Although there sometimes comes across a feeling of resigned mutual need in the postings on this site - the relationship is not always a happy one.
Philip Ross, a former IT freelancer and regular contributor to Shout99 is now on the other side of the fence, trying to source freelancers as a client.
Here Philip asks if the agency route is the only route. At the end of the article we invite and welcome your contributions to this debate.
Philip Ross writes:
There must be a better way for businesses to engage contractors than to have to always go through agencies?
Philip Ross at Labour Party Conference
I am now helping to run a consultancy and I am experiencing that relationship from the client side. It is not great and I know it is not great from contractor side. There has to be a better way.
When I was contracting through an agency despite my best efforts to sell myself in as a business and trying to red-line lots of clauses in their contract I felt they were treating me as some sort of super-temp. Now reading the client-agency agreements I see that that is exactly how contractors are being sold to clients.
As a contractor I wanted to be treated as a business and now as client I want to hire contractors as businesses not as agency workers. Despite there being lots of opt-out for the Agency Workers Directive and others, it still doesnít feel right. It feels like a market for temporary workers not a market place for professionals.
One of our visions for the contracting industry when we founded the PCG was to try and build a new market model for contracting to make it an acceptable business model. But so much time has been spent fighting IR35, work permits and other regulations (all crucial to sustain contracting as a model per se) that that hasnít happened.
The fracture in the contracting model is and has always been the use of agencies and it is through this gap that IR35 emerged. The use of umbrella companies and management service companies and the various opt-out clauses in various pieces of legislation all stem from this one reality. But it doesnít need to be like that. At the heart of the whole problem is an urban myth.
There are lots of urban myths about how you have to buy services from various companies. For instance I heard an advert on the radio today that urged people to get their cars serviced through them rather than the main dealer. It pointed out that this wouldnít affect their warranty. But I know and you know; that the average motorist will still be anxious about it, could it really be true? We have been told for years the opposite. Best go down to the mainline dealer and pay extra, just in case.
People prefer to go to the bank for their holiday money or to transfer money because they think that they are the only ones who can be trusted to do it. Other firms can do it cheaper and better but people are still anxious despite that the fact that they could walk in with sterling and walk out with less dollars - they will feel more secure because it is the bank that has done it, years of marketing have conditioned them to believe it.
Estate agents are another, the myth that only they can sell your house and any advertising company that can do it for a fraction of the price canít be right. It is such a big commitment best to pay someone, just in case.
The final myth is that you have to use an agency to engage contractors else you will be liable for employment rights if you take them on directly. Not true. Yet it is not just clients who believe it, but agencies and contractors themselves. Also as a permie I could never understand why my company thought it would be better to pay thousands of pounds extra to an agency for convenience of invoicing for a contractor than taking them on directly. It was this myth about employment rights. It is so pervasive that agents donít have to make it up because they and everyone believes that it must be true.
Back in the early days of the PCG it was a revolutionary movement, it had great fluidity and power. Our huge mass lobby on Parliament which brought people together nationwide was the contractor equivalent of the storming of the Bastille. (In a way National Freelancers day should be 3rd November in commemoration of that event, which was the first great act of the PCG).
I introduce the analogy, not to discuss the history of the PCG, but to use the metaphor of revolution for what should have happened with the agency model. We should have challenged it then, but there was some much going on.
We made a start, one thing I was involved in was to negotiate for contractors back in 2003 in the Agencies Act as well as the opt-out was the ability to pay agencies a marketing fee for selling their services, we tried them to build the foundations for a new market.
Times for change?
But it is not too late. The market has matured, technology has improved and now the economic circumstances suggest the need for innovation and improvement. Or to put it another way, perhaps the time has come to bypass the agencies not just for the benefit of contractors but for the benefit of their clients too.
Shout99 has a huge subscription base, so as a user of contractors weíd like to develop with Shout99 and its contractor readers, a service to help us resource our projects.
Iíd like to discuss why clients use agencies, why they donít go direct? Or how can they go direct? Are contractors prepared to go direct? Or do they prefer working through agencies?
Of course it is important to note that there are different groups too, the standard IT department on a project and also the consultancy business seeking to resource a contract that it has won.
These are the questions that I am going to be asking friends, colleagues and businesses and Iíd like to pose the same questions to Shout99 readers.
Philip Ross was one of the first political/external affairs director of trade group, the PCG and led the team which successfully campaigned to have IT skills removed from the Skill Shortage list. He has been a long term critic of IR35 and as well as writing for Shout99 has also written for other political publications such as Progress where he has rounded on IR35.
A former IT freelancer, Philip has campaigned actively on behalf of freelancers and small businesses. At Labour Party Conferences, he has chaired fringe meetings and spoken from the platform in support of clearer and fairer policies for small businesses.
Editor's note:I welcome Philip's suggestion to open up this debate to Shout99 readers - the vast majority of whom have personal experience of working through and with agencies.
Is there scope for a different model?
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Susie Hughes © Shout99 2011