Nothing new from Dave's perspective....there's a reason most agencies have
earned their reputations.

In my opinion, I think 50%, and higher, markup for consulting services thru
an agency is, to quote our buds 'cross the pond, 'rather cheeky'.

I believe in free enterprise, etc., but there's (you WOULD think) a line
that needn't be crossed.  The reason a box of Corn Flakes doesn't (yet) cost
$25. USD is that the raw material suppliers have a 'reasonable' (I think)
relationship with the 'middle-person' in that the 'middle-person' takes a R
E A S O N A B L E markup.  Everyone makes some $$$, everyone's
happy....farmer grows more raw materials.....'middle-person' works the next
purchase.

I'm thinking it's a leetle bit less than 50%.

Just one victim-of-the-blood-sucker's-opinion....


Al Karman
IT Consultant
US Freightways
[log in to unmask]
773.824.2284


-----Original Message-----
From: David T Darnell [mailto:[log in to unmask]]
Sent: Monday, July 30, 2001 2:17 PM
To: [log in to unmask]
Subject: Re: OT: H-1B--More lies disguised as truth


Perhaps our income tax system can take some of the blame.

My current employer's senior people are continually talking about getting
ris of "those expensive contractors".
Well, I was a contractor here two years ago. If they had been paying me
directly I would probably have cost them less than an FTE.  Mostly due to
the phobias of getting hit with tax and benefit liabilities, they will only
contact a person through another entity. So the guy that gets $50 an hour
costs the client $200 and hour.  At another of my regular client locations,
contractors work through two intermediary companies, plus their own
cross-division "burden rates" apply, so the customer's budget still gets hit
for two to four times what the contractor gets.

This is why (I imagine) the third-parties only want to pay $45/hr for
HP3000/Speedware work in the Bay Area (?)


Now, I have my own type-LLC company, do my own tax withholdings, and pay
myself on a W-2 basis, so when I contract with a company (even if they are
re-selling me to someone else) they are pretty well protected on the tax and
benefit issues.

But the legal department has most medium-to-large companies fearing the
possible tax and benefit liabilities of contracting directly with the
worker.

Of all the people who call wanting to send me on assignment, only about %10
are willing to discuss corp-to-corp.  Maybe a few more will go 1099.

So, as I see it, the middlemen are making the bucks, and to a large extent,
are part of the mechanism keeping contractor rates down.

Comments?

-Dave

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