Demise of Agencies

I was browsing through the response to the article that we put up recently “Social Networking Sites will kill agencies stone dead”. The demise of agencies has been predicted several times, as it has of IT Contractors, and yet we both are alive and kicking!

However, the responses to the article set me thinking.

I could sense the disappointment from the responses. The weaknesses were pointed out and the responders didn't seem to think the concept would work.

Going Direct

I have often noticed that client companies don't go more to IT Contractors that they have on their site, especially the better ones, or ask them if they can refer anybody good.

The reason is simple. They believe the contractors they know are very likely to have the same skills as they have, and really the same skills that are needed at the site.

My insight comes from my experience as a Systems Manager and Chief Information Officer. I used to take IT contractors on recommendation.

Why They Don't

I think client companies don't do more of this as they strongly suspect that people will just get jobs for their mates. To a certain extent this may be true – but generally they recommend only the ones that are good or reasonably OK and who wouldn't let their recommendation down. B

Besides, there could be this status thing too.

I guess, they think they would rather do business with an agency that they see as being on the same level as themselves rather than deal with an IT contractor who they regard as beneath them.

Social Networking for IT Contractors

Can a social and business networking services which is exclusively for IT Contractors work? The PCG is certainly this to a certain extent and runs a contracts portal, but only members of the PCG and who buy the package and pay the price of membership – which would account for less than 5% of the contractor community (based on the fact that there are 250,000 IT Contractors and the PCG memberships is about 15,000 and just under half of it are IT Contractors) have access to it.

Recommended Contractors

What I have in mind is that IT Contractors would register themselves with the site and then put up a list of contractors that they would recommend (who would, obviously have to be signed up to the site).
Clients could view the summary of their skills and experience but the full CV would be obscured.

I was thinking that the contractor recommending the contractor who got interviewed and got the job would then share some commission with the website, but there’d be no way the recommending Contractor would track it.

What if the client company failed to send the money? Would the IT contractor who just got the job be thoughtful enough to update the site saying that he or she had secured the job and then trigger an invoice which would then have to be tracked.

Other Scenarios

It might be a case that the client pays a small fee to get the CV and the commission is then shared between the contractor who is the recommender and the client.

Another scenario is that the client is required to contact the recommending contractor via the site asking for details of the contractors he is recommending.
The contractor will then follow-up on the progress and prompt the client being charged for taking on the recommended contractor(s).

Better for Everybody

The terms will be reasonable and the arrangement will suit everybody. The client would just get charged a one-off fee (unless we decided to go the recurring income route) instead of having to pay every week ad infinitum.

They would also get contractors who are recommended.

Gravitate to Quality

Of course some contractors would have no qualms putting up anybody they knew, but eventually clients would gradually gravitate towards the contractors who recommended good contractors to them. Clients could leave comments on the site (and give marks) about the quality of contractor recommended by Recommending Contractors. This would put the contractors who got work through this route in a better negotiating position, as it is just a one-off fee that the client has to pay.

Mini Agents

So, finally the IT contractors who work in the business would become mini-agents themselves. The money would stay in the industry, instead of being siphoned off by agents who bring no great value to the business.

I'm sure that agencies would still exist but then they would command a smaller market share.

Gradually, the recommending Contractors who recommended good contractors would replace agencies as more and more clients approach them to procure more and more quality contractors from them.

Extra Facility

We could even do it as an extra facility on ITContractor.com.

Now, readers, I invite your comments on whether this idea would work -  is it fool-proof or are there flaws in it, would you sign up to something like this and recommend other IT Contractors?

Which one would you term the best scenario among the ones I outlined?

Should I just go for it?