In defence of agencies
Friday, 18 July 2008
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 a contractor, I can assure you that most don't.
I've 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.
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. So why do so many contractors view them as otherwise? I think there are a few reasons.
The first is that the worst 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.
The second is the margin that 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've been placed 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 an hourly contract rather than as a lump sum, they are effectively being paid after the main benefit of that service has been received.
Of course, the contractor receives other benefits such as being paid before the agency has, but they see this as a secondary service. Whether they'd feel that way if they had to wait months to be paid 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.
But if you dig a bit deeper, you discover that it is not, in fact, the 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 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. 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.
The truth is that most agents negotiate hard to get good rates for their 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.
But there is more still to this unhappy relationship between contractors and recruitment agents than mere money. When I see what contractors are saying, both here and in other forums, I notice something all too human - the taint of snobbery.
Because a recruitment agent's role involves an above-average level of saleswork, the professional contractor feels that the agent is somehow beneath them. Sales people belong to an underclass, is the sub-current, and are undeserving of our respect.
But sales is a noble profession. As the old saying goes "nothing happens until somebody sells something". Without salespeople our economy would grind to a halt. The role of bringing buyers and sellers together is probably the most important one in the entire economy.
Someone once said (I forget who and I'm paraphrasing): "Even the most oppressive dictatorship has doctors, lawyers, engineers and scientists. Such people exist everywhere. But only the free democracies have salespeople. Wherever you see salespeople, you see wealth and freedom. They are the symbol of a free society."
The snobbery against sales people is completely unjustified. I've programmed before and I've sold, and I can tell you which is harder. For all their disdain (or even disgust) with the role recruitment consultants play, most contractors are unwilling to do without them. If you hate them so much, don't use them. Nobody's forcing you.
Some contractors huff and puff about how the agencies have all the work tied up when challenged with this assertion. But the truth is they've never tried. They have no idea of how to sell themselves to an end-client. Even worse, they are unwilling to try.
I wish contractors and other IT professionals would not be so quick to disparage recruitment agents. Together, we often make a great team.
Alan
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YOU...!...just made me cry... snifff. I really have compassion with AAAALL those Wreckers now... - LOL What a pile of shhhhh..! The other article was a little bit on one site, I agree somwhow, but this one is definitely… somewhere else. Ken, 07/17/2008 06:51:40 PM
Load of rubbish AlanWhat a load of rubbish Alan. Recruiters "well-educated, above-all honest". That cracked me up. The recruiters I come across know very little about the industry they are recruiting for, filter people based on keywords and buzzwords like a 5yrs old. I told off one recruiter once when with 7yrs of SQL Server work, the guy asked if I had done T-SQL. How can you guys accurately choose candidates, when most of you don't know much about the industry. margin that agents take in return for their services I have no issue with an agent taking a cut for maybe the first 6mths or year of a contract. But why should agents still be getting cuts for someone they placed into a role maybe 2-3yrs ago. What service then Alan?? Fine, take the 5% for admin costs, but why 15% 3yrs into a contract. You guys just sponge off the hard work of others. Without salespeople our economy would grind to a halt.. If there aren't people to make the products, and provide the service, you wouldn't have anything to sell in the first place Alan. MK, 07/17/2008 09:08:23 PM
Grow up MKThe recruitment industry is one of the largest employment sectors in the world. Australia alone has thousands of firms, employing tens of thousands of people. Many are $billion turnover businesses. If you look at some of the largest public listed Australian recruitment firms, you will see that on turnover of around a billion dollars, they typically make $25m to $50m in net profit. Most Australian recruitment companies make between 2% and 4% return on margin (EBITDA). Compare that figure with an individual $30m bonus paid to the CEO of Macquarie Bank and it starts to look pretty small, especially when you consider that most $billion recruitment firms employ upwards of 700 staff. I am unlikely to know the specific recruiters you come across, but I don’t know any in IT without at least a degree. My Bachelors was awarded by an IBM sponsored Computing & Mathematics department, where I got a First Class with honours in Computer Science. Dishonest people are found in all industries, so it doesn’t take a Rhodes Scholar to conclude that you will find some in one of the worlds largest industries. After 7 years IT recruitment in Melbourne I have seen my fair share of dishonesty in the IT sector. To date I am aware of people in the IT industry who have falsified time & expense reporting, fabricated resumes, defrauded employers, stolen equipment, falsified references, broken data privacy laws and not paid income tax. I am also aware of people who have broken EEO legislation and performed acts of gross misconduct. Yet I still know that 99.9% of IT professionals are exactly that… professional. I really think you miss the point of a recruitment firms, especially for contracting. The primary reason that most large companies use agents, even when they have their own large corporate recruitment department—is to mitigate the risk of an implied employer relationship with contractors. Secondly, they want the convenience of knowing that we have high levels of PI&PL insurance (think $5/10 and up to $20/20m) – when was the last time you had your house on the line for a contract? Only then do we get to the crunch regarding the accurate choice of candidates… which you will know from your own experience (if you think back to interviews), is actually an activity the client does. I.e. we don’t choose, we screen and shortlist. Hiring choices are always made by the client because with time & materials contracting and permanent employment it is their risk. Regarding the margins we make – who are you to make a call on what margin we make for services rendered to a client? On exactly what basis have you calculated your proposed 5% for admin costs? You clearly have no idea what you are talking about. Take for example the largest recruitment firms in Australia. The majority make their living from Preferred Supplier Agreements with some of the nations largest companies (think banks/telco's etc). These agreements can take upwards of 18 months of tendering to win, and usually involve having to negotiate with some of the toughest procurment and comercial managers in the land. Do you think for a second that they would get anything less than a great deal? Regarding your response to Alan about salespeople not having anything to sell without you—it makes you appear very small-minded as we all know that circular arguments go nowhere and are pointless. This is not a chicken and egg competition. If you don’t want to use an agent – we are OK with that! PM, 07/22/2008 05:30:28 AM
Get your hand off it PMRecruiters typically are tick and flick. I have worked in a recruitment firm, providing IT support \ project work. The recruiters themselves had no real idea of what they where doing, they simply ticked and flicked. If they wanted a SQL person, they would do a search of their resume database for the words SQL. I was frequently asked what does this mean, or what does that do, and whilst the recruitment agents themselves where interested in the answer, it was more for their own reference. My guess is that if you have a CS degree, and are in the recruitment game, you made a lousy programmer \ engineer. Because unless your one of the top, (who can earn $200 - $300 K inc commissions) your probably on mid $40K. Also there are some recruitment agents out there who do not provide any value add to a contractor, but still take a fee. I was once stuck with one, they didn't even find the job for me, I found it myself, and I even negotiated a good rate for myself, it wasn't until 2 days before I started, as I was signing the contracts that I was told I had to nominate one of the panel recruitment companies to run the contract through. Working so closely in the industry, I'd say your argument of 99.9% are honest, I'd say it was more a division of 80% to 20%, where 80% where good, 20% are snake oil salesmen. anon, 07/22/2008 07:50:36 PM
When you get to the real world, let me know...Honestly, those that try to say that the recruitment industry is 100% honest are fooling themselves. I have worked in IT recruitment for 10+ years now and could tell some horror stories that I am sure would shock some. We currently have a floor full of IT recruiters and I can assure all that none hold any IT degrees or certifications at all. What they are though, is very good salespeople - people that can talk the talk, make the opportunities appear and close the deals. At our weekly meetings we often laugh about new roles that come in from clients yet we have no idea what on earth they are or mean. What we do though is place contractors & permies into these roles at many multiple numbers each week. That's not to say all agencies are the same as they are not, but can assure you that all are not 100% clean and pure as other posters here would like to let you believe. Frank, 07/23/2008 10:07:29 PM
This used to sh!t meThe thing that really got up my nose was that recruiters are basically in charge of the candidates career prospects and not the candidate themselves. This is made worse by the very fact that recruiters are generally uneducated English backbackers with the gift of the gab that bring absolutely nothing to the equation at all. A pox on all recruiters houses! IT recruitment agencies remain a cancer in the whole IT industry. Gloomyshoes, 07/24/2008 12:10:32 AM
RecruitersHow can you say IT Recruiters are a pox, i mean really we provide a service ( some better than others but thats life)you can use our service or not. instead of going around putting others down get in and try it yourself. Tex, 07/24/2008 02:24:18 AM
Gloomy's problemYou blame recruiters for your own inabilities. You blame the IT industry for your own failures. I deal with both and have no complaints. Find jobs through networking and being good. Find decent jobs and avoid sh*t ones - don't take the first thing that comes along. Easy really. Easier than bailing out and doing a medical degree. brownie, 07/24/2008 06:45:02 AM
RemovedThis comment was removed as it contained offensive content. Gloomyshoes, 07/24/2008 07:12:52 AM
RemovedThis comment was removed as it contained offensive content. Lonely Shoes, 07/25/2008 02:07:12 AM
Lonely Shoes!!Now that's just repulsive! Not even I would post something like that. What if Gloomy was as miserable as you suggest and took your word for it - would you like to have that on your conscious? Mr B, 07/25/2008 02:23:06 AM
RemovedThis comment was removed as it contained offensive content. Mr B, 07/25/2008 02:25:51 AM
Moderation neededPaul, you should pull those last couple of comments. They're over the top and potentially dangerous. 123, 07/25/2008 04:32:50 AM
I hope that the IP's are turned over to the AFPFortunately I don't react to abuse or encouragement to commit suicide. Notwithstanding that however those last few comments are, I believe, a breach of various Commonwealth statutory provisions (both telecommunications and Criminal) and if they are not removed, pronto, then the matter shall be reported to the AFP. Gloomyshoes, 07/25/2008 04:53:14 AM
Lonely shoesSpot on Lonely! Helen, 07/25/2008 05:52:35 AM
A nurse??Nurse Fokker? Perusal, 07/25/2008 06:24:08 AM
ClarificationI agree and I apologise. It's all clear to me, now when I had a few beers: I shouldn’t have said that - it was wrong. I still think that agents are miserable fucks - but I don't recommend you to do ANYTHING that would hurt you, or any other human being (or animal, alien or plant). As the smiley suggests, my second post was intended as a joke, whereas the first was a serious criticism to the preceding comment about cutting yourself or anyone else (or alien or plant - especially Gloomy). Capish!? And Gloomy: do you think it is very adult to provoke people and then , all of a sudden, react to posts that are “over the top” like that? Don’t get me wrong, I think they where, but everyone knows that you are intentionally trying to provoke people. Mr B, 07/25/2008 08:43:59 AM
Lonely Shoes, 25/07/2008 04:07:12 PMThis is the comment I object to and is likely in breach of a number of Commonwealth statutory provisions including those in the Crimes Act. If the offending comment is not removed then I shall lodge a complaint with the AFP and insist that the poster be prosecuted. Gloomyshoes, 07/25/2008 08:53:35 AM
gloomy mental stateGloomy, the thing is right, with all the things that the AFP have to do: preventing people being killed on the streets by ICE nutters, etc...do you think wasting their time because you feel offended is in the spirit of your new altruistic profession? Isn't it a tad self indulgent? brownie, 07/25/2008 07:29:25 PM
What will the AFP do?Here is the result of the phone call gloomy makes to the AFP Gloomy - "Some people posted some bad stuff on an anon internet forum" AFP - "Get lost, we have better things to do that follow up on some nasty things that where posted on an internet forum" At which point the words "dry your eyes princess" will be mentioned after you've hung up the phone. anon, 07/25/2008 07:43:39 PM
Time for some moderation paulPaul it's time for some moderation. I'd suggest you get rid of everything after the post by Frank, 24/07/2008 12:07:29 PM. None of it does anything towards IT, and some of it is highly offensive. (From both sides) Seriously, this forum has a long way to go before I ever consider it serious again and not just a bleating place for rednecks and trolls. (I do love coming here and laughing at some of the dick heads though) anon, 07/25/2008 07:47:15 PM
what the f are you talking about AnonI'm happy to have some serious IT discussion. Let's start some.. Has anybody in IT done AFMA Financial Services Accreditation as a way into FX Dealing? I'm considering it... brownie, 07/25/2008 09:05:37 PM
Leopard with unapproveLeopard with unapprove of commentations Lonely Shoes. Best one mates never laugh for problems of mind and self halm. Man with such laugh not real man but coward mouse. Gloomy and Leopard with problems but never deserve such commentations. But then what AFP to action? Sure squads very busy chase western Sydney buglers, find drug bandit and wrong Haneef prosecute. Great Leopard, 07/26/2008 07:49:57 AM
Poet (un)discoveredLeopard with unapprove, you are a true poet. Or drunk. One or the other. Perhaps both. davedrastic, 07/26/2008 09:18:55 AM
This thread is staleAlmost a day and no comments - the thread is stale. Come on Paul, how about something on - 'Indepdent Contractors' This is going to be hot issue. By the end of the week I reckon, Alan Jones, Rattus Rattus and that silly retired radio fart will be riding down the F3 on Hogs to the tune of Convoy. They'll be telling us that 'Independent Contractors' are really small business people who deserve a fair go! Too bad they didn't think of this a few years ago and tell the ATO. Let's see 'The Great Leopard' interpret that one? Withheld, 07/27/2008 08:16:06 AM
yea rightAfter 3 interviews through 3 agencies for different roles - none of these agencies even had the courtesy to call me post interview. In the end I just bypassed them - what a bunch of unprofessional wankers. Nothing has changed. DS, 09/06/2008 05:04:15 AM
What Defence? Criminals!There is absolutely no defence for ignorance and imcompetence. There is absolutely no defence in regard to the role agencies play in intentionally creating the highly illegal barrier to employment to many highly experienced professionals in OUR INDUSTRY. There is absolutely no defence in ruining many of our long standing careers and career goals. Legislation to prevent these insiduious criminal activies of private EMPLOYMENT AGENCIES will soon be implemented as per ILO Convention and Recommendations. Hawkwind, 09/17/2008 12:24:42 PM
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