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Update on my threads before: Finally signed the contract! The HR was not lying. Officially resigned from my current employer.

Anyway, turns out I'm to be working under an agency. I just thought the agency just handles the papers, but I'm going to be working under them. I always have a bad impression on working under an agency because people say they cut your pay, and I feel like it's better if you're direct hire.

They say every big company does this, and all the entry-level positions in the company I'm going to work for all go under an agency.. I'm not sure if it's true.. I hope it is so I'll feel better myself.

My question is, what's the bright side on this? Is it just technically the same with direct hire? Should I not feel bad?

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    Did the offer say you would be working for the company or working for the agency? Did you realize this would be a contract position, or were you expecting to be a permanent employee? Are you a permanent employee of the agency? – DJClayworth Jul 16 '15 at 16:04
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I used to work with an agency. There are some key differences:

  1. Your employer will most likely be paying an additional fee (usually 10% of your salary) to the agency for them finding you. I am not quite sure if this means that you are offered 10% less as your personal salary as a result, but it is quite possible. What I do know is that going through an agency reduces your salary negotiating power as a result, because of this.

  2. Your benefits will be whatever the agency gives you, which may be worse or better than the company you are working for. In my experience, my benefits (retirement, health, etc.) was much worse under the agency and got better now that I am a direct hire. I had a higher health insurance deductible and no retirement matching under an agency.

  3. Depending on the contract (contract only, contract-to-hire) it is never guaranteed that you will get hired directly for the company that you work for. Things change, and the company may lose money. When this happens, the contractors are always let go first. You are on the bottom of the totem pole.

  4. Human Resources at any company don't care much about you whether you work directly or for an agency. Their primary concern is the company. This was just a feeling, but I felt that this was amplified when I worked for an agency. I just felt like once I was placed nobody really cared what happened to me.

Overall, I didn't like the experience of working for an agency, and would most likely never do so again. At the time I was desperate for a job and had to take anything. Now that I have a job that I like and am a direct employee, I wouldn't go back unless I found myself in the same circumstance. However, this does not mean I turn away recruiters. I tell them that I only consider the job if it was a direct hire and because I am already a permanent employee, they do everything they can to do that for me.

  • so youre telling me that its completely different being drect hire and under an agency? Cause right now im just thinking this agency just handles my papers and payroll and THATS it. the treatment i get is from the company im working for.. So i guess not much difference than direct hire.. – user1551672 Jul 16 '15 at 15:51
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As with all things it depends on the contracting company and the client company. I worked for a company as a contractor to another company and I made more than I did when I worked for the other company (my job was outsourced to the company I currently work for), it was easier to get raises and I hadbetter benefits as a contractor. I have also worked for companies in a contract to hire postion where I was better off when I converted to the permananent postion and ones where there was basically no change whatsoever except who issued my paycheck. I have seen contractors treated exactly like employees and places where they got the worst office space and no one wanted to learn their names because they would be gone shortly.

People misunderstand when they think that you are making less because the agency is paid one thing and you get less than that. The agency has business costs and profit that have to be covered by the costs they receive for your work. So they should be charging at least 3 times your salary as a rule of thumb.

This does not mean that if you were hired directly, you would receive 3 times what you are getting. Many people I know who have converted from a contract postion made less in the permanent postion because the company now has to pay for benefits and their own overhead costs. They might have been paying you more because they knew you would have to get your own health insurance or pay for your own time off, etc.

One thing I do know is that attitude makes a huge difference in how you are treated and how you perceive the reality of your work life. If you go into this thinking, "Oh poor me. I am stuck as a contractor." you are likely to be treated as some temp person who is not worth bothering to get to know because that attitude will show up in your behavior.

If you go in thinking "This is a great opportunity to show my value and to get them to take me on permanently and wow I will be able to learn so much", that attitude will also show.

Yes some places treat all contractors badly. These places tend to also treat their own employees badly as well. But even in those places, some people will get better treatment than others, so your attitude towards your work will count.

Don't be down on yourself because you started as a contractor. Don't think all is bad because you are a contractor.

Don't think entry level is going to be better if you are permanent. Entry level jobs are not the best jobs in the bunch no matter how you slice it because they are entry level. The most junior people get the tasks no one else wants to do; they have to prove themselves before they are trusted to do more interesting work. There is a reason why people don't want to stay at entry level for their whole careers. This is not a function of being a contractor or not, so remember that when you look at this job. The jobs you get will get more interesting and better as you get more experience. Contracting is a great way to get experience.

  • Well actually.. i never thought of it that way.. Thats totally different from what m thinking. Arent almost everyone in my company also under an agency? Since when you apply directly to them, youre gonna be sent to an agency anyway? SO.. im sure what they think about me being a contractor is the least of my problem. My concern here is that im just wondering if everyone really does go to an agency on this company. – user1551672 Jul 16 '15 at 15:48
  • And siunce we are the Internet and not the company, how would we have a way of knowing that? And why would it matter? If some people are permanent hires and some are not, it may have more to do with the position they are being hired for than anything else. It doesn't say anything about you one way or the other. – HLGEM Jul 16 '15 at 17:21
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If you are working as a contractor, you should be getting paid a lot more than normal. If you are getting paid a typical full-time wage, then there are only downsides. As a contractor, it is much easier for the company to fire you and at least when I was a contractor I was always an outsider. Did not get invited to company gatherings/offsites/parties. You have to list "(contractor)" on your resume by the company's name. Also, there is a stigma to being a contractor which is hard to get over, even if you eventually get employed by the company. Basically, if you work as a contractor you are just that: an independent business person, not a member of the company.

If you are getting paid a mediocre rate by the agency, consider yourself to have been taken advantage of. When I was a contractor I was making about 30%-%50% more than regular employees doing the same job.

  • Working for an agency makes it their job to line up your next assignment after this contract ends. The extra a direct contractor gets paid partly goes into covering those "down" periods. It really comes down to how much security you need and how good you are at marketing your services. – keshlam Jul 20 '15 at 21:02

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