From: dfavor@logan.tivoli.com (David Favor)
Newsgroups: austin.general
Subject: Re: painful experience with AiC (Analysts International Corp.)
Date: 23 Jul 92 12:34:21 GMT
Distribution: austin

In article <21180@rpp386.lonestar.org>, jfh@rpp386.lonestar.org (John F. Haugh II) writes:
|> In article <2031@tivoli.UUCP> dfavor@logan.tivoli.com (David Favor) writes:
|> >... how you treat them. I wish I had caught the first of this thread... if
|> >anyone has a copy of the original posting send it to me. the majority of
|> >head-hunters and contract firms I've worked with over the last 10+ years
|> >are mostly simple, non-technical people trying to eek out a living. I
|> >wonder if you have ever run a corporation? did you know that it takes from
|> >3-6 times an employees wage to keep them employed? why do you think so many
|> >companies are reorganizing lately, laying off 30K-40K employees and
|> >replacing them with $60/hr contractors. guess what... the contractor is
|> >usually cheaper. this is bottom-line on the client side.
|> 
|> The 3 to 6 times figure is grossly overinflated.  Benefits run 35% or so
|> over direct compensation - all things included (like employer matching
|> FICA and unemployment insurance).  Overhead is usually another 20% or so.
|> You can only get to 3 times wages if you throw in a high profit margin.
|> Thus fair value for a contractor is close to 60% over gross wages.  Your
|> $30K to $40K direct employee becomes a $32/hr contractor at best.

I already posted a response outlining a few costs that are over looked until
an individual incorporates so I won't repeat them here.

|> Sure, contractors are often cheaper, but only because many of the expenses
|> are completely avoided.  Try figuring in several months of training when
|> a permanent employee changes projects - a contractor comes pre-trained.
|> This is where the company saves money.  It has no pension fund liablity,
|> no accrued vacation to provide for, and so on.  After 6 or 12 months, it
|> throws you out the door and gives your desk to the next guy.

but that's the point of contracting. you take your money up front and
invest it so that at the end of each contract you can take a long vacation.
unfortunately I've had little time off in the last 10+ years because
business is so good.
 
|> I've been associated with contract agencies since 1979 and most of them
|> are not people eeking out a living.  I've known a number of headhunters
|> since childhood when my father was contracting for CDI and Allstate
|> during the late 60's and 70's.  These were not people who struggled to
|> stay in business.  Some of them owned their own planes, most owned boats
|> and fancy cars.  When my father was working on the Los Angelos class of
|> submarines, he and a recruiter friend regularly flew out to the Bahamas
|> on the recruiter's private plane.  If you are good at sales, selling
|> bodies isn't a bad way to make a rather nice living.

I've never met a really successful head hunter. even head hunters with
large staffs. hum... most of the head hunters I know are concerned with
where their next meal is coming from.

|> Contracting just isn't for everyone.  Some people get that first $5K
|> paycheck and freak out.  Some people lack the self-discipline to take
|> some of that money and put it someplace safe.  I know contractors who
|> worked for 18 months at IBM making $80K or more a year and today have
|> nothing to show for it.  Many of the direct employees out there might
|> have a hard time imagining how someone could spend $120K less taxes
|> and wind up no better for the effort.  But it =can= be done ...

sad, but true. I see this over and over. I think that America is the
land of opportunity... the opportunity to have your dreams or to end
up like people in other countries... die poor, having never tasted
the fruits of dreams once during an entire lifetime.