Recruitment Agency Benefits
A reader sent us this article, about recruitment agency benefits, after an article of ours.
I’m writing this in response to the appalling article that appeared recently on this site entitled Confessions of an Agent.
It’s appalling both because it confirms the stereotype many hold, and because it’s true that a small minority of agencies operate that way. However, as someone who’s been both an agent and an IT contractor, I can assure you that most don’t.
I have put much thought into why recruitment agents are generally considered in such a poor light by those they represent. The proprietor of this site has kindly allowed me to express some of those views.
Most Agents Well Educated and Honest
The first thing I want to make clear is that most recruitment agents working in the technology sector are nothing like the person who wrote the Confessions article. The majority are well-educated, hard-working, articulate and above-all honest.
Agencies add value to contractors.
So why do so many IT contractors view them as otherwise? I think there are a few reasons.
The first is that the worst IT agents tend to be the most prominent. They’re dishonest because they’re desperate. Because they’re desperate they cold-call more, so contractors hear from them often.
Also, people tend to remember a bad experience more than a good one. Thus the behaviour of the minority taints the honest majority.
Agency Margins are Fair
The second is the margin that IT agents take in return for their services. In most cases, this amount is entirely fair, covering such costs as payroll tax, administration and overheads.
It’s rare to hear a contractor complain, or even ask about the margin until after they start in a job.
There’s an old saying “the perceived price of a service drops sharply once the benefits of that service have been received”. This is especially true in contracting.
Because the agent receives payment for their services in instalments, often as a percentage of a daily contract rate rather than as a lump sum, they effectively gettheir money after the contractor receives th main benefit of that service.
Of course, the IT contractor receives other benefits such as getting their money before the agency has, but they see this as a secondary service. Whether they’d feel that way if they had to wait months for their money is another question!
Because they feel they’ve already received the benefit of a service delivered, they want to wriggle out of paying for it.
The agency continue to add value after contract renewal.
Client Pays Really
But if you dig a bit deeper, you discover that it is not, in fact, the IT contractor who is paying for that service at all. It is the client. It’s a popular, but untrue, myth among contractors that they’d be receiving the agency’s cut if they went direct.
They wouldn’t, plain and simple!
In almost all cases, and particularly in the context of a Preferred Supplier Agreement, the client is well-aware and perfectly willing to pay an additional margin to the agency on top of what they’re paying the contractor.
That’s because the IT agency is providing them a service. They are sourcing talent, dealing with payroll, and taking on the laborious task of sorting through resumes and selecting candidates.
These are roles traditionally done by a company’s Human Resources Department.
Agencies Adding Value
However, more and more companies are choosing to outsource this work to recruitment agencies. They’re choosing to do so because they feel they get better value and service. And, as in all business dealings, they realise they have to pay a fee.
That fee is what a recruitment agency’s margin predominantly consists of. It is not what the contractor would have got otherwise. It is a negotiated fee with the end-client for services provided.
There are lots of recruitment agency benefits.
The truth is that most agents negotiate hard to get good rates for their IT contractors. They know which skills are in demand, and they push for a good return for the contractor. Most contractors would not be earning what they do today if it weren’t for their agent.
So, what do you think readers. Do you see the recruitment agency benefits – or just the costs?