Post April impact on recruitment agents

[ladymuck]

I noticed that there are lots of 'boutique' consultancies/agencies that are trying to do the right thing and I think there's real opportunity for them because they have the ability to be flexible and attract proper recruitment talent.

Big agencies will merge and acquire each other as they've always done (have you seen how many companies are part of SThree?) and the luddites will fail while the innovators / those with enough cash will survive.

[Andy Hallett]

Big agencies will merge and acquire each other as they've always done (have you seen how many companies are part of SThree?) and the luddites will fail while the innovators / those with enough cash will survive.

SThree have never acquired another recruitment company. All the growth since 1986 has been organic to date.

[Andy Hallett]

To answer the OP question, I don't think it will have a massive impact on the agencies that go into these changes with their eyes open. I was around in 2000 when IR35 and ran SThree's project when the rules were amended for the Public Sector in 2017. At the time 25% of our book was FIA yet the impact was minimal as we were well planned.

GDPR, AWR, MSC Legislation, Onshore and Offshore Intermediaries, Brolly Expenses and various changes to IR35 and Conduct regs have come and gone, but flexible freelance working in a megatrend that won't be bucked easily and agencies will adapt.

Anyway, just my 2p - What would I know?

[Hapax]

It's hard to predict how every entity that is part of this whole supply chain will end up.

there would be ever more agents in the market, they probably just switch over to handle perm roles instead.
As for the agencies they belong to, well, smaller ones are likely going down the pan like you say hence, I see lot of them are fighting all corners to try to cling on to anything they can grab hold off.
Whilst, other agencies are becoming more creative and in seek for other possible solutions via SOW or even turning themselves into an Umbrella

The specialist contracting accountancy firms probably the biggest suffer but then again, they can become Umbrella too if they want to go down that route.

I agree that it's hard to predict what will happen.

However, the scenario of contractors as collateral damage in agencies imploding, struck me as sufficiently plausible to be worth discussing. I was just surprised nobody seemed interested.

I'm sure that agencies would love to reinvent themselves as you suggest but as I've already pointed out it's not clear that they will be able to do so.

Some could switch to handling permanent roles only but there aren't going to be that many permanent roles. I can't see it generating enough revenue to cover their costs without significant down sizing.

If they decide to supply temps or run umbrellas they face substantial competition from existing consultancies and the big four accountancy firms. Many of whom have already got there. Imagine you're a client deciding to buy a temp from say Accenture or Barrow-Boy and Bimboe recruitment consultants. Who would you choose as your supplier? Imagine you're an ex-contractor working as a temp. Who would you choose as your employer?

All in all I believe the future for many of these agencies is bleak.

[BritishLad88]

I was just surprised nobody seemed interested.

Tbh i'm not that surprised. My place have a lot of permitractors. they say they don't care what the agencies are up to. All they care about is what is the best financial option for them going forward. only thinking about the finance but nothing else.

But yes, i believe you're spot on that agencies will find it tough to reinvent themselves. Some are already finding the SOW package model difficult simply not many clients are willing to engage in this model for whatever reasons. And turning themselves into a brolly like you say, it's hell of a tough competition indeed.

[CheeseSlice]

I slightly surprised that there's been so little discussion about the impact of the IR35 changes on rec. cons.

Maybe because its a contractor forum?

[CheeseSlice]

They can always go back to their original jobs of used car salesman or real estate agent or selling double glazing

That's a step up from the sort I usually deal with. I see them more as sports direct assistants, mobile phone sales, barrow boys, or fresh out of school burger flippers

[mogga71]

I slightly surprised that there's been so little discussion about the impact of the IR35 changes on rec. cons.

It's clear that many agencies, particularly those targetting financial services, face an existential threat after April. Since many contractors on this forum deal through these intermediaries I would have thought that their financial stability would be more of a concern than it appears to be.

Sorry, but I don't get this. Why? Nothing has really changed for them. In fact I would say that for those who now offer a PAYE option (instead of pointing the contractors to an Umbrella Company) will have a new option to try and fleece their contractors even more. You could argue that there will be fewer contractors as many will be going permie but I have come around to the idea that these new IR35 laws will actually end up aiding the recruitment firms as many large organisations will simply employ inside ir35 contractors instead of permies going forward.

For me, apart from us contractors, the ones who will be greatly impacted are the accountants. I reckon many will simply go out of business.

[Cirrus]

IPSE plus membership covers you for that,

I think you'll find that IPSE merely have a pot of cash. If there is a problem they will share the money out amongst the people affected. There is no guarantee you will get what you should or indeed get anything. I took this up with them - it looks like a financial product that they are not permitted to offer, and almost certainly one that does not follow FCA standards. They took it all on board - and banned me. Trust that bunch of self-deluded *******? You must be joking.

[GigiBronz]

So, are we starting to care now about the agents? The same ones that try to pull all the tricks in the book on us.
The ones that with 2 months to go before 6th of April, do not mention if a role is inside or outside, then pretend they don't know?. (Yes, had 2 of them trying to do this in the past 2 weeks)
The same ones that are trying to sell roles on 200pd knowingly that people are desperate and might go for it.

The reason the market operates in the way it does, ltds and so is because, that was the preferred option to suit all the parties at the beginning. There are a lot of permtractors there that did not choose to be contractors or have ltds but that was on of the options suggested. They would have been fools to surrender 30-40% of their income for any other option. Now they get the blame for avoiding tax. Madness.

You must have Stockholm syndrome if you feel any sympathy for them.
Just my 2 cents.