Agency Margins Rising while IT Contractor rates steady – I Know Why

Agency Margins Rising
Agency Margins Rising

Agency Margins Rising

This article, about agency margins rising when the rates of IT Contractors are falling, was posted as comments after one of our articles. See what you think.

Smart Thinking

I know exactly how this is happening and if you‘re smart enough you may have guessed as well before you even read below this point!

1: Obviously any rise is NOT being passed onto the contractor.

2: More and more agencies do not want contractors with experience as that is far too expensive.

It’s better to tell little white lies to the end client and blag whether or not they notice these 25 year olds with minimal experience cannot be the ONLY staff on the market right now!

Does the end client even care that a lot of contracts are to maintain headcount? They have nothing to do with an actual demand for a role to be performed in my experience.

3: Agents are squeezing rates as well before any interviews. They are downsizing the offer to suit or telling that old favourite that someone else will do the same role for 10-15% less than you but the client would rather have you!

4: If the agency has a business relationship with the end client they can put literally anyone in the role to suit their margin aspirations so naturally the rate offered will be low.

IT Contractor Comment

There is the constant struggle over rates between agencis and contractors.

Each wants to keep as much of the pie as he, or she, possibly can.

Agencies have the advantage here as they take part in these negotiations on a daily basis.

Practice makes perfect, they always say, and agencies practice this a lot.

Negotiation Techniques

They also know the techniques to use to force the hand of the contractors.

“The client needs to know by the end of the day” they tell contractrs when it is really the agency that want to close the deal.

We have a situation now with agency margins rising and with contractors rates rising much more slowly than those.

Contractors need to be more wily. We have a bank of advice articles on agencies that IT Contractors might find useful.

To be forewarned is to be forearmed.