.

Where do you think the agent is going to try to push the cost - either they have to cut their margin or they need to increase their revenue. You should explain that you are expecting them to cut the margin rather than for the client to be footing the bill.

I'm keen not to seem like a money grabber in the eyes of the client, now my feet are under the desk... But still, I've got bills to pay, and the 21% the agency are getting at the moment seems like a cheakily good deal for them, especailly given the contract length!

Your ability to pay the bills bears no relevance to the rate that the client pays the agency - if you are running a business where things are that tight then you either need to reduce your costs or increase your income. Rather than agreeing one price and then renegotiating, you'd be better off getting a higher rate from the start.

So, who is likely to pay in this case?

Depending on your negotiating skills, the client, you or the agency. Probably in that order.

[Techforcer]

Thank you all for the interesting replies and debate The 21% agency cut does seem high from what you are saying- I'm not complaining, but was looking to find out if thie was high, low or average.

I've just started this 6 month contract (on what's likely to be a 2 year project), so I'll certainly look at renegociating at the end of the initial 6 month period.

When I do this, would an increase in rate from me come out of the agent's margin? Or, do you think the agency would try and push it on to the client, telling them that I'm looking for a rate increase.

I'm keen not to seem like a money grabber in the eyes of the client, now my feet are under the desk... But still, I've got bills to pay, and the 21% the agency are getting at the moment seems like a cheakily good deal for them, especailly given the contract length!

So, who is likely to pay in this case?

[kal]

Not really. What you fail to mention is that clientco have more than one agent pushing people, so agent that brings the more cost-effective cheap candidate will get the sale, hence the commission.

I honestly don't care about this silly 'offense' that those on this forum with vested interests in the recruitment agency 'industry' have with the frank truths I share.

You really have an inflated sense of who you are, 'share the frank truths'? purleese... you are naive as best, an idiot probably, so end-eth my wasting time on your banal posts...

[masonryan]

Bearing in mind the agents get a percentage cut this would be a pretty stupid thing to do for the agent and pretty stupid for a client to agree to get cheaper people in when they are looking for a specialist.

Not really. What you fail to mention is that clientco have more than one agent pushing people, so agent that brings the more cost-effective cheap candidate will get the sale, hence the commission.

I honestly don't care about this silly 'offense' that those on this forum with vested interests in the recruitment agency 'industry' have with the frank truths I share.

[northernladuk]

Agencies are all too happy to facilitate the client co to get people cheaper than before, heck even cheaper than their bare minimum rate they told the agency last week.

Bearing in mind the agents get a percentage cut this would be a pretty stupid thing to do for the agent and pretty stupid for a client to agree to get cheaper people in when they are looking for a specialist.

[masonryan]

Bollocks. It's just a little harder, that's all, with less money in the system and a huge number of redundant ex-permies who think they know how to be a contractor. The market works as it's always done.

And on that subject, given the over-supply of candidates, "market rate" is what the client is prepared to pay, not what the supplier deems to be the value of his services

Agencies are all too happy to facilitate the client co to get people cheaper than before, heck even cheaper than their bare minimum rate they told the agency last week.

[malvolio]

clientcos are using agencies to do their dirty work for them of finding cheap people without publicising how poor they intend to pay them. In the past, perhaps agencies helped them to get the right people. It was a different market back then.

Bollocks. It's just a little harder, that's all, with less money in the system and a huge number of redundant ex-permies who think they know how to be a contractor. The market works as it's always done.

And on that subject, given the over-supply of candidates, "market rate" is what the client is prepared to pay, not what the supplier deems to be the value of his services

[masonryan]

Come on, masonryan, you can try harder.
Surely you can contort the above the make out it's recruiters fault, instead of clientcos cutting overheads to the bare bones.

clientcos are using agencies to do their dirty work for them of finding cheap people without publicising how poor they intend to pay them. In the past, perhaps agencies helped them to get the right people. It was a different market back then.

[quackhandle]

I agree with Andy Hallett, a good agent is a broker, I've worked for brokers in the City and done properly the work is very similar.

We're not just arguing over semantics here, the word "agent" sets expectations that are false.

An agent in law and in English is someone who acts on your behalf, I am not an agent, I act on my behalf and that of my firm, as a director that is my legal obligation, if I was a wage slave then my employment contract would say much the same thing.

If I were an "agent" I'd have some formal obligation to act in the best interests of someone else, which begs the question of who ?

That doesn't mean I have to screw people over, in the long term that is counterproductive, but given the broken market with its false expectations, not as counterproductive as we'd like.

Margins are now usually too low to give the service that clients want, but too high for the service they often get.

This is because the word "client" is also misleading.

The project manager wants good people that he can afford. Most are smart enough to know that one person who can do it properly is worth two that aren't good and if that means spending 1.5 X on one guy rather than 2X on 2 then that is a good deal.

However purchasing and HR just see the margin, they are vaguely aware that some contractors or permies are better than others but how many HR people do you think know the differences between Oracle and Microsoft SQL ?

If HR/Purchasing get the margin cut by X, they can bask in the love of their bosses for making a saving and since bodies still come in, that seems wise, but isn't.

Not just HR people, "but it's just a database isn't it? Surely you can tell why it's not working?"

qh

[Dominic Connor]

I agree with Andy Hallett, a good agent is a broker, I've worked for brokers in the City and done properly the work is very similar.

We're not just arguing over semantics here, the word "agent" sets expectations that are false.

An agent in law and in English is someone who acts on your behalf, I am not an agent, I act on my behalf and that of my firm, as a director that is my legal obligation, if I was a wage slave then my employment contract would say much the same thing.

If I were an "agent" I'd have some formal obligation to act in the best interests of someone else, which begs the question of who ?

That doesn't mean I have to screw people over, in the long term that is counterproductive, but given the broken market with its false expectations, not as counterproductive as we'd like.

Margins are now usually too low to give the service that clients want, but too high for the service they often get.

This is because the word "client" is also misleading.

The project manager wants good people that he can afford. Most are smart enough to know that one person who can do it properly is worth two that aren't good and if that means spending 1.5 X on one guy rather than 2X on 2 then that is a good deal.

However purchasing and HR just see the margin, they are vaguely aware that some contractors or permies are better than others but how many HR people do you think know the differences between Oracle and Microsoft SQL ?

If HR/Purchasing get the margin cut by X, they can bask in the love of their bosses for making a saving and since bodies still come in, that seems wise, but isn't.

[evilagent]

It seems that removing middle-men, and/or being transparent on charges is the way forward in so many areas of business nowadays. The exception I can think of are recruitment agents who pretend they're YOUR agent when really they put themselves and end client first, they get really angry when you start asking what their cut is & have you noticed they always try and push your rates down whilst claiming they are trying to get you the most possible as they get more commission that way?

Seems anyone can set themselves up as an agent nowadays and must enjoy the fact they don't need to be transparent on anything as they casually stab you in the back whilst pretending to work for you.

True enough, anyone can become a recruiter.
I have stated elsewhere that the industry currently prefers sales ability over industry knowledge.

If you remove the middleman, that's a perfectly valid approach.
But don't fool yourself you're going to get a higher rate. The clientco will simply say that now that they have removed the middleman, they pocket the "commission".
You still get the "day rate".
The only benficiary is the clientco.

Considering contractors are also stop-gap middlemen, of a sort, the clientco could take the leap and just take on permies and save even more.
I am sure you are aware of the phenomenon of Fixed Term Contracts, where contractors are paid a pro-rata'ed salary, but without the benefits of employment. (nor pensions, sick pay, etc)

[evilagent]

A lot of people are working contracts in the first place because they're facilitating sending things offshore. Daily rates might be nice for now but there might be unemployment for a long time once the work has sailed away.

Come on, masonryan, you can try harder.
Surely you can contort the above the make out it's recruiters fault, instead of clientcos cutting overheads to the bare bones.

[masonryan]

Whilst we all debate a few percentage points here and there the MSP's and end clients are depressing the overall rates and sending loads of work offshore.

A lot of people are working contracts in the first place because they're facilitating sending things offshore. Daily rates might be nice for now but there might be unemployment for a long time once the work has sailed away.

[Andy Hallett]

Never ceases to amaze me how short-sighted some contractors and indeed agencies can be. Whilst we all debate a few percentage points here and there the MSP's and end clients are depressing the overall rates and sending loads of work offshore.

It is the equivalent of two bald men squabbling over a comb.

FWIW, on contract roles I have never seen our role as an agent, more a broker.

*puffs out chest, awaits incoming*