The IT sector has always been one of the most demanding markets for contracting. The fast moving environments, the forever evolving technologies and pressured deadlines for completion of projects. All of this makes for a lucrative contracting world for the IT contractor and of course an IT agency. Many of the Blue Chip companies will have stringent preferred supplier (PSL) in place with selected IT agencies, meaning any contractor wishing to get involved on one of their projects normally means working via an agency. Sometimes contractors can also secure contracts via onsite consultancies, working under the umbrella of a consultancy on a contract basis.
What is the average IT agency margin?
There has always been a push and shove attitude with contractor and agency. Contractors wanting to know what ‘margin’ an agent is getting and the agency wanting to know a contractors lowest acceptable daily/hourly rate so they can leverage what they can in between pay & charge. There is a few myth bubbles that need to be burst around agent fees’. It’s no longer the 90’s the days of a 25% – 30% agent fee has long gone. If an agency is a preferred supplier to a client, they could be on anything from 10% to 14% margins. Take into consideration the amount of budget that goes on advertising jobs across online job boards, added in with hours resourcing and account management, it’s really not the high.
A contractors biggest gripe is that an agency margin is money that they are losing out on, an hourly or daily rate could be higher without an agency involved? All probability is that the contract wouldn’t have been found without the call from the agency or that job alert you got emailed from monster.com.
IT Contracting via an IT agency
As well as IT contractors having to accept that an IT agency is part of the process when securing contracts with Blue Chips or larger companies, an agency also has to realise that a good IT contractor is someone they need to run their business and keep clients happy.
All of the good agencies employ agents who don’t just call a contractor when they have work in, but will check in on them on a regular basis to see if they are looking for a different type of contract or if they have learned new skills. They will meet up with them face to face and build a business relationship. Too many IT agencies are tarred with a brush that paints a picture of a ruthless sales house just looking for that contractor placement; they do exist but not like in the past.
Can an IT contractor and an IT agency get along? The fact is they have to, and in most cases they do learn to work together and take advantage of a market that demands the best.