Why do employers use recruitment firms/headhunters?

I know some of you have worked "behind the scenes" and understand why employers hire IT people through staffing companies of some sort (not temp agencies).

Does it save them money somehow?
Are these agencies better at finding the "right" person with the right skills?

I just took a job that's contract to hire, and I'm assuming the recruitment firm gets X dollars per hour I work. They accidentally indicated that my pay was negotiable. I'm not saying how much I make, but lets just say I'm getting paid $20/hour. Does that mean that the company I'm working for is paying the recruitment firm $25/hour?

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Anonymouse

ehnde wrote: »

I know some of you have worked "behind the scenes" and understand why employers hire IT people through staffing companies of some sort (not temp agencies).

Does it save them money somehow?
Are these agencies better at finding the "right" person with the right skills?

I just took a job that's contract to hire, and I'm assuming the recruitment firm gets X dollars per hour I work. They accidentally indicated that my pay was negotiable. I'm not saying how much I make, but lets just say I'm getting paid $20/hour. Does that mean that the company I'm working for is paying the recruitment firm $25/hour?

I would assume that all companies work out different contracts. For instance one contract I did we were all getting paid $18/hour (though one complete moron was making $12/hour and was told the rest of us were too) but one of the project managers let it slip out that the company we were performing the work for was paying $100/hour per each tech.

earweed

The recruiting firm (aka bottom feeding slime) gets a pre-approved amount for your services. The less they get you to work for the more profit they make off you per hour.
A lot of gov agencies use recruiting agencies just due to their requirements to utilize small businesses/ minority owned businesses. That's how the company I was recruited by got a contract where I'm at.

ehnde

Anonymouse wrote: »

I would assume that all companies work out different contracts. For instance one contract I did we were all getting paid $18/hour (though one complete moron was making $12/hour and was told the rest of us were too) but one of the project managers let it slip out that the company we were performing the work for was paying $100/hour per each tech.

I was told not to talk to anyone about pay (signed a paper agreeing not to) and it's probably not legal anyways. It's easy to see how that could cause problems

earweed wrote:

The recruiting firm (aka bottom feeding slime) gets a pre-approved amount for your services. The less they get you to work for the more profit they make off you per hour.
A lot of gov agencies use recruiting agencies just due to their requirements to utilize small businesses/ minority owned businesses. That's how the company I was recruited by got a contract where I'm at.

So would they get say....$25k for you working 6 months? It's probably more complicated than that, like if someone gets fired.

I'm excited and grateful to have a *real* job, was just curious what goes on behind the scenes.

cyberguypr

earweed wrote: »

The recruiting firm (aka bottom feeding slime) ...

Priceless

Hypntick

My understanding is this: I was working at xyz help desk making 14 an hour with no benefits. The full time guys we're making around 21 an hour with full benefits covered, plus vacation etc. Chances are the contracting company billed me out between 25-30 an hour since that is still going to be cheaper than 21 an hour with full benefits etc. So we'll hedge that and say they're pulling in 13.50 an hour for just having me there, 6 month contract, so they're bringing in close to 13k for just finding me that job.

Just glad I found a direct hire to get past all the red tape.

earweed

Just like my contract..lol It has a stipulation stating that you can't discuss salary with your coworkers and could be grounds for termination. It's just to prevent "hurt feelings" on the part of people who agreed to work for less than the others. The recruiters get a set amount, per hour, for each employee and they make more if you accept lower pay (for every hour)
Like you, though, I'm glad to have the job but would have rather gotten it direct and gotten better pay.

Bokeh

<<-- Former recruiter. Cut throat business.

If you are getting paid 20.00 for example, the "bill rate" for most agencies is 40-45/hr. That covers your FICA, unemployment ins, and the agency overhead. Now the recruiter is not going to make a huge portion of that, maybe 3-5%.

Its to a recruiter's advantage to have as many people on contract as possible. Most of these firms work on draw against commission. So if they are not putting people to work, they are making pocket change. Once they hit on a permanent job, they need to pay back the bank (aka draw). Since its easier to place contract people, it makes more sense for a recruiter to have as many people as possible in their temp book.

A lot of companies find it easier to let an agency sift through the chaff, and find potential people to hire, then have HR do it and miss someone who is actually qualified for the position.

DigitalZeroOne

One of the main reasons companies use recruiting firms is because the company does not have to spend the time to screen quality candidates, for that the hiring company sets up some type of contract with the firm, and in contract to hire positions usually you work for x amount of time, and then the company has the option of hiring you full time. If the company wants to make you a full time employee earlier than the contract allows, there is usually a "buy out" clause stating how much it costs to essentially break the contract and hire you on early.

Yes the firm is making money off of you, it could easily be twice as much as they are paying you, so there is room for negotiation. I would usually ask what the range of pay is for a job, and then work from there. Something to keep in mind is that if a firm is known for always delivering quality candidates, that firm can find you jobs left and right, so they are useful. The cost of hiring someone costs the company, especially if they find out later that you are not the correct fit for their company, it's more economical and it involves less time to use a recruiting firm.

it_consultant

earweed wrote: »

The recruiting firm (aka bottom feeding slime) gets a pre-approved amount for your services. The less they get you to work for the more profit they make off you per hour.
A lot of gov agencies use recruiting agencies just due to their requirements to utilize small businesses/ minority owned businesses. That's how the company I was recruited by got a contract where I'm at.

Tell us how you really feel! I have gone through headhunters, my experience was not universally negative but I don't prefer working through one unless the contract is contract-to-hire. I suppose if you need to work you will take it so you can pay the bills, thats what I did.

SteveLord

Bokeh wrote: »

<<-- Former recruiter. Cut throat business.

If you are getting paid 20.00 for example, the "bill rate" for most agencies is 40-45/hr. That covers your FICA, unemployment ins, and the agency overhead. Now the recruiter is not going to make a huge portion of that, maybe 3-5%.

Its to a recruiter's advantage to have as many people on contract as possible. Most of these firms work on draw against commission. So if they are not putting people to work, they are making pocket change. Once they hit on a permanent job, they need to pay back the bank (aka draw). Since its easier to place contract people, it makes more sense for a recruiter to have as many people as possible in their temp book.

A lot of companies find it easier to let an agency sift through the chaff, and find potential people to hire, then have HR do it and miss someone who is actually qualified for the position.

Pretty much sums it up right there. This is also why I tell newbies on here that scream the "omgz I got like 4 calls/emails within a day of posting on monster/career builder! Everyone must want me!" to essentially tone down their celebration of themselves.

Bokeh

And usually on a perm position, the agency charges 1% per thousand of the new potential hire's first year salary.

So, on a 45,000 first year salary, the agency "fee" would be 20,250. Now, most employers balk at high of a fee, so most cap it at 25%. So a more reasonable 11,250, of which said recruiter would get roughly 20% of that or $2250. Of course this varies with agencies and location, but you get the idea.

geek4god

Don't forget when someone ends up sucking the staffing form gets to fire them and deal with it.

Lots of companies love the flexibility.. Firing full time staff can be a pain. Get a 6 month project call staffing firm even if u might keep a few.. Ten people start the project, halfway u decide u need 5, two weeks latter u need a couple more.. Internally that is an HR nightmare, but it is just a phone call if you use a staffing firm!

A lot of companies love to work u through a staffing firm to see what kind of worker you are before hiring you as for a lot of orgs hiring and firing is a royal pain!!

Everyone

I started to hate recruiter calls last time I put my resume up on a job site. Having said that, I did end up using a recruiter to get the job I have now. Very small family owned and operated recruiting firm. The guy was very nice to work with.

The biggest thing I couldn't stand was all the calls from people who's 1st language obviously wasn't English. I have nothing against foreignors, but if I can't understand you, it isn't going to work out. Plus they seemed to be the ones that just didn't get it when I said "I'm only interested in full time permanent employment". No matter how many times I said it, some of them would keep calling me back trying to talk me into these 3 to 6 month contracts that were clear on the other side of the country.

ehnde

Sounds totally different from my experience. The agency that got me my current job is very professional. Americans speaking English, all been with their company several years.

Everyone

ehnde wrote: »

Sounds totally different from my experience. The agency that got me my current job is very professional. Americans speaking English, all been with their company several years.

Had a few of those too. I had one guy trying to talk me into a 3 month contract to hire for company working a contract at an Army base in AZ. This guy really made me laugh, he acted way too excited about my resume and said things like "With your kind of experience I could put you in any one of these jobs down here, you can pretty much have your pic, you'd be like a rock star as soon as you step off the plane here!". The pay was really good, it was hard to pass up. I didn't want to move my family halfway across the country for something that wasn't guaranteed. Who's to say they wouldn't just let me go after the 3 month contract is up?

Finding good recruiters that were offering direct hire placement with one of their clients was hard. This was a few years ago though, not sure how things are right now.

CodeBlox

I'm a newbie. Is it possible for one who got hired through a staffing agency to eventually work for the company they are supporting indirectly? If that makes any sense. Ex. Say I'm employed by staffing company abc to support company xyz. Could I eventually end up working for company xyz?

QHalo

earweed wrote: »

Just like my contract..lol It has a stipulation stating that you can't discuss salary with your coworkers and could be grounds for termination. It's just to prevent "hurt feelings" on the part of people who agreed to work for less than the others. The recruiters get a set amount, per hour, for each employee and they make more if you accept lower pay (for every hour)
Like you, though, I'm glad to have the job but would have rather gotten it direct and gotten better pay.

I'm working contract and the guy that was my peer was making less than half what I make for the same work. I don't know why he felt the need to tell me but I sure as hell don't discuss what I make with anyone else. Not all recruiters pay their employees well. I'm sure the recruiter I work for is making alot of money on me, but they're also paying me a ton more than I would normally make because of the rarity of what I support. I work at a place now that has more contractors than FTE's so they're probably enjoying paying higher salaries but no bennies. There is no going rate for a recruiter. Negotiate or find someone else who will pay you more.

QHalo

CodeBlox wrote: »

I'm a newbie. Is it possible for one who got hired through a staffing agency to eventually work for the company they are supporting indirectly? If that makes any sense. Ex. Say I'm employed by staffing company abc to support company xyz. Could I eventually end up working for company xyz?

Depends. Did you do a Temp to Perm or is it just a straight up contract? I'm temp to perm and I discussed the situation with who I work for during the interview if there was a possibility of hire. I say ask unless you specifically signed something that says you can't direct hire to them. It's my understanding that recruiting companies make more off of you if they place you into a full time role than by the hour. Unless you're working under an SOW, then they already got their money so they could care less. I'm probably way off base though and someone who's been doing it longer and knows more should set me straight.

Nevermind, I read Bokeh's post and he pretty much summed it up. +1 to him

CodeBlox

Sounds like people where don't really care for recruiters. Is there a reason besides them lying about wages?

Hypntick

CodeBlox wrote: »

Sounds like people where don't really care for recruiters. Is there a reason besides them lying about wages?

I personally have had good experiences with them. A lot of the higher end ones, RHI, Teksystems etc. when you speak with them and lay down what you're looking for and the pay range, they usually won't call until they have something like that. Also some of them can give you some connections in your area, I added my points of contact on linkedin. Gives you a wider network of people to deal with when it comes time to look for a job.

djfunz

Hypntick wrote: »

A lot of the higher end ones, RHI, Teksystems etc. when you speak with them and lay down what you're looking for and the pay range, they usually won't call until they have something like that.

Are there other ''higher end'' firms you're able to list?

tbgree00

CodeBlox wrote: »

Sounds like people where don't really care for recruiters. Is there a reason besides them lying about wages?

Recruiters essentially work a pimp and ho trade. It's their job to sell you to the company as the worlds best for this position and then also to sell you on the company being only mildly interested at the wage you told them you want but are willing to take you at 5 dollars/hour less than you said you needed. They know if you're unemployed or unhappy and desperate you will take it.

You basically accept this wage with no benefits and (in my case at least) are treated, and worked, like you're a 100/hr employee when you're making much less. I always felt a little disposable because the company itself doesn't owe anything to you and can call up their rep and get another worlds best candidate just like you at the drop of the hat.

Lastly they sell you the job as one thing when it's really not that. I was sold a tier 1 desktop support job with no real exposure to server technology as a vmware and server job. Imagine my surprise!

If you're looking to get in the door and are at entry level or experienced specialist level then they're a decent option. If you're between those two levels you may have some problems finding something you like. Also if you find a trusted local company you may find something decent, though big companies like Tek have contracts with utilities and multi-nationals.

jtoast

CodeBlox wrote: »

Sounds like people where don't really care for recruiters. Is there a reason besides them lying about wages?

Back when I worked contract, there were 3 or 4 recruiters who I worked with on a regular basis. They didn't BS me because at the time I was one of the few software packagers they had who was willing to accept 3-6 month contracts that required travel.

Now that I'm in a more permanent position, I still keep in touch with them on a fairly regular basis just in case I need them.

Other than those known quantities, I am very leery of recruiters. I get 4-5 emails and phone calls a week from someone wanting me to send them an updated resume. Most of them have no actual position I would be interested in and are simply hoping to shotgun a bunch of candidates for everything they have and hope someone sticks.

That approach sucks if you are actually job hunting because those type of recruiters will often try to submit you for positions without telling you the name of the company or discussing your submission in advance. This will kill your prospects at that company if its one that already has your resume on file as they now have a potential conflict regarding which recruiter they would have to pay. Much easier to just eliminate you as a candidate.

QHalo

tbgree00 wrote: »

Recruiters essentially work a pimp and ho trade. It's their job to sell you to the company as the worlds best for this position and then also to sell you on the company being only mildly interested at the wage you told them you want but are willing to take you at 5 dollars/hour less than you said you needed. They know if you're unemployed or unhappy and desperate you will take it.

You basically accept this wage with no benefits and (in my case at least) are treated, and worked, like you're a 100/hr employee when you're making much less. I always felt a little disposable because the company itself doesn't owe anything to you and can call up their rep and get another worlds best candidate just like you at the drop of the hat.

Lastly they sell you the job as one thing when it's really not that. I was sold a tier 1 desktop support job with no real exposure to server technology as a vmware and server job. Imagine my surprise!

If you're looking to get in the door and are at entry level or experienced specialist level then they're a decent option. If you're between those two levels you may have some problems finding something you like. Also if you find a trusted local company you may find something decent, though big companies like Tek have contracts with utilities and multi-nationals.

I'm working with Tek and I'll vouch for the last part. They put me in with a huge insurance company and they're paying me a pretty hefty salary as well. It's mostly because the skillset has been tough to find in our area and with that comes higher hourly rates.

PPforLife

SteveLord wrote: »

Pretty much sums it up right there. This is also why I tell newbies on here that scream the "omgz I got like 4 calls/emails within a day of posting on monster/career builder! Everyone must want me!" to essentially tone down their celebration of themselves.

This is exactly what I did today,..YES 6 phone calls... sighhhhhhh

RobertKaucher

geek4god wrote: »

Don't forget when someone ends up sucking the staffing form gets to fire them and deal with it.

Lots of companies love the flexibility.. Firing full time staff can be a pain. Get a 6 month project call staffing firm even if u might keep a few.. Ten people start the project, halfway u decide u need 5, two weeks latter u need a couple more.. Internally that is an HR nightmare, but it is just a phone call if you use a staffing firm!

A lot of companies love to work u through a staffing firm to see what kind of worker you are before hiring you as for a lot of orgs hiring and firing is a royal pain!!

In my experience this is the real reason that most companies use temp agencies. It mitigates risk and allows flexibility in hiring/firing.