Agents Add Value to Contractors
Do Agencies and agents add value to contractors after they get them the contract initially?
This was in the comments section in reply to a reply to one of our articles.
See what you think.
Agencies a Necessary Evil
You say that you see agencies as a “necessary evil” which is all just a part of being a noobie to the game I suppose.
You’ll soon realise just how unnecessary they really are.
In fact agencies shouldn’t have anything to do with contractors. Their business domain is the outsourcing of recruitment and HR.
Since we are not recruited and do not deal with HR, why use an agent?
They have simply muscled in on the IT contractor market to carve themselves a larger slice of the pie. That’s at at our expense.
Where do agents add value?
This is not a reflection on agents as individuals, before any of them starting whining. If it wasn’t them it would only be someone else muscling in on our profits.
This is a reflection on IT contractors for failing to defend their legitimate market share.
Agencies have invested some of their own profits by bribing government to skew the market in their favour.
This bribery does not take the form of a bung, or campaign contributions. It is more in the form of colluding with tax officials in order to generate the utterly false impression that IT contractors are employees in disguise.
Agency Doesn’t Recruit Us
You should not apply the very term “recruitment” to the way most of us work. No one recruits us.
One only has to look at other self-employed contractors to see that in IT we are being shafted.
Regardless of whether you are an individual or a large corporation would you go to an agency if you needed a plumber or a builder to fix up a problem or build something new?
If you want to hire some security contractors to go abroad and kill a whole bunch of civilians so that you might steal their oil would you go through an agency?
Agency Fees and Margins
If, as the writer disingeniously claims, agents are entitled to take fees for the “supply” of contractors on a no-limit recurring basis then why do they not do the same with their core-business, the supply of permies?
The reason why they don’t rip-off permies like this is because they and the companies they supply both know that when the permie realises what’s going on he or she will be demotivated and leave (or loaf).
Besides, the corporations have a thousand other methods to screw their staff out of their wages. They don’t want to share this lucrative little sideline with the agencies.
No, the clients allow the agents to screw us out of fees. If there was no agency they would still have to pay it to us anyway.
Don’t believe this guy when he says going direct will lose the agency mark-up. It does not.
I have never had a direct contract where the client has cut the rate because I don’t have an agent. Indeed, in each and every case I was billing them the same rate as the agencies were charging for people working alongside me.
The vast majority of hiring is done on a basis of a fee per head. The agent has to skim his or her cut out of that. Do you really believe that, if agents were all taken out and shot, the clients would start paying lower rates?
There’s nowhere where agents add value.
Competition on Rates
Hasn’t this guy heard of competition or poaching?
Rates would stay the same if there were no agents. That’s because as soon as one company tries to claw back the agent’s skim they will lose their contractors to their competitors. At least they lose the good contractors.
The loafers and the liars will be left to work for the cut-price cock-up artists.
In fact without agents butting in there is a significant chance that contractors rates will go up not down.
Why do you think the clients are using agencies in the first place if they could get us direct at 80% of the cost?
The reason they go to agencies is pretty bloody simple to figure out: They use the agencies to keep their costs down.
Clients Cutting Rates
Agents couldn’t give two-hoots if the client wants to cut rates. That’s as long as they can maintain their margin. That is all they care about. They also have a legal responsibility to their share-holders to up their margin when our rates are cut.
They will tell contractors that there’s no budget for an extension, then place another one in on a lower rate, and up their margins so that they don’t have to take any cut in profits.
The current structure of the business is going to be hard to change however. Companies benefit by using agencies to keep their costs down.
The taxman benefits because he only has to ask the agent for information on us and he will get whatever information the agency has.
They will claim that they have to do this by law. However, this is again disingenious. Since when did you ever hear of an agency requiring a court order before handing out our private business information to any Tom, Dick, or Harry of a government official that asks for it.
The agents benefit since their revenue does not go down when they put us in on a reduced rate. The only people that are the losers here are, you guessed it, the contractors.
We get the shaft from every direction and the role of the agents is to profit by assisting those who are shafting us.
Sack the lot of them.
So readers, what do you think? Do agents add value?