Supplying Other Contractors
This question, about supplying other contractors to clients, was sent to us by an IT Contractor.
Dr. McLaughlin, I‘ve been in this contract about three months and when I‘ve heard that vacancies have come up I‘ve told contractors that I have worked with before about the vacancies and then given them the contact details of my agency and each time they got the contract.
Each of them has performed well.
I got an introductory fee of £150 for each one from my agency totalling £450.
Agency’s Big Cut
However, the agency is taking 20% for each of them, which is around £400 a week for each freelancer or £1,200 a week in total.
Over their 6 month contracts that could total £31,200 and then there could be renewals.
My £450 for supplying other contractors to them seems a bit measly beside that – and it was I who found them and supplied them.
Start Supplying Other Contractors Direct
The Client knows that it was I that supplied them because each time I told him that I knew someone who was good for the role beforehand.
Could I start supplying contractors direct and do it through my limited company?
I know loads of other good people and have kept in touch with many of them.
Dr. McLaughlin’s IT Contractor Surgery
What a pile of money you have made for your agency supplying oher contractors to them.
I must say that the agency are real skinflints when it comes to paying for leads that get work.
There‘s another bonus you‘ve given them and that is you‘ve increased their credibility with the client – even though you supplied the people and they had to do nothing except pass this on to the client.
Supplier of IT Contract Staff
The answer is that of course you can supply other contractors to the client through your limited company.
As you are at the client‘s company you would be acting not as a supplier of contract staff like an agency but like a small software house, as presumably, you would be managing, to a certain degree, your workers on site.
The big thing to get past is the Preferred Suppliers List if they have one there.
This is often set up by Personnel or Human Resources and can be quiet strict.
Human Resources are sticklers for proper procedures and may only take on agencies after they see they have a clean financial bill of health.
This is a bit of a nonsense but then most HR departments are a bit of a nonsense.
Ascertain The Situation
The first thing you have to do, as regards supplying other contractors, is to ascertain the situation.
The wrong way to do this is to march into the boss‘s office and ask him or her if you can supply contractors.
They are on their own territory there and you outside yours.
You are in an inferior position.
Take Client Out To Lunch
The way to do it is to ask the client out for lunch where you are paying.
Say you do this for all your clients.
Most clients will accept this freebie.
Agents do it all the time with clients so it must be worthwhile.
As you‘ve seen they don‘t give money away easily.
Potential Future Works
Don‘t tell the client straight away what the main purpose of the free lunch is.
Just say that it is so that you can talk about how things are going and any potential future work.
He or she will think you are talking about future work for yourself (and you can start off with that).
Propsects of Renewal
Use the first part of the lunch, preferably over a nice bottle of wine, to get on with the client and you can ask about your own prospects of renewal.
You are on neutral ground here as a supplier of services to your client and you will have the advantage that you are paying for the meal and the client knows it.
Get the bit about your own possible renewal out of the way first and then late in the main course (don‘t leave it till the dessert as he or she may turn that down saying they have to get back).
Whenever you do it make sure it is before you ask for the bill.
It is human nature not to like turning someone down for something and then watch them pick up the tab for a nice meal that they‘ve just had.
Supplied Three Contractors
Bring the subject up by saying that you supplied the three contractors and asking the client how they have done and if the client is happy with them.
You said they have done well so it should elicit a positive response.
The Client will probably pick up on what you are going to suggest next and it is an easy way of introducing the subject.
Money You Are Paid
I don‘t think there is any harm in letting the client know how much the agency has ‘earned‘ from the three contractors and how much they paid you.
Clients are human like anyone else and anyone can see that this is highly unfair.
Don‘t do this as a bit of a bitch at the agency.
You‘re not using this to put them down and the last thing you want is the client seeing the logical conclusion to what you are saying being that they don‘t take people through this agency again as they‘re charging too much.
After all, you want to get what the agency are now getting in the future.
Supplying Other Contractors to Client
Tell the client that you know lots more good people but that you no longer want to continue supplying other contractors through this agency.
Just ask the client now if he or she would be happy for you to supply all those good people in the future to the client.
You‘ve told the client two things, firstly that the supply of good contractors that he or she has been getting will now dry up and secondly you could open that pipeline again.
Preferred Supplier Lists
Don‘t ask about PSLs.
Let the client bring that up if it is a problem.
If it is problem, you could still live with that.
Ask the client for the contact details of the agencies on the PSL.
You‘ll almost certainly get them as the client will want to keep this source open.
Cut a Deal With Agencies
You can then contact the agencies on the list and basically get them to tender for your services, i.e. you will put your contractor mates through the books of whatever agency gives you the best deal letting them know that you have already place contractors there and know lots more.
You may find that they‘ll split it with you.
If the PSL is not a closed list, but they wouldn‘t take people from a one man band like yourself, ask if you can be allowed to find an agency whom you will put your contractors through.
Better Deal from New Agency
You will get an even better deal here as not only will you be putting contractors through an agency that you find but you will be getting them on the Preferred Suppliers List of a company where they are not on the list.
Agencies are desperate to get on these lists.
You should contact a few agencies and perhaps even negotiate a fee for getting on the PSL there.
After all this could be very lucrative in the future to them.
They would pay a lot of money to get on a PSL.
No Preferred Supplier List
However, even if there is a PSL at the company, it may not apply to contractors – or there may be no PSL.
In that case, you stand a great chance of being allowed to become a supplier of contractors to the company.
Don‘t say anything silly like giving the client a discount.
You don‘t need to.
They want good contractors more than they want a discount and you have already shown that you can supply that.
More Money for IT Contractor
If you are being generous give a bit extra to the contractor rather than the client as a good will gesture.
However, there is no need to do it as all three contractors you put forward were happy enough with the rate they got through the agency.
Now you are in a great position and can start supplying other contractors, indeed, all that they want and you can start turning this into a lucrative business.
Go for it!
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