Wednesday, April 16, 2014

A Contractor’s Guide To Recruitment Agencies

I haven’t contracted through an agency for a long time, but I thought I’d write up my experiences from almost ten years of working as an IT contractor for anyone considering it as a career choice.

IT recruitment agencies provide a valuable service. Like any middle-man, their job is to bring buyers and sellers together. In this case the buyer is the end client, the company that needs a short-term resource to fill a current skills gap. The seller is you, the contactor offering the skill. The agency needs to do two things well: market intelligence - finding clients in need of resources and contractors looking to sell their skills; and negotiation – negotiating the highest price that the client will pay, and the lowest price that the contractor will work for. The agency’s income is a simple formula:

(client rate – contractor rate) * number of contractors placed.

Minimize the contractor rate, maximize the client rate, and place as many contractors as possible. That’s success.

Anyone with a phone can set themselves up as a recruitment agency. There are zero or low startup costs. The greatest difficultly most agencies face is finding clients. Finding contractors is a little easier, as I’ll explain presently. Having a good relationship with a large corporate or government client is a gold standard for any agency. Even better if that relationship is exclusive. Getting a foot in the door with one of these clients is very difficult, usually some long established, large agency has long ago stitched up a deal with someone high-up. But any company or organization in need of a contractor is a potential client, and agencies spend inordinate amounts of time in the search for names they can approach with potential candidates.

As I said before, finding contractors is somewhat easier. There are a number of well known websites, Jobserve is the most common one to use in the UK, so it’s merely a case of putting up a job description and waiting for the CVs to roll in. The agent will try to make the job sound as good as possible to maximize the chances of getting applications within the limits of the client’s job spec.

An ideal contractor for an agency is someone who the client wants to hire, and who is willing to work for the lowest possible rate, and who will keep the client happy by turning up every day and doing the work that the client expects. Since agencies take an on-going percentage of the daily rate, the longer the contract lasts the better. The agency will attempt to do some filtering to ‘add value’, but since few agencies have any real technology knowledge, this mainly consists of matching keywords and years-of-experience. Anyone with any experience of talking to agencies will know how frustrating it can be, “Do you know any ASPs?” “No, they don’t want .NET, they want C#.” I’m not making those quotes up. Ideally they will want to persuade the client that they have some kind of exclusive arrangement with ‘their’ contractors and that the client would not be able to hire them through anyone else. It can be very embarrassing for them if the client receives your CV through a competing agency as well as theirs.

The job hunt. How you should approach it.

Let’s say you’re a competent C# developer, how should you approach landing your dream contract role? The obvious first place to look are the popular jobsites. Do a search for C# contracts in your local area, or further afield if you’re willing to travel. Scan the job listings looking for anything that looks like it vaguely fits. Don’t be too fussy at this stage, you want to increase your chances by applying for as many jobs as possible. Once you’ve got a list of jobs it’s worth trying to see if you can work out who the company is. If you can make a direct contract with the client, so much the better. Don’t worry about feeling underhand, agencies do this to each other all the time, it’s part of the game.

Failing a direct contact, the next step is to email your CV to the agency. Remember they’ll be trying to match keywords, so it’s worth customizing your CV to the job advert. Make sure as many keywords as possible match those in the advert, remembering of course that you might have to back up your claims in an interview.

The next step is usually a short telephone conversation with the recruiter. This call is the beginning of the negotiations with the recruiter. Negotiating is their full time job, they are usually very good at it. Be very wary. Your attitude is that you are a highly qualified professional who is somewhat interested in the role, but it’s by no means the only possibility at this stage. Whatever you do, don’t appear desperate. Remember at this stage you are an unknown quantity. Most contractors a recruiter comes into contact with will be duds (there’s no barriers to entry in our profession either), and they will initially be suspicious of you. Confidently assert that you have all the experience you mention in your CV, and that, of course, you can do the job. There is no point in getting into any technical discussion with the recruiter, they simply won’t understand. Remember: match keywords and experience. At this stage, even if you’ve got doubts about the job, don’t express them, just appear keen and confident.

Sometimes there’s a rate mentioned on the advert, at other times it will just say ‘market rates’, which is meaningless. If the agent doesn’t bring up rates at this point, there’s no need to mention them. At this stage you are still an unknown quantity. Once the client has decided that they really want you, you are gold, and in a much stronger bargaining position. If there’s a rate conversation at the pre interview stage, try to stay non-committal. If there’s a range, say you’ll only work for the top number.

They may ask you for references. Your reply should be to politely say that you only give references after an interview. It’s a common trick to put an imaginary job on a jobsite then ask applicants for references. Remember, an agency’s main difficulty is finding clients and the references are used as leads. If you give them references you will never hear from them again, but your previous clients will be hounded with phone calls.

Another common trick is to ask you where else you are applying. They are looking for leads again. Be very non-committal. They may also ask you for names of people you worked for at previous jobs, this is just like asking for references, you don’t need to tell them. Sometimes it’s worth have a list of made up names to give out if they’re very persistent.

Next you will either hear back from the agent with an offer of an interview, or you won’t hear from them at all. No agency I’ve ever had contact with bothered to call me giving a reason why an interview hadn’t materialized. If you don’t hear from them, move on with applying for the next job. Constantly calling the agency smacks of desperation and won’t get you anywhere. There are multiple possible reasons that the interview didn’t materialize, the most common being that the job didn’t exist in the first place (see above).

At all times be polite and professional with the agent even if you’re convinced they’re being liberal with the truth.

If you get an interview, that’s good. This isn’t a post about interviewing, so let’s just assume that you were wonderful and the client really wants you. You’ll know this because you’ll get a phone call from the agent congratulating you on getting the role. You are now a totally different quantity in the agent’s eyes, a successful candidate, a valuable commodity, a guaranteed income stream for as long as the contract lasts. Their main job now is to get you to work for as little as possible while the client pays as much as possible. If you agreed a rate before the interview, now is their chance to try and lower it. You may well have a conversation like this: “I’m very sorry John, but the client is not able to offer the rate we agreed, I’m afraid it will have to be XXX instead.” Call their bluff. Your answer should be: “Oh that’s such a shame, I was really looking forward to working with them, but I my minimum rate is <whatever you initially agreed>. Never mind, it was nice doing business with you.” I guarantee they will call you back the next day telling you how hard they have been working on your behalf to persuade the client to increase your rate.

If you haven’t already agreed a rate, now is the time to have a good idea of the minimum you want to work for. Add 30% to it. That’s your opening rate with the agent. They will choke and tell you there’s no way that you’ll get that. Ask them for their maximum and choke in return. Haggle back and forth until you discover what their maximum is. If it’s lower than your minimum, walk away. You may have to walk away and wait for them to phone you. Of course you’ve got to be somewhere in the ballpark of the market rate or you won’t get the role. Knowing the market rate is tricky, but a few conversations with your contractor mates should give you some idea.

Once the rate has been agreed and you start work your interests are aligned with the agent. You both want the contract to last and and you both want to maintain a good relationship with the client. The agency should pay you promptly. Don’t put up with late or missing payments, just leave. Usually a threat to walk off site can work wonders with outstanding invoices. Beware, at the worst some agents can be downright nasty and bullying. I’ve been told that would never work in IT again by at least two different characters. It’s nice to see how that turned out. Just ignore bullies, except to make a note that you will never work for their agency again.

Agencies are a necessary evil until you have built up a good enough network and reputation that you don’t need to use them any more. Some are professional and honest, many aren’t, but if you understand their motivations and treat anything they say with a pinch of salt, you should be fine.


  1. Chris M7:47 am

    Excellent post. You've nailed the exact experience I've had over the years.

  2. "No, they don’t want .NET, they want C#" - true story, it happened to me at least 2 times! :-)

  3. Ahhh the nostalgia of the wonderful agencies of the 90s. The lying thieving scum and the truly hardworking and excellent agents.

    Lovely trip down memory lane Mike!

  4. Anonymous3:39 pm

    Thanks for sharing your experience Mike. Awesome post.

  5. Anonymous12:18 pm

    "Ahhh the nostalgia of the wonderful agencies of the 90s"

    This is still how they operate in the 21st century

  6. In banking, most agencies work on fixed margins, so they will always try to get you the most money.

    This is the case with many other large firms.

    I've heard horror stories where this hasn't been the case and the agency has been taking 50% of the rate!

  7. Great post, Mike! I would be interested to hear about your experience with interview too :)

  8. Of course Recruitment Agencies behave just as badly with permanent staff, with the same tricks about where you're working now and who you're applying to both acting as leads for the agency.

    In the case of permanent staff, though, it's in their interests to move you to a new job as soon as possible, as they get their commission when you move. So I would advise either keeping your mobile number and email address out of your CV and 'provider contact details on request', or have a dedicated recruitment email address and SIM.

  9. Anonymous4:46 am

    Great post. Sooooo true!

  10. Anonymous9:33 pm

    Most clients are shocked by the agent's cut (where it's not fixed) so one gamble is to talk the the end client directly.

    It's not clear cut as he wants you to work for as little as possible, but generally they aren't as good at negotiating, and/or are more keen to get the right person than worry about saving a tenner a day of someone else's budget.

  11. As a recruiter that has worked agency and in-house I certainly can relate to this. Personally as an in-house recruitment manager I would never work with an agency if they were not transparent with their rates. Equally now having set up my own agency again I would not expect a client or contractor to work with me if I did not disclose the markup or margin.

  12. Anonymous5:27 pm

    Frankly, I don't see the issue with recruiters fishing for leads. It's simple business. They get leads, get jobs on and get you your next contract. And the cycle repeats.

  13. disclose your margin
    disclose your principals names and addresses
    if you do not then you are playing the same hide and go seek games of disreputable Indian Body Shops (TCS,InfoSys,Wipro,HP-Mphasis,Dell-India,Ramgam)

  14. This comment has been removed by a blog administrator.

  15. Thanks for this article, tells it like it is!

  16. HealthInsurance

    Unless they are Donald Trump the agency is REQUIRED by law to offer Health Insurance

    If for any reason they balk ask for 10/hr MORE than the offer..10/hr is what you

    will require to purchase Health Insurance on your own dime.

    Nota Bene: Health Insurers dont want to bill one-sies or two-sies such as 1099 contractors

    It is far less administrative/accounting cost for the Health Insurer to maintain/bill one

    big entity that has 10+employees rather than 10 individual policies and ten individual

    Remember..we are all in this together I'm pulling for the guy/gal that does all the work..YOU!

    1. Anonymous12:25 am

      Employers are not required to provide health insurance.

      They're merely required to offer you the opportunity to purchase insurance through their plan. And you pay 100% of the premiums they pay nothing

  17. by State and Federal Statute Organizations do have to offer Health Insurance
    Mandate to comply with MassHealth explained at
    and the ACA Federal Act has a mandate for all employers with > 10 employees
    The only reason company > 10 employees refuses to offer HealthInsurance is they have more lawyers than the contractor..and those 200/hr Lawyers can bury the Contractor in litigation

  18. Anonymous2:04 pm

    Right on point!! Great blogg and a mirror of my experiences over 29 years of contracting, but oh how things have changed also. Why do the government think they are saving money by using Capita all the time 8% to them and a further 7/8% to the third party agency is more than the good old fashioned 10-12% to the agency usually negotiated in the past. I know the early 90's could have seen 30% off the top by the agent. They also manipulate the rates and welch on rate agreed before interview which I find appalling.

    Such is life - the necessary evil!!!

  19. Fact1:
    when I started in 1992 one agency took 25% so on a 75/hr contract I always got 50/hr
    Today the preferred vendor still gets their 25% but your agency gets another 25%
    end result was the last contract I worked the rate was 34.00/hr with no benes

    If the H1B agency middlemen involved promise they will pay airfare and hotel dont believe them..I signed a contract with Indian agency for 34.00/hr to go to Oregon and back for work..Indians were supposed to pickup airfare (1000) and hotel (1000) and car-rental (400) and food (300)
    The agency ping-ponged my billing statements back and forth so many times nobody knew where the statements were ..India then the US then back to the end i was not reimbursed

    Fact3 2017(crystal ball prediction)
    After Jan 20 2017 Queen Hillary will in all likelihood award Goldman Sachs as preferred financial vendor of choice..If you are a bonded contractor in banking/financial services and want to work in 2017..I would suggest starting a relationship with GS..Also The more you contribute to Queen Hillary's campaign the stronger the possibility to land the 2017 contract at an a decent rate!

  20. Anonymous1:46 pm

    Just another angle on rate. A role is advertised at a higher rate than you are on and you apply. Is it fair of the agent to suggest you don't warrant 550 as you were previously on 100 less?

    Other agents hook you with a high rate only to go through the process and find suddenly the rate has dropped.

  21. I do not understand why in this time of internet, intelligent search engines and fast databases we still need a recruiter and one can not find a job by him or herself googling, e.g. "london job offer C++ developer senior". I've made the same question to Google, asking them to provide a switch for jobseekers so to exclude jobboards from job offers coming directly from the employers. This could be easy to do, because they would just need to automatically classify by some sort of intelligence whether a web site is a job board or a company's site, assuming all job boards are plagued by recruiters. Else, they would need intelligence to discern job offers that name the company you are supposed to work for from those who do not. All job offers managed by recruiters hide the company name, but they may cite their recruitment company name, which the search engine should classify as a recruitment agency and ignore. This way only fucking recruiters would need to get a job through a recruitment agency, which is what they deserve.

  22. How would Indian Middlemen make money if they were forced to do actual work instead of taking their enormous recruiting fee for the arduous task of making 1 phone call?


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