Confessions of an Agent - Why we love first time contractors
Monday, 7 July 2008
Introduction
Agencies are usually one step ahead of contractors. I have been asked to write a series of articles explaining how we do it.
I worked as a recruitment consultant for many years in several roles (yes, we do have different roles).
In fact, I actually placed the proprietor of this site twice (probably the only one ever to do so).
We have remained in contact for a number of years and I have been asked to spill the beans on some of the ways we had of staying one step ahead of the contractor.
A Kill Approaches
You can almost hear a recruitment consultant salivate when an IT employee contacts him or her and says the magic words, i.e. that they want to become a contractor.
This is like a hungry lion spotting a young zebra that has become separated from the herd.
It is the answer to all their prayers!
They have been given targets as far as fee income is concerned and that applies to the amount of fee income as well as the margins.
There is going to be a veritable feast here that will keep any hungry rec cons sated for days and which will catapult him or her up the margin and fees table. It will also help deliver a nice juicy bonus at the end of the period.
Touching Naivety
First time contractors have a touching naivety about them. They see us as their agents who will represent them to our best abilities and who will not only get them a lucrative contract, but who will get them as much money as we can.
That’s what an agent is for isn’t it?
That’s what happens in the acting and football professions isn’t it?
Yes, they know we will get a fee for doing it, which they expect is standard but they don’t want to look a gift horse in the mouth and to ask what that fee or percentage is.
They don’t realise that our first concern is to get as high a fee for our services as we can. The next priority after that is to keep the client happy so that they put more lucrative business their way.
The contractor’s needs and wishes are way down the priority list. I think it is because they refer to us as ‘agents’ that they think we will look after their needs. We refer to ourselves as recruitment consultants or salesmen and women.
Our Duty
It is the duty of the recruitment consultant to his or her company to get as much money as he or she can for them. It is also the duty of the contractor to get as much as he or she can for him or herself.
It is not our duty to find out and tell contractors the market rate for their skills. It’s up to them to do that if they want to think of themselves as real small businessmen and women. What other small businessmen wouldn’t do any market research into the market price of the commodity that they are selling, i.e. their services?
This is the real world and if they are not ready for it then that is not the fault of recruitment consultants.
Fat Fees
It is not only their naivety that make them such a juicy ‘kill’ for recruitment consultants, it is the fact that, unlike seasoned contractors, they will be earning probably double what they were getting before as a permanent employee.
At companies where I have worked, I have seen recruitment consultants take up to 70% of what a contractor is charged out for.
Unlike some naïve contractors we know their market worth. It is our duty to our companies and to ourselves to haggle with our suppliers, i.e. the contractors to get the supplied commodity, i.e. their labour, for the lowest price that we can get it for.
That’s capitalism!
Certainly that was the way we all looked upon it when I was part of major recruitment companies. I must say now that 70% would seem a bit over the top.
That was exceptional though.
However, it was not exceptional to be able to take anywhere between 30% and 50% for a first time contractor.
Any recruitment consultant who couldn’t negotiate at least a 30% commission for a first time contractor should think about going and selling burgers at McDonalds.
Fair Commission
What is a fair commission?
Contractors often ask me that.
However, the question is irrelevant.
As I’ve said before it is up to both contractor and recruitment consultant to know the market rate for their skills and to maximise their returns.
Recruitment companies are not charities. They buy their raw materials, i.e. the contractor’s skills, add value to it, and then sell the added value item on to the highest bidder.
I must say that in those days we used to joke that if we had our way that all contractors would be first timers and that they would only be allowed to contract once before having to take a full time job for 5 years before they could contract again.
Sole Agent
To show you how naïve some first time contractors are, I used to tell them that I was to be their sole agent, and if they signed up with another agency I would discontinue from representing them. I told them that I would definitely get them work – and I almost always did.
I didn’t want to lose this juicy kill.
Amazingly, the majority of first time contractors did exactly as I said and didn’t sign up with anybody else.
Many of them shouldn’t have been allowed out alone.
Advice for Contractors
So, what should first time contractors do then?
Well, firstly, they should keep an eye on the jobs on Jobserve, CWJobs, and other job boards.
They should also get in touch with quite a few agencies. They’ll always be happy to hear from them.
They should also not quit their permanent jobs until they have got a contract. I am ashamed to say that I talked many a contractor into resigning saying that it would be much easier for me to get them a contract if they were immediately available.
I didn’t manage to get all of them contracts and I hope that the ones that I wasn’t able to help managed to see themselves all right.
Ask the Question
Then, they should have the ‘cheek’ to ask the agencies what their normal commission are. Of course they will not want to tell, but the contractor should say that he or she will want to know before signing any contract. That alone will bring the commission down from a lofty 50% to a more agreeable 30% (if it was that high).
Of course, if the contractor is happy with the money he or she is being offered then perhaps they should just take the contract – even of the agency are taking a high commission. There will be plenty of opportunities later in their contracting career to make even more hay.
What Now?
So what do I think now that I am out of the business?
Well, there was immense pressure on us to make targets and this forced us to cut a few corners to make those targets. Our jobs were very much on the line.
Contractors should realise that salesmen are much more sackable than contractors, and there is a big churn rate in our profession.
However, I do think that, except in exceptional circumstances, anything above 30% is too high. The normal is around 15% to 20%. If your agency is getting less than that for you then you are on the winning side. If they are getting more than that then you are on the losing side.
However, this is the big world and it is up to you to look after yourself!
This article originally appeared on the British contractor's website IT Contractor.
Agent X
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IT people are unemployed losers Losers Gloomyshoes, 07/06/2008 03:22:59 AM
SkillDr gloomy without even skill to create url links. No wonder becomes tech failure. Great Leopard, 07/06/2008 11:04:57 AM
Very entertainingThese "confessions" are a good read. Very entertaining. The author certainly has a flair for writing. It reminds me of the other articles I've come across a while back, such as BOFH (Bastard Operator From Hell). Laz, 07/06/2008 02:41:41 PM
An idea to curb trollingI don't know about everyone else here but I've stopped looking at this forum of late because of the constant trolling and generally little value add provided by an annoying minority. I realise you don't want to force people into creating user accounts, so here's another way at removing the undesirables so to speak. Add a button or a link on every post that people can click when they see a troll post. When the button is clicked, store the event along with the IP of the voter. Once enough unique IPS have voted against the post, remove it from the thread thus removing said undesirable/irrelvant posts from the conversation. I'm not saying people should be shouted down for their views, far from it. It's just a way to keep the discussions on point. As far as Agents go, they are merely acting in their own best intrest and the quicker contractors learn to evaluate situations from other stake holders point of view, the better your negotiation and other skills get. Ranier Woflcastle, 07/06/2008 02:55:45 PM
IT jobs plummet - Losers IT Jobs crash Gloomyshoes, 07/06/2008 05:16:28 PM
Raniers voting suggestionHi Ranier, whilst I support your suggestion I think Paul is happy to ignore us. Paul knows the site popularity stats and since he doesn't advertise expect he is happy with the way things are. For example, constructive comments re the site redesign that could have been implemented easily were not taken up. The only alternative is to provide him some competition, and provide these features that have been asked for elsewhere. The software is free. A domain and bandwidth is relatively cheap, and I'm sure you can think of great features to implement and are available as open source. Sell some ads and you might even make a profit. Personally, I'm too happy leaving IT in the office and reading this site when time and boredom such allows. Much as I expect Paul does. Topdown, 07/07/2008 02:43:38 AM
Gloomy's first link Gloomys first link Whilst an unemployment rate of 0.17% for medic graduates is great (but hardly unexpected) an unemployment rate of 10% for IT grads doesn't tell me about IT unemployment, rather that some candidates just aren't up to the task. Such is the quality drop when gates are opened up to all via 'afirmative action' to bolster numbers. Not all applicants or grads in IT are of quality. I joined the IT employ from an IT degree 11 years ago and held six different offers back then, however I knew some classmates couldn't get helpdesk work. In addition, I remember reading a report at that time that IT grads were the best paid grads behind doctors, lawyers and architects and yet our salaries generally start at say 60% of the max whereas medics may start at 30%. Personally I'd rather work my 40-45 hours and have a life rather than have no life until I am in my 40's like many UK medics. Topdown, 07/07/2008 02:55:17 AM
Brainbox CompetitionAnyone who sets up a competitive site to brainbox should make themselves aware that click through rates on professional technical sites are the lowest of any industry. Tech people suffer from banner and ad blindness. Many are also tech savvy enough to block adverts through greasemonkey or other specialised ad blockers. Hence, don't expect to make much/any money from the venture. cyber, 07/07/2008 11:06:10 AM
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