In procuring recruitment services the Master Vendor / Managed Service is an attractive reality.
From a finance perspective the benefits are clear to see – competitive, standardised margins. However, aside from the potential drop in the quality of candidates (and in my view that’s a very significant aside); the real (hidden cost) is much more tangible.

In my first Process Consultancy pilot Audit the preliminary results made uncomfortable reading for client and agency – in over 25% of sample contractors on site the real cost was more than the stipulated margin covered in the contract

In a typical example:
1 - Master Vendors’ strongest Recruitment Consultants move away from Master Vendor account (low margin) onto higher margin billable work (after all this is usually a commission driven industry).
2 - Remaining consultants need to engage 3rd party suppliers, but the margin is not sufficiently high to split; so 3rd parties present candidates at a total cost (perhaps shadowing the deal as the contractors Ltd / Umbrella Company).
3 - The real margin (the difference between contractor pay and client charge) can easily be double the agreed Master Vendor margins

If you would like an Audit to verify your contractor margins then please contact gill.claireaux@ifftner.com or jim.marshall@ifftner.com