02-12-2013 07:27 AM
I saw this post here: http://techtalk.dice.com/t5/forums/replypage/board
where it is possible for a head-hunter to charge client $250 per hr. and then give the actual worker about $80 all-inclusive. It's obvious that the money is not in the work but in hiring people out for the work. I have worked with a product for over 15 years and feel I can fill a position better than anyone else who just looks for buzz words on a resume.
So - with that in mind, how does one go about doing this?
02-12-2013 11:05 AM
...where it is possible for a head-hunter to charge client $250 per hr. and then give the actual worker about $80 all-inclusive...
Don't be reeled in to this sort of fabrication. It is NOT possible to bill a customer $250/hr and pay the consultant $80/hr. The customer is fully aware of the bill-rate and corresponding pay-rate, and will only allow a certain amount of mark-up. Generally it is already pre-determined.
Also, I am not currently aware of any contract position where the customer is willing to pay that high of a bill rate - customers are just as tight with their purse-strings, and will go elsewhere, where the bill-rate is significantly less...
02-12-2013 01:20 PM - edited 02-12-2013 01:20 PM
There are rates in the high $300's (think mine was $375 on a recent project). This is for SAP functional, SAP project managers, architects, etc -- but I agree, you're going to need to pay them at least $150/hr all inclusive.
It would, however, be extremely difficult to just move into this line of work.
1. Establish yourself and a reputation in a highly sought after skill niche,
2. Find a client with an urgent need (and a budget),
3. ... even harder .. find a talented contractor that is available at any given moment.
So I largely agree with Silver Surfer -- possible, but not likely.
02-12-2013 02:44 PM
That ad is complete BS. No one is gonna pay a 300$ markup. Like someone else said, the clients usually fix the payrate and have contracts with their suppliers that usually run between 25-40% (depending on volume) for markups. Believe me, if we could get those kind of rates, most of us wouldn't be working long.
02-12-2013 04:11 PM
>> There are rates in the high $300's (think mine was $375 on a recent project). This is for SAP functional, SAP project >> managers, architects, etc -- but I agree, you're going to need to pay them at least $150/hr all inclusive.
Which functional area were you in? I was offered $80 all-inclusive for SAP BASIS (and was supposed to be grateful for that one)
>> Like someone else said, the clients usually fix the payrate and have contracts with their suppliers that usually run >> between 25-40% (depending on volume) for markups.
The client doesn't care what is paid to the engineer so long as the job gets done.
Case and point. I was working on a project (in a SAP capacity) for a certain rate. They told me they wanted me to relocate to a different area - I told them I was having X as take home pay and that relocation would be difficult. When hearing this the tech manager onsite said that "someone is eating a lot of your money".
Based on that, I surmise that the agency was charging the customer a LOT of money. Hence why the customer gives me the difficult cases - that their own people have not been able to solve along with a dump truck's worth of work.
Customer is charged X (a lot), engineer gets Y (a little) - customer wants their money's worth (understandably).
This highly angers me hence the reason for my wanting to represent myself. Why should a pattern-matcher get over 40% of my pay for a year because he was able to efficiently use Google? I can do that as well.
Additionally - something that most head hunters cannot do - I can look at someone's resume and determine whether or not they have the skillset / background to do a job - even if they don't have the buzz word sitting on their resume. I did this for another project and was able to get it done quickly for very low cost because I could find "diamonds in the rough". Eventually, they "grow-up" and leave the nest to get higher pay (and I was glad to see that actually) - but - in the meantime, they work for me for next to nothing.
Again, head hunters cannot do this because they look for buzz words and version numbers and then have to play games with payments, hours, etc. Of course, one will say "this is just capitalism at work", however, it is the same captialism that has jobs being outsourced to other countries (a two-edged sword).
02-13-2013 07:45 AM
I will say this ONE more time. The difference that the recruiter gets between payrate and billrate DOES NOT come from the candidate. If a job pays $65 and the company is billed $85, the candidate has ZERO chance of getting $85 even without a recruiter. The job PAYS $65, PERIOD, thats what you'd get no matter how you got the job. The excess goes to pay the unemployment, SS taxes, workers comp...and some profit to the recruiter which the employer sees as cost savings as his HR department isn't spending the hours searching for a candidate. Guess what, If you were able to get maybe $75, that will be on a 1099 and then you pay the taxes, netting again the $65. Unfortunately MOST companies will not do 1099 anymore because they got burned by "consultants" when the economy tanked. SO, **bleep** all you want about recruiters but the industry is here to stay and will be utilized even more by companies as time goes on.
02-13-2013 09:57 AM
I remember going to an interview (for a large company) where the head-hunter pretty much took my resume and slapped his logo at the top of it.
Mind you, for the interview, the company paid for the flight to the interview site. I paid for the hotel for the day (for which I was reimbursed by the company) and the head hunter paid $0 throughout the whole thing. BTW, he was initially trying to get me to pay for the flight up until *I* told him that the company was covering it.
The HR person for the company asked me : "how long have you been working for this recruiter" I told her I never met the guy and that he was someone living in Florida who found my resume. She looked at me and said "Yeah - they're a dime a dozen aren't they?"
Even the large contracting houses go out of their way to distinguish themselves from the mom-and-pop houses. So, with that being said, there would not be so many if it was so incredibly hard. In the old days, I got jobs with no head hunter involved.
If the climate has changed so that the engineer must be BOTH head-hunter and engineer, then so be it - just need to know how it is done (again for the reason of my post).
02-13-2013 10:10 AM
Oh - BTW, you claim that the company does not allow for ridiculous mark-ups over the engineer's rates. If that's the case then why the stories of 5 people in one room (obviously making low wages) but the recruiter representing them charges much higher rates?
Why the stories of someone fighting for $25/hr (when head hunter originally tries to get them to accept $17/hr) only for the guy to discover that he charges $50 to the customer (100% markup).
This is stuff I have seen here on dice.
This is something I have had personal experience with.
I have heard countless engineers speak on not-so-favorable terms about the recruiter more times than I can imagine.
Again, if the climate has changed that much - need to learn how to work with it.
02-13-2013 10:33 AM
Where do I start? First, this isn't 1980 so clients negotiate everything including the contractor's pay and bill rate. Small companies that don't use a lot of contract help may base their purchasing decisions strictly on bill rates, but the staffing industry is so competitive, that it would be almost impossible to charge $250 for a skill that’s worth $80 on the open market. But don’t take my word for it; review the quarterly earnings reports from publicly-traded staffing companies if you want the real scoop. Granted, the margins for professional staffing are healthier than general staffing segments but the spread you described would be an anomaly not the rule.
02-13-2013 12:58 PM
For the $200/hr. example, was referring to link above. This is what it looks like to me. From what you are saying there is a market rate fee for the work and finders fee rate for "finding you".
The focus seems to be on the $250 bill rate in this discussion. My focus was on that the rates charged for a skill. Let's say a SAP functionality were $200+ Someone above said he was getting $300+ for a recent project.
Now, I can remember when one actually used to get $200+ for SAP work as a contractor. I thought such days were gone until the fellow chimed in above. But, under the recruiter scenario, the engiiner will no longer get $200+ anymore. It will be less than that because the recruiter has to be paid for finding you.
Perhaps I should confer with the fellow above who is getting $300+ for his work. I doubt seriously he is being represented by a recruiter but going "straight in" without one.