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So I have been in the job market from the past month & I have learned a major process flaw and big-time corruption in recruitment layers.

I do receive mail/calls from many fake companies established at onshore/offshore locations, for the Job opening with some of the fortune 500 clients, who are willing to arrange an interview between me and the x company but the x company won't hire me directly. The terms are that I'll work on the payroll of one of these fake companies and will be paid on an hourly agreed rate.

Strange enough when I look for the same job opening on the site of the actual company (end client in other words) these positions are either expired or on hold or not taking applications anymore, If they are somehow still open and I apply directly I would never hear back from them.

Now one may think how does it really matter unless these fake companies are willing to pay me what I demand. Well look at it this way, these companies are keeping somewhere between 20 to 25% of your hourly paycheck without doing absolutely nothing and this corruption will go on until you work with the end client.

Why is it this way? Why companies do not hire resources directly? I am having a hard time wrapping my brain around it.

closed as unclear what you're asking by DJClayworth, scaaahu, gnat, sleske, sf02 Oct 4 at 14:05

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    Those are not fake companies they are contracting companies. And many companies do hire IT professionals directly. – DJClayworth Oct 4 at 2:47
  • @DJClayworth But why would you let them keep 20% from your paycheck for not doing anything? And BTW thanks for downvoting my questions. – foo-baar Oct 4 at 2:49
  • @joeqwerty : May be I am missing some process information here, but why would these companies take a share from your salary for doing nothing and not giving you any job security or commitment. – foo-baar Oct 4 at 2:56
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    So your question is "Why do IT companies sometimes use contracting firms?" If you edit the question to ask that and remove the ranting it could be answered. – DJClayworth Oct 4 at 2:56
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    It's still a rant that talks about fake companies. – DJClayworth Oct 4 at 2:59
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Recruitment is an expensive process, and many times, companies will hire a contracting company to manage this process for them. Depending on the setup, it could be a flat fee or a commission or any matter agreements that pays the contracting company. But no matter how the contracting company is being paid, they are not taking it from your pay.

Contracting companies have the resources setup to filter through applicants. There are a lot of applicants and for good well paying jobs, there are thousands of applicants. A company can struggle to filter through all these applicants, so hiring a contracting company removes this load from a companies shoulder. In addition to this, a contracting company will double check the skills of any applicants, perform preliminary interviews and a whole range of extra tasks to ensure you get the role filled with a suitable applicant.

Thats not to say all contracting companies do this. Some will actively try to get people jobs so they can get a commission and chances are it is these aggressive recruiters that you are encountering. You can think of it as the difference between an reputable sales agent who works in an office and has a steady supply of clients coming through the door, verses a telemarketer who is trying to gather and sell as many products to as many people as possible.

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How is any of this fake or corrupt?

They're not taking money from your paycheck. They're being paid a fee by the company. If you let that fee come out of your hourly rate or your salary then that's your fault.

The fee a company pays to a recruiting company is part of their cost of doing business. I don't doubt that they'll try to recoup that cost by offering you a lower hourly rate or salary than is expected or desired, but you have the choice and ability to either negotiate for what you want or turn down the offer. If you accept their offer then you really can't be upset with them.

Years ago I was hired on as a sub-contractor for a technology migration project. The company that won the bid for the project contracted with a local IT company, who in turn sub-contracted with me to perform the work. So that's 4 layers of different parties involved. All completely legitimate. Each party got paid what they negotiated for. I got the hourly rate that I negotiated for. That's not fake and it's not corrupt. That's business.

Company A pays Company B xxxx dollars, Company B pays company C xxx dollars, Company C pays me xx dollars. If xx dollars isn't acceptable to me then I don't accept the contract. There's no fakeness and no corruption involved.

  • I called them fake as it's not just 1 company, most of the time its multiple layers, each trying to keep some chuck from the actual billing. Also keeping a one-time fee makes sense but not a regular drip from your pocket isn't that corruption. – foo-baar Oct 4 at 3:03
  • I think you don't understand how the recruiting industry works. – joeqwerty Oct 4 at 3:06
  • Wouldn't it be sensible for Company A to pay XXX to you directly ? A win win for both ? – foo-baar Oct 4 at 3:20
  • I'd like it better but that's not the way it works. Each party needs to be paid. If a company chooses to use a recruiting company to fill positions rather than filling them directly then that's their right to do so. That doesn't make it fake or corrupt. You negotiate for what you want and why do you care what everybody else makes if you get what you want? – joeqwerty Oct 4 at 3:25
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    As en example, it would be cheaper for you to buy a car directly from the manufacturer rather than a retail car dealer, but that's not they way it works. Car manufacturers don't sell cars directly to the public. That's their right. If you negotiate to pay the car dealer the price you want to pay for your car why does it matter how much the car dealer makes? – joeqwerty Oct 4 at 3:27

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