Should I use the recruiter?

December 17, 2010 1:56 AM

An IT recruiters ad for a contract position gives away the company name. Is it better to go through the recruiter or directly to the company?

I know which company it is because I'm working in a specialized niche and with enough time you figure out all the possible employers. I have never worked as a contractor before. My understanding is that the recruiter takes a part of your hourly rate, so it would seem better to go directly to the company - but they don't have the position on their website.

What's the best way to play this to get the best possible hourly rate? I've had no contact with recruiter or company so far.

posted by dhoe to work & money (16 answers total)

Typically the target company will be using the recruiter to vet applicants etc. the cot of the hire is already budgeted. you won't necessarily be gaining an advantage.
posted by the noob at 2:38 AM on December 17, 2010

By going directly to the company, you risk causing a breakdown in the relationship between the recruiter and the company. The recruiter's business is based around being paid as a go-between in the hiring process. There may well be legal implications for the company if they directly hire someone who has received information about the position from a recruiter.

Also, if you approach the company with the idea of bypassing the recruiter, you may appear unscrupulous; whether or not the company feels this is desirable or undesirable behaviour on your part is not something you know without inside information about said company's hiring practices.

In balance, I'd say stick with the recruiter. The company has chosen to work with them and have negotiated acceptable terms.
posted by le morte de bea arthur at 2:45 AM on December 17, 2010

My understanding is that the recruiter takes a part of your hourly rate

it depends how you look at it, but generally you (the contractor) gets a certain rate, and the employer also pays the recruiter some percentage of that for some period of time. I wouldn't expect there to be the benefit to you of a higher rate if you were employed directly, just a lower cost to the company in question.

perhaps they'd consider you more favourably because of that lower cost if you approached them directly, or perhaps they don't want the hassle of dealing with every applicant and are paying the recruiter to give them a reduced set of qualified applicants.

I can't see it hurting to approach their HR directly and say "I hear you're looking for a widget twiddler, here's my CV". the worst that'll happen is they tell you to go and talk to the recruiter.
posted by russm at 2:48 AM on December 17, 2010

My understanding is that the recruiter takes a part of your hourly rate

My wife used to work as a legal recruiter in London. Headhunters typically receive a lump sum percentage of the total first year compensation. In her case 25% which seems like a lot until you begin to understand the business model.

Headhunters earn their living understanding their clients and their specific needs and then finding people who are well-suited to their clients' requirements which is not actually very easy. They are both search engine and pre-filter and depending on their skill and depth of industry knowledge and contacts, you can get a good one or a bad one.

In general, if a recruiter (which is a headhunter under contract) brings a CV:

- the candidate is almost always seriously considered (this makes your CV stick out)
- the headhunter helps to sell the company on the candidate and the candidate on the company (it is in her own interest),
- the headhunter will help to negotiate the highest compensation (again in her own interest because of they way they are paid).

And for this assistance to you, the company pays all the fees.

So yeah, if you can gain the assistance of a recruiter for free, by all means do so.
posted by three blind mice at 3:43 AM on December 17, 2010

Do you know anyone at the company? Can you talk to them about the position and ask them this question? If not, just go through the recruiter.
posted by alms at 4:04 AM on December 17, 2010

If it's not listed on their website (and *only* through the recruiter), you should go through the recruiter. Otherwise you probably won't fit into the process through which they're evaluating candidates and you may fall through the cracks.
posted by cranberry_nut at 4:17 AM on December 17, 2010

For my day job, I build procurement systems that focus specifically on acquiring contract labor for my clients. For a large organization, the systems normally require that any contractor walking through the door must be aligned with one of a select and contractually compliant number of staffing firms ("recruiters"), so that the organization can push risks like liability and co-employment off to the firm, and have a reasonable expectation that they carry enough insurance to mitigate those risks. We need to have a reasonable expectation that the firm won't fold like a house of cards and push their problems our way if a contractor screws up or files suit in the future.

So, for my client, you're not getting the job as an independent contractor, nor if you set yourself up as DHOE, LLC. It can't hurt to reach out and inquire inside the organization, but be aware that many/most large organizations are using consultants like me to standardize their contract labor category, and squeezing risky, un-/under-insured independent contractors (and small firms who can't afford the insurance, which is pricey) out ends up being a natural result of our efforts.

Good luck.
posted by GamblingBlues at 4:31 AM on December 17, 2010

Typically large companies are adverse to hire contractors on 1099-MISC and (especially) W2. The reason being is that the legal line between employment and contracting is extremely blurry in very many jurisdictions. This is the reason that these staffing agencies succeed, their true value add (I think anyone who's worked with a recruiter or sales guy from one of these companies pines for the ability to just go direct).

What you can do if you want to go direct, is set up a Type-S Corporation in your own name (small legal filing fee to do this), and then sell services at an hourly rate to the client through your corporation. There is actually a tax advantage on doing this compared to 1099-MISC or W2, but the flip side is that you have to do books -- payroll, etc.

I think that in this case far and above your most likely path to success is using the recruiter, unless by chance you know the hiring manager directly, and can bypass hr that way.
posted by robokevin at 4:38 AM on December 17, 2010

Typically large companies are adverse to hire contractors on 1099-MISC and (especially) W2.

If a company hires you on W2, you are their employee, not their contractor.

That being said, my clients ONLY engage staffing firms who provide us contractors who are on the staffing firm's W2. 1099s aren't acceptable to us, for the risk reasons noted above by me and robokevin.

What you can do if you want to go direct, is set up a Type-S Corporation in your own name

Again, you're not getting in the front door with many large enterprises as a self-employed S-Corp. You as your own and only revenue stream couldn't possibly meet the client's contractual and insurance requirements.
posted by GamblingBlues at 5:03 AM on December 17, 2010

yeah, just talk to the recruiter. I had a brief, unsuccessful stint at doing recruiting, but at BEST you'd be saving the company some money they planned to spend anyway, with no advantage to you. More likely, you'll make enemies and get crossed up at the crossroads.

The fact that the recruiter has the ad and not the company is the key. They've outsourced the job of finding the right candidate for a reason.
posted by randomkeystrike at 5:49 AM on December 17, 2010

Oh, and by playing nice with the recruiter, you just might get other offers as well if this one doesn't work out. Talk to the recruiter as carefully, cordially, and professionally as you would the employer themselves.
posted by randomkeystrike at 5:51 AM on December 17, 2010

If the position is not listed through the employer, they likely actually engaged the recruiting company. Go through the recruiter.

If the position IS listed publicly through the employer, the recruiter is basically reading the want ads to you. Go through the company.
posted by Lyn Never at 7:12 AM on December 17, 2010 [1 favorite]

A lot of the advice here doesn't match my own experience as a long-term contractor. Any blanket statements about what corporations "always" or "typically" do is probably wrong -- I've found that the rules vary drastically even within divisions of a single organization, let alone across all large firms.

Typically large companies are averse to hire contractors on 1099-MISC

It really depends on the company and on the position. In my experience, a relatively small percentage of large companies are absolutely required to hire all contractors through specific staffing firms. In these cases it doesn't make any difference if you're LLC, S-Corp, or 1099, you gotta go through those firms or not get the job.

A somewhat larger number of companies have preferred staffing firms for disposable jobs, but when hiring for more significant contract positions will be willing to contract with you directly.

you're not getting in the front door with many large enterprises as a self-employed S-Corp. You as your own and only revenue stream couldn't possibly meet the client's contractual and insurance requirements.

This may be particular to certain industries, or simply may not be as widespread a phenomenon as you think. I've worked with plenty of large corporations that were perfectly happy to hire sole-proprietor contractors, do so routinely and without batting an eye, and have no apparent preference for whether you're incorporated or 1099. They have boilerplate contracts ready to go to cover the liability and insurance requirements.

My understanding is that the recruiter takes a part of your hourly rate

There are two kinds of recruiters.

Some work like headhunters: they charge the corporation some amount of money and then set you up as a contractor to the corporation; after that they're out of the picture as far as you're concerned.

Others work more like temp agencies: these will set you up as a contractor to (or employee of) the staffing firm, and they play middleman for as long as you have the job. These guys do bill the corporation some percentage higher than your hourly rate, yeah, but it's a mistake to think of it as them "taking part of your hourly rate." Your rate is your rate, they're just tack on some overhead (which you would be unlikely to get for yourself by bypassing them.)
posted by ook at 7:22 AM on December 17, 2010

Your hourly rate is entirely, 100 percent independent of the recruiter's fee, regardless of how it gets billed to the company. There is not a company in the world (worth working for) that would let you explicitly end-around a recruiter, and those companies would see no reason whatsoever to bump up your hourly rate.
posted by Etrigan at 9:47 AM on December 17, 2010

The recruiter will likely be doing the shortlisting work, and the company doesn't want to be bothered with having to that themselves.

Your hourly rate is entirely, 100 percent independent of the recruiter's fee

This is true, mostly. But esp come renewal time, if the recruiter is taking a large ongoing slice for no extra work, and you have a good relationship with the company you can work with your boss to squeeze the recruiters margin, so you get more without the company paying correspondingly more.
posted by philipy at 11:42 AM on December 17, 2010

Thanks all, there's excellent advice and perspective in these answers. I'll use the recruiter if I go for it.
posted by dhoe at 9:26 AM on December 18, 2010