Misconceptions About Direct Sourcing

Considerations to keep in mind when hiring direct

“I can hire direct, eliminate the agency’s fee and save money”

Some companies consider hiring directly, reasoning that if they eliminate the agency fees, they will be paying less overall. Instead of saving money, they often pay more overall, as the workers recognize direct negotiation with the company as an opportunity to charge more.

An agency with an extensive history of working with contractors knows what the work is worth, and is able to negotiate a rate that will be competitive and fair for the worker and the company using that worker’s skills.

icon of magnifying glass inspecting job candidates
Employee versus contractor

“I’ll never have misclassification problems”

Classification assessments can get murky if the worker is using your computers and network, coming to your premises daily during the assignment, and participating in team meetings with your regular employees.

Working with an agency, who handles payments and keeps the relationship with the company at arm’s length, should include a formal classification process so it is clear that the worker is not your company’s employee. This gives you peace of mind because the risk of misclassification of workers is mitigated – you’re not liable for paying any missed deductions, or for fines for non-compliance.

“I can negotiate my own pay rates with freelancers”

Yes, you can negotiate the rate and terms of pay – but it’s often better to let an agency with experience handle it. Here’s why:

  • The agency has a wide array of payroll data and can determine what those skills are worth.
  • A third party can mitigate the anxiety of negotiating directly with a reporting manager.
  • Pay rates determined through the agency are more likely to be fair and accurate.

The numbers back this up. Procom conducted a study into pay rates, and found that contractors hired directly had a total cost that was 10% to 14% higher than those presented through an agency, showing the power of a competitive recruitment process and effective negotiation skills.

Two business people negotiating
icon of two hands shaking

“I can find quality candidates by hiring direct”

Often this will be true, but may not always be the case due to skills shortages, pressing timelines or other issues that may mean you require some expert recruiting help.

Having an agency in the mix can give experienced contractors the confidence that they’ll be paid on time, have access to a client services person for assistance and that they can to build a track record for the quality of work, which helps them with future opportunities.

Procom surveyed over 3000 job seekers to find out which they prefer. We found that 58% would rather be represented through an agency.

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