I’ve been a freelance ICT analyst since 2004, and let me tell you how this typically works when I’m looking for another contract.
The next morning I need to keep my cell phone nearby, as starting at 8:30 in the morning it will start ringing. The next following days I talk to tens of over friendly sales boys or girls, all of them using my first name like they’ve known me for ages, about this great “opportunity” they have at their client in the financial or public sector.
What it boils down to is that there are in general six or seven positions available in total at a given moment, and I get called about each of those three times on average. These positions are generally from the same few players on the market, the large banks and insurance companies, and all kinds of government or semi-government bodies. Apparently, when one of these companies has a need for an external resource, they send out the opening to a number of agencies, who in their turn will often forward that to even more agencies.
If one of those positions appeals to me, and we have an agreement about my daily rate (Why do they always have to ask whether it is negotiable?), I give the sales boy/girl permission to send my CV to the client, but not before I know the name of the client. I don’t want the client to receive 4 copies of my CV, all with a different company header, and a different rate.
If then the client likes my CV, we make an appointment for an interview. The sales boy/girl will then usually give me some trivial advice such as “don’t wear shorts”, “brush your teeth” or “try to answer all the questions”, and asks me to come 15 minutes early in order to “get to know each other”. Then he/she joins the interview and sits quietly in a chair until it’s finished.
When both me and the client agree to work together the agency sends me a contract to sign, which usually states that they can end the contract at any time, and I don’t, and I’m not allowed to work directly for this client (or one of his clients sometimes) for a period of one year after the contract has finished, stating ridiculous fines of up to €25000 a day would I violate that clause. I usually get the ending clause amended so that I have the same rights to end the contract as they do, before I sign it.
Then the work at the client begins. I go to work everyday earning my paycheck much like any internal employee, and at the beginning of the next month I send my invoice to the agency. They then add 10% to 30% to my invoice total and send that off to the client. So for everyday I work they get something between €70 and €250, for as long as I work at this client, which often is several years. And what to they need to do for this? Well, the occasional phone call: “Hi Geert, how are you doing, everything still OK? Yes? Great, talk to you later!“, and at the end of the contract period make up a new appendix to the contract and get me to sign it. That’s it!
From my first days as a freelancer I noticed the remarkable resemblance between this business model and the red-light district business model. The freelancer is the equivalent of the working girl looking for her next client. And the agencies resemble the pimps. The problem is that all the good windows are owned by the pimps, and there aren’t many clients who are willing to pick you up from the street, and those who will might not be so trustworthy. So the working girl doesn’t have much choice then to work from one of the pimps windows, giving the pimp whatever percentage he asks.
After six years of being a freelance consultant I’m getting seriously fed up with this business model. Most agencies add little or no value, but they are still getting paid very well to sit back and watch the freelancers earn their money.
In my next blog post Abandoning the red-light district business model – TOBE I’m going to share my view on how to actually abandon this business model in favor of new and improved business model that cuts out the pimp-agencies.