Suffice to say I don't see it that way.
For a start, that $75/hr includes payroll tax and stat costs like workers comp, PI and PL insurance - that's about $4 of the $15 margin gone straight to the government and insurers right there.
#2. Clients expect to pay more for a candidate sourced through an agency. We eliminate a lot of the hassles associated with recruitment, we mitigate a lot of the risk of making a new hire, and source better candidates than clients can source themselves. Clients don't expect that to happen for free - they expect to pay more for a candidate sourced via an agency. That $75 they are pending to source via an agency will be significantly less if they go the DIY recruitment approach.
The clients aren't paying just for the candidate. They're paying for the process - the search, the shortlisting, the interview facilitation & the ref checking. And the margin also has to pay for the contingent nature of recruitment, and the cost of establishing a relationship with the client in the first place.
It's a bit like ordering a pizza from Pizza Hut rather than making it yourself. You're paying not only for the ingredients of the pizza, but also for the convenience of it being made, cooked and home delivered.
This is how I thought margins should work. I was an IT recruiter for many years before I jumped the fence and am now a contractor.
ReplyDeleteUp until recently the agencies I have dealt with are pretty up front, but I am through a group now who are charging about 35% with me wearing the PI/PL and Payroll Tax.
Unfortunately they were the only agency working the role I really wanted. Some agencies call themselves consultancies but do nothing different. These guys don't own the outcome, nor do they understand the program of work I am working on. I don't report to them, I just send timesheets.
This is just a whinge, as I know the ball is in my court to put up a fight at contract renewal time.