Most businesses and contractors that make use of Recruiting agencies have no idea how much money is lining the pockets of the Agencies.
“The most they’ll pay is $60/hr, Sugar”
Why not? Because the Agencies keep it a secret; why do they keep it a secret? Because if they didn’t keep it a secret, no one would make use of their “Services”.
To put it simply, the average recruiter Margin today is 40%. 40%! And after that you pay another 40% to Uncle Sam, leaving you with what, a pittance? Exactly.
Unlike a Full Time Employee, where the amount the recruiter makes is fully disclosed (and usually around $25,000), the contractor margin is almost never disclosed.
This author argues that it is a pox on the industry that this “fee” is not disclosed to either the company engaging the Agency, nor the Engineer employed by the Agency.
This is bad for a number of reasons, primary amongst them that the Agency’s goal is to make the biggest spread between the bill rate and the amount they pay the Engineer, thus they are incented to find the “cheapest”/”worst” talent and bill them for the highest rate.
This is bad for corporate accounting and fiscal responsibility because they have no idea how much money is being wasted.
This is bad for the Engineer because they are unfairly being taken advantage of.
How can I “be sure” it’s 40% if it’s hidden? The math is simple my friend. How many times as an Engineer have you been told that, the “most the client will pay is $60/hr” or, “the most they will pay is $55/hr”. Tons of times right?
So do the math. They are billing the client $100/hr, or $99/hr, and then they skim their 40% and the most they have to pay is, voila, $60/hr.
So what’s the alternative? Simple. In the Internet Era companies don’t have to be at the mercy of the Headhunter Pimps and their rolodexes.
They can just advertise their jobs directly on job boards such as Craigslist, Monster, etc.
They’ll get more Developer for their money, and for the money saved, can probably get 2 developers for the price of one.
Finally, for those that continue to use Agencies, they should force the recruiter to disclose the margin. If their service is worth their fee, then noone should complain about their margin. But if it isn’t, and no service is worth the 40% they charge, the margin should be adjusted to be realistic.
It’s bad enough to be pimped around by these folks — the least they can do is disclose the Pimp fee.
And don’t forget to advertise your job directly.
After all, the gals in the “oldest profession” have pretty much given up on pimps and tend to advertise directly on the net.
They should know how best to play the game.