Drawbacks of using IT Staffing Companies June 10, 2009
Posted by csprestoninc in IT Staffing, outsourcing.Tags: Employment Agencies, IT Staffing, outsourcing, Staff Augmentation
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Article written by Brett Miller – http://www.customsoftwarebypreston.com
For over ten years, as a software developer working as an independent contractor, I had the opportunity to work with quite a few contract employment agencies, or staffing companies … and probably a hundred different recruiters. No doubt staffing companies have their place and serve a useful purpose, as long as the parameters are narrow and extremely well defined. But unfortunately it is not usually the case.
Don’t get me wrong, there were times when it was a very worthwhile experience for me as well as for the end client. However, in my experience, there were more mismatches in the staff augmentation process than there were matches. Sometimes it seemed like the requirements were not well defined; sometimes the technical skills of those around me (other IT placements) were questionable … but most of the time I felt like the end client was overpaying, unnecessarily.
Let me share some thoughts with you about IT personnel and the procurement capabilities I have witnessed from various supposedly expert staffing specialists and/or recruiters.
1. Staffing Company Recruiters and Account Executives
a. Tremendous turn around within the staffing company for Recruiters and for Account Executives. In my experience the recruiters sometimes only stay for a few months
b. Recruiters / Account Executives of the staffing company usually are not technical. As an example, a few years ago when Visual Basic (VB) was so popular, a recruiter once asked me if I had VD experience … and it was not a slip of the tongue.
c. Communication can be a big challenge since many of these placement companies are now owned and operated from foreign countries.
2. Minimal knowledge of Contractor (Candidates) true abilities (by Staffing Company)
a. Many times staff augmentation company have never met the contractor candidate in person. Those that refer to themselves as being thorough have usually only met the candidate once.
b. Skills summaries are done in the Y/N format. Example; yes he has C#, yes he has more than 4 years experience … but there is little or no skill evaluation in a meaningful context.
c. References may be checked, but who doesn’t have a couple people that will vouch for them. Proficiency exams may be given, but such exams usually look to highlight certain major concepts to see what a candidate can remember of the top of their heads. These tests simply do not reflect a candidate’s true ability to do the job.
d. Once a candidate is placed, the staffing company only handles billing and may only speak to the candidate every few months. There is no follow up or follow through as far as competency or viability.
e. When the project ends the contractor will usually move on … so the skill sets are lost, as are any follow through opportunities and/or continuity.
3. Staffing company
a. No responsibility of performance of consultant or results of the project
b. They only make money when they place a candidate … so their interests are not quite the same as your own. There may be a tendency to overstate a person skill level.
c. 20% – 40% Mark up on what the contractor is actually getting paid. Offices, Advertising and Staff don’t come cheap.
d. Generally candidates come from internet postings on Dice, Craigslist, Monster, etc. These are all places you could investigate on your own.
e. The end client still has to perform its own interviews. And many times they find that the pre-screening process could have been better, usually resulting in an unacceptable candidate and wasted time.
f. Contractor usually receives inaccurate job descriptions. I used to joke that the job posting would say one thing, the recruiter would explain it as another, the client would explain it as even another and (you probably guessed it) when I went to actually do the job it turned out to be something even different
Again, staffing companies do have their place and in many cases serve a useful purpose. But you should spend at least as much time interviewing them and their personnel as you might if you were doing the personnel searches yourself. Yes, they are motivated to provide qualified IT personnel … but that motivation is skewed by the overriding requirement to place somebody/anybody, since that is how they make money.
Oh, by the way, none of the thoughts or experiences I have shared above even begin to address the problems of managing a project. One can only shudder at the thought of what it might be like if an unproven, unqualified contractor is hired. That’s a topic for another day.
I agree with your bottom line. A client must spend as much time interviewing and picking a staffing firm and their personnel as if they were doing the search themselves.
I work for a Silicon Valley-based [IT] staffing company and the points that you mention here are true of a lot of staffing companies and at the risk of sounding cliche, our main differentiator is that we’re not like that.
For example, I have been with the company 8.5 years, and while that is almost unheard of in the industry, I’d have to add that I am relatively “new” compared to those who have been with the company 12, 14 years (and there are several). When you have a recruiting staff that has that kind of tenure, you tend to have a following and you do get to know the candidates and contractors that you work with. In quite a few cases, the contractors we placed 10, 15 years ago are now clients. You don’t get to build those long-term relationships with massive turnovers and placing “just anybody.”
And speaking of long-term relationships, that’s really the only way a staffing firm can succeed. Staffing firms bill per hour. We make money (after payroll, payroll taxes and other mandatory costs…that amounts to cents per hour) for each hour the contractor works. A high turnover rate resulting from poor recruiting is not profitable and well…you’ll just lose money. As the employer of record, most attrition costs fall on us: cost of finding replacement, unemployment insurance, etc. It’s in our best interest to find the best candidate who’s the best fit and after that candidate has been placed, to keep that person happily working.
Great Post!! My experience tells me you are speaking for the majority of IT Professionals out there. I especially agree with the point you make about people needing to be critical in who they allow to represent them when working with staffing companies in general.
As a service delivery manager for TEKsystems In Seattle, I also appreciate the fact that you took the time to explain that you’ve had positive experiences in the past with staffing companies as well. Hopefully you are having those positive experiences with representatives from my company in your area as I type. If not, I suggest you let us know immediatley as we are striving to better align our services to every one of your points mentioned in the post on an ongoing basis, seriously.
I’ll echo the earlier comment on how most staffing companies are incented financially over the long term so lasting placements are actually far more desirable to us than short term ones. I’ll also mention that the “20-40% Mark up” is something that naturally comes with engaging a 3rd party in business but that any staffing company’s profits are only a small portion of that “Mark up” opposed to what many believe is a pure profit venture.
I invite you or anyone else to continue this conversation directly with me at jorchard@teksystems.com, through the new Seattle TEKsystems Blog at http://www.teksystemsseattle.wordpress.com or twitter via johnorchard1.
Thanks again for your post!
I think that this posting is invaluable to both managers and staff-augmentation professionals. It is important for all involved parties to understand the colleague’s position of the other side of the conference table.
1) Business Developers need to take the time to really understand why the customer need the consultant — not just what skills are needed.
2) The customer/hiring manager needs to make sure that the Business Developer has a well-written job description… I can’t tell you how many times I’ve had to dig for more details. Sometimes, the managers may not actually understand the role they are filling and have to go back to the team lead to get a better job description.
3) The hiring managers need to interview their candidates like their job depends upon it….because it does. Anybody can fake their skills on a resume — and they certainly have done, in the past. It doesn’t matter if it is a consultant hire or a FTE hire — the person that is interviewing most likely wants the job and will do a tap-dance to win it. The staffing company can’t be blamed if the contractor isn’t a good fit. The manager pulls the trigger. Blame-shifting is not good for anybody — so everyone has some level of fault.
4) It is important to note that technical people don’t usually make good recruiters or sales people — which explains why there are very few techies that take their career in the staff-augmentation direction.
I do my utmost to understand the needs of my customers and abilities of my candidates and do my very best to always bring the right resource solutions to projects. When all parties are happy — I’m happy.
Great post – that is why at Kovasys Inc., (http://www.kovasys.com), we are a team of IT professionals turned into IT recruiters. We understand what our fellow IT contractors need as we’ve been there ourselves before.
Alex Kovalenko
Director Of Operations
You cannot generalize that all Recruiters are the same because it is not true. I have had many candidates tell me they are gun shy because they have had bad experiences with Recruiters in the past. Most of these experiences centered around the Recruiters being too pushy and not listening to their wants or needs, not explaining the position accurately and/or not providing any follow up after the first communication and after submitting them to the client. Everyone likes to say/think they are different, but we truly are and hear that constantly from our candidates and clients. I just had a client tell me that I changed his opinion on Recruiters, and he thought that would never happen. We are not trying to just place candidates for a fee, we truly see ourselves as an extension of our client’s businesses and their business needs. We know that if we do not do our homework and send the right candidate, our business relationship with the client will not continue, and their business will suffer. We are all about building relationships with clients and candidates and placing candidates in the right positions for their needs and skill sets. That is the way to ensure success as a Recruiter.
As unfortunate as it is that a large number of staff augmentation companies have lost trust with companies, there are other options.
At SoftEx Consulting [http://www.softexconsulting.com], we specialize in placing programmers with companies, matching their needs to our assets, and keeping with them all the way.
Fortunately, at SoftEx, most of the people who work the placements are also fully active programmers. We like to keep in the trenches, so to speak, this way we are up to snuff on the needs of the current marketplace.
If you go to the website, you will also see our ‘first week, no obligation, guarantee’.
As to the VB vs VD, I remember a time a few years ago where I spent about 20 minutes on the phone with a technical recruiter who was trying to recruit me, teaching her what the difference was between Java and Javascript. That was probably one of the big reasons that I got involved with SoftEx, to make a change in an industry that badly needed it, from a company poised to do just that.
Hmm, it looks like I am the first non-recruiter to respond. I have been placed a few times by staffing companies, and I really appreciated the work that SOME of them have done. Yes, I have had a phone call / lunch / coffee with a recruiter, never to hear from them again. Or, to talk with someone once, and then get an email in a month that so-and-so is my “new contact” … then another the next month … etc.
The few people that really helped were those that had been in the business for a while and were looking to stay. Yes, I have done my share of training with a recruiter, but only because I thought they might be longer term, and I wanted to put something into the relationship so I might get it back later.
I understand your points, and, just like people say about lawyers, “the bad ones give the other 10% a bad name.” Maybe the real solution is for the technical people to stop using bad recruiters? The problem is, when you are out of work, you’ll take any lead to get the next position. I try to do my own due diligence; if I don’t think I’m a good fit, I’ll let them know, and try to let the recruiter know what was wrong for me.
I guess my bottom line is I think you are too harsh in generalizing. Yes, there are problems with the current model, but I don’t see any better ideas offered. A staffing company gives the hiring company a bigger set of people to choose from, and does some up-front filtering (at least the better ones). As long as a good, qualified candidate is found, then the money is probably well worth it.
Im not sure i completely concur……as a recruiter i mean, i can only assume the person that composed this had a bad experience with one recruiter – As you are generalising, i shall assume you are referring to the high street, genralist “ill get you a cleaner or a director” style agencies, and not the specialist recruiters who do invest time and money into learning their individual technology (like myself, of course). ALSO, researching candidates on your own is all well and good, but in my experience when you are advetising roles direct from a company you can receive up to 700 applicants – now, do you, the line manager want to sift through that all day? Or, for a fee that YOU agree with (not an erronious markup) i can do it for you. That didnt meant to sound like a sales call by the way, i do it so often it just came out like one! Feel free to get in touch should you not share my feelings of love, when referring to the lovely staffing industry – My complaint the other way? For goodness sake, if i send over a candidate, give me feedback!
Thanks
Unfortunately I agree with everything you’ve said as well. I’ve been a contractor/consulting for 15 years, independent for three, and most of the time there is a horrendously poor matching between job skills and position. Oftentimes it’s due to funding limitations. I have to add that a staffing company earning 20 – 40% of the bill rate is, imo, highway robbery. In my experience, I have found most of my own jobs, but only needed an intermediary vendor to go between with the client. (Thanks Microsoft!) Why are they collecting $30/hr when I did all the work? I have found a candidate unmatched to the job requirements more often than not, from multiple staffing companies. Many have, at best, questionable business ethics costing the client more money in the end. I do not meant to stereotype and every call or email I get from a recruiter I listen to/read with an open mind, but when I receive dozens of correspondences from recruiters looking for a developer when I have no developing skills, background or experience listed anywhere on my resume, this tells me they did a scan for a word and when they found it, they simply contacted me without really reading my objectives or experience. As someone earlier stated, the 10% make the rest look bad. Somehow I think it’s more than 10%, but I haven’t done the study to know for certain.
@Lisa – I commend your organization for having such a long-standing business relationship. So few companies can see the big picture and benefits of developing relationships and just want to get in there and get their take.
Some valid points and some less valid ones as well but certainly interesting to hear peoples perceptions.
I wish I had time to address all the points but I guess the one I feel most strongly about is the staff turnover and lack of accountability.
This is the same in almost any field u care u mention if the company is of a certain size. The solution is to work with an owner operator. They is no turnover and they are accountable for everything. The issue here is that clients often have strict PSA that are generally aligned with the larger more corporate agencies. As such many of the highlighted issues above stem from the hiring company themselves blocking their managers dealing with small operators.
Congratulations for the great post! I consider them an obstacle in finding jobs as well, both from the ability of matching skills and from the salary perspectives.
I am impressed on the arguments provided by the staffers, which seems to be anything than underrepresented here on the comments.
@Tom E – there are no good or bad recruiters, some companies go through a list of 3-5 recruiter companies, if you don’t like them you don’t get an assignment there, while lawyers you can simply choose between.
@Alexius, you don’t have a clue what a manager does. Of the 700 applications, a secretary can retain only 100 applications by using keyword search. For example, for a Java developer, if there is no Java word in the application, in the experience section, the application will be removed from the pile. Believe me or not, 85% of the applications fall in this category. Then, a non-manager but technical person will filter up 10-20 applications. They will be forwarded to the manager, who will read them, will call them and will arrange interviews, eventually together with an HR specialist. The manager has to spend time employing people, getting good people in my team (usually in IT a manager does not manage directly more than 20 people, usually 5 to 10) is one of the most important things I consider.
@Liz it’s about principle, the principle does not work, not about good and back recruiters. If the objects heavier than water sink, even if you say they don’t and pay a bunch of people to approve you, you may fool a few, but the most understand this doesn’t work.