Real companies go direct

Like it or not, the agent is seen as a drain on resources, a non-trusted, unwanted party to a deal that would be better without them. In the Empire of the IT freelancer, few contractors believe agents are a force for good, but rather a dark, malevolent necessity that merely simplifies the search for work.

Most contractors are, and wish to remain, technicians. Sure they flirt with the idea of growing their nascent companies into large global consultancies, but most are so busy mucking about with technology that they are happy for the agent to take on much of the administration for a small cut.

But it's not just that the task of administering a direct relationship costs energy most contractors would rather spend on their technical work, it's also the case that winning a direct contract is not always easy.

The client-agent-contractor menage-a-trois, is a well-established trade-triangle that project managers are comfortable with. Their loyalty is to their business, they have a budget for human resource and a project to complete.

For most larger companies, the decision-making-unit that interviews and offers roles to contractors, has been created for working via an agent, and managers simply do not have the authority to say "yes" to a direct deal.

Such a company-to-company arrangement is for higher powers that are not usually party to finding resource for individual projects and can be difficult to contact. Any tricky negotiations, new experiences, or awkward contractors are simply not worth the bother when easier options exist.

And creating easy options is what agents excel at, so in order to compete, you must present a very desirable proposition.

Dave Waterman runs a two-working-directors limited company that operates directly, "whenever possible." He says his first direct contract was relatively easy to arrange. "The client wanted specific skills and solutions and was not worried about using an agency. We reduced our rates as a result."

Waterman's specific skills were in demand, and the company was open to a reduced rate, two good selling points.

Finding a unique selling point can be a challenge if you have standard skills which is why many direct contractors have first worked via an agent and then approached a company later on – a sometimes risky strategy, since most agent contracts contain a term forbidding direct working for a period of time after the contract has ended.

The motivation here, for both parties, is the potential sharing of the agent's cut. The contractor has previously proven themselves and the client-manager therefore has enough reason to push such a deal through.

But when you have no previous contacts, just finding the right person to pitch your skills to is a challenge. For this reason, going direct often means contracting for smaller, easier to sell to, companies, and taking shorter contracts.

Small and medium-sized companies still have contractor requirements and their contract-making managers also resource the projects. They will also be eager to reduce the fees they pay agents, and will look at unusual contract arrangements for staffing projects if it can save money or get them what they want.

So if you wish to go direct, you must consider your bargaining position. Will a prospective client be bothered to change working practices, and if so, why? What is so special about one contractor that makes it worthwhile to make the necessary arrangements, which can be onerous.

"The direct clients tend to want more clauses in the contract," says Waterman, adding that you must carefully consider terms, and "be very clear on how and when you are getting paid. Especially the when!"

Approaching companies direct will mean marketing materials, websites, negotiation skills and a willingness to put in hours of unpaid work in the hope a contract comes off. Then rates and expenses must be finalised on top.

Usually, the agent conducts client negotiations with all the experience and market-knowledge they can bring to bear, and despite protestations from contractors that they are legitimate limited companies with concerns of growth, overheads and legal arrangements, most contractors are content to sit back, count the money, and let the agent take a cut.

But as Waterman puts it, going direct, "is what real companies do."

William Knight


Wednesday 17th Aug 2005