Agencies - the future?

[Wanderer]

I do. It's in the 10's of thousands. In the Business Unit I'm in there's around 3k suppliers on the system, most are inactive and procurement go through periodic culls to remove them.

They prefer a smaller number of large suppliers who they can have "leverage" over. In the global IT organisation they reduced the supplier base to 4 main companies ( IBM, Accenture, Wipro, Infosys)

For the UK contractors there is a limited number of agents on the PSL. Practically everyone goes through one of them. Again it's because of ease of manageability

Yep, I've seen clients in a similar situation. They have a huge number of suppliers but they prefer agencies and maintain a small list of preferred suppliers that they work with.

I guess that another reason is that they get a standard terms of business with their contractors too and they don't get stung with intellectual property rights not being handed over when work is done and such like.

[SussexSeagull]

My current contract is a slight variation on the norm where I invoice direct to the client and the agent does the same for their cut (the recruitment part was bog standard).

I agree with most of the above, I can't see the current status quo changing much for the foreseeable future unless a piece of legislation comes out of leftfield that changes the landscape.

[tomtomagain]

Agency Myth #1. Do you have any idea how many companies your client deals with?

I do. It's in the 10's of thousands. In the Business Unit I'm in there's around 3k suppliers on the system, most are inactive and procurement go through periodic culls to remove them.

They prefer a smaller number of large suppliers who they can have "leverage" over. In the global IT organisation they reduced the supplier base to 4 main companies ( IBM, Accenture, Wipro, Infosys)

For the UK contractors there is a limited number of agents on the PSL. Practically everyone goes through one of them. Again it's because of ease of manageability.

But they won't. Why would they? And, just to be pedantic, HMRC can't introduce anything; that's what Parliament is for.

I agree they wont. My point is that the current client-->agent-->supplier will remain place because it is currently in the interest of the client-co's and they are the ones paying. The only way for the model to change is if something effects the ClientCo's directly ... which I believe is highly unlikely.

[malvolio]

...
The client wants to deal with a limited number of companies, one agency rather than potentially several hundred personal service companies.

Agency Myth #1. Do you have any idea how many companies your client deals with?

Also the client likes the agent to be the man in the middle. It shields them from directly engaging the contractor and so lessons the chance that they would ever be accused of having "disguised employees" and trying to avoid employers national insurance and employee rights.

Partially true. Any Human Remains drone that understands the relevant legislation will also understand this is simply not the case.

Any change in legislation that only effects the PSC wont change the current model because it does not effect the people paying.

If HMRC introduced something that impacted on the client-co's then the whole model would change quickly.

But they won't. Why would they? And, just to be pedantic, HMRC can't introduce anything; that's what Parliament is for.

[tomtomagain]

The agent wants to "own" the relationship with the end client. The agent wants ongoing monthly revenue for the duration of the placement and not just for an initial finders fee.

The client wants to deal with a limited number of companies, one agency rather than potentially several hundred personal service companies.

Also the client likes the agent to be the man in the middle. It shields them from directly engaging the contractor and so lessons the chance that they would ever be accused of having "disguised employees" and trying to avoid employers national insurance and employee rights.

Any change in legislation that only effects the PSC wont change the current model because it does not effect the people paying.

If HMRC introduced something that impacted on the client-co's then the whole model would change quickly.

[CoolCat]

I get lots of calls from Bob agents these days. Either ringing from India, or clearly recently arrived and on uncapped ICT work visas like the floods in the rest of IT. Personally I can see no reason why the recruitment business will not be decimated the same as the rest of the IT biz by this influx.

[Boo]

Another thread made me think of this again.

With constant proposals coming from HM Gov to change the way agencies engage individuals/companies - how about this (this is something I mooted a while ago)

1. Client says to agency - I need someone for a six month contract - Project to do XYZ - prepared to pay 60k
2. Agency advertises role
3. Jubber Ltd contacts agency - finders contract signed with agency - if we get work - you get paid
4. Jubber Ltd meets with client - all goes well
5. Jubber Ltd raises contract directly with client
6. Jubber Ltd pays Agency 10% finders fee in full up front (real business risk for Jubber Ltd)
7. Jubber Ltd provides service to client and invoices as agreed in contract

I'd do it - and negates any risk for PAYE/NIC with agency.
Plus client and Jubber Ltd would have water tight ROS/MOO/D&C in contract

Am I missing something?

Yes, you are missing that famous old radio station : WII FM

"What's in it for me ?" Spoken in a whining voice by a person in HR / Executive management who does nothing useful for a living.

If your answer is "nothing, except the satisfaction of doing your job to the best of your ability in seeing the best contractor recruited to the team" then that particular radio is likely to go "click" and comms be lost...

Boo

[malvolio]

Doesn't item 6 cover this?

No, the worker can't pay for work finding services

Really? Even business to business? Didn't know that.

Same rule as above. The business is classed as a worker in this context.


However, my argument is that those rules are encapsulated in the Agency Regs. If you opt out of them you opt out of all their provisions. Therefore the restriction on charging for finding work should go away. But it's the commercials that will kill the idea: from the agency's viewpoint it simply doesn't work unless you are a serious specialist that can be actively marketed and will command a premium.

[Wanderer]

Jubber Ltd pays Agency 10% finders fee in full up front (real business risk for Jubber Ltd)

Am I missing something?

Yes, agencies aren't allowed to charge work seekers a fee except in a very limited number of professions (show business, modelling etc) BUT there is nothing to stop the client paying a fixed fee to the agency (as they do when recruiting permies) and that's the business model sorted.

I like your business model, there are a few problems though:

1. Agencies like their ongoing fee (money for old rope) business model rather than a fixed introduction fee
2. Clients don't like to engage workers directly for fear of workers demanding expensive employment rights in the future
3. Clients prefer to deal with a smaller number of "suppliers" and having their contractors working through an agency helps simplify billing
4. Clients like having hard nosed agencies doing their dirty work for them so they can cut contractor's pay rates or dump contractors without being (directly) threatened with legal action

[Jubber]

I've spoken to agency ownrers before about this approach. Two obvious things get int he way - risk aversion and credit rating. Agencies are a £27bn a year business, they want their money up front and will not extend virtual credit to a £100k a year company.

Doesn't item 6 cover this?

Also the agency model you propose doesn't add any value to the client or the agency,

True

and under current legislation you can't pay the agency anyway.

Really? Even business to business? Didn't know that.

[malvolio]

Another thread made me think of this again.

With constant proposals coming from HM Gov to change the way agencies engage individuals/companies - how about this (this is something I mooted a while ago)

1. Client says to agency - I need someone for a six month contract - Project to do XYZ - prepared to pay 60k
2. Agency advertises role
3. Jubber Ltd contacts agency - finders contract signed with agency - if we get work - you get paid
4. Jubber Ltd meets with client - all goes well
5. Jubber Ltd raises contract directly with client
6. Jubber Ltd pays Agency 10% finders fee in full up front (real business risk for Jubber Ltd)
7. Jubber Ltd provides service to client and invoices as agreed in contract

I'd do it - and negates any risk for PAYE/NIC with agency.
Plus client and Jubber Ltd would have water tight ROS/MOO/D&C in contract

Am I missing something?

I've spoken to agency ownrers before about this approach. Two obvious things get int he way - risk aversion and credit rating. Agencies are a £27bn a year business, they want their money up front and will not extend virtual credit to a £100k a year company.


Also the agency model you propose doesn't add any value to the client or the agency, and under current legislation you can't pay the agency anyway.


But otherwise...

[Jubber]

Another thread made me think of this again.

With constant proposals coming from HM Gov to change the way agencies engage individuals/companies - how about this (this is something I mooted a while ago)

1. Client says to agency - I need someone for a six month contract - Project to do XYZ - prepared to pay 60k
2. Agency advertises role
3. Jubber Ltd contacts agency - finders contract signed with agency - if we get work - you get paid
4. Jubber Ltd meets with client - all goes well
5. Jubber Ltd raises contract directly with client
6. Jubber Ltd pays Agency 10% finders fee in full up front (real business risk for Jubber Ltd)
7. Jubber Ltd provides service to client and invoices as agreed in contract

I'd do it - and negates any risk for PAYE/NIC with agency.
Plus client and Jubber Ltd would have water tight ROS/MOO/D&C in contract

Am I missing something?