Negotiating with contractors – an Agency Spills the Beans

Negotiating WIth Contractors

Negotiating With Contractors

An agents explains how they go about negotiating with contractors.

Hello all.

I‘m new to this website.

I actually am a recruitment consultant. Although I don’t work in IT I deal with these sort of issues daily!

It is true that I will aim for the highest margin. The only reason I would pay someone more than the minimum they give me is if I think they will walk away otherwise.

Now, from the point of view of building a good relationship with candidates you don’t want a tooth and nail fight for every last £1 per hour. So the typical scenario is more like this.

Client Wants a Candidate

The client wants a candidate and is prepared to pay £2400 a week but would like to pay less.

The candidate likes the role and could just about do £1400 but wants more.

The more savvy candidates will say something like “I’ll have to think about it you know. The rate is much lower than I wanted.”

At which point the recruitment consultant will most likely say “I could go back to the client and see if we can get something more out of them.”

I edited out the standard attempt to convince candidate he is pricing himself out of the market.

In reality, with a £1000 margin, he can go have a coffee, phone you back and give you £1600.

Clients Squeeze Agencies

By the same token clients, though usually less prone to last minute jitters due to clearer mandates/budget, do sometimes try and squeeze at the last minute.

Negotiating a big margin in the first instance allows slack for this to happen without breaking the deal.

The same applies if you phone your consultant while working through him and tell him that you’re considering leaving. You say you have the chance of much better money elsewhere.

If I can say with confidence right away that I can increase someone’s rate, then hopefully recoup the loss from the client, it is so much better than phoning around furiously trying to maintain a slim margin.

Many candidates are not at all averse to playing hardball like this. However, if you have to keep phoning up the company and asking for more money then it can jeopordise an otherwise good deal.

Taking a Bigger Margin

Taking a bigger margin also makes it more viable to invest time in the deal. You can spend time finding the right job for the candidate, or the right candidate for a job. High street admin agencies can work on tiny margins. That’s because they get candidates walking in all day looking for jobs and clients phoning up looking for staff.

They can place someone with about 20 minutes of phone calls, and on the basis of nothing but a quick chat, and just possibly a reference. In professional/technical recruitment you often have to get to know your candidates and client. You need spend a considerable amount of time making the right match.

Finally, we all like money!

Anyone who has ever moved jobs for better money or asked for a pay rise with the implicit threat that you would leave otherwise has basically been their own recruitment agent That’s with the same motivation as those who do it for a living.

So, there is an insight into agencies negotiating with contractors over rates.