Agency work or independent contracting?

agency or contractingThe latest Labour Force Survey revealed that 15.1% of UK workers are self-employed, and the number is rising. Despite economic and political uncertainties, the number of people freelancing or contracting is increasing from industry to industry, unlocking some major benefits for contractor and client.

Employers across all sectors are benefiting from the self-employed market explosion, with companies now able to meet the short term needs of their market and fulfil specialist projects without adding employees.

Although the rewards are obvious, being a contractor is not without its challenges. One of the difficulties contractors face is how to source work. Thanks to advancements in the digital world, there are more avenues to explore than ever.

Many contractors choose to work through recruitment agencies to secure contracts, whilst others prefer to approach companies directly for opportunities. In this post, we look at the pros and cons of agency work and independent contracting, and you can decide which option is right for you.

Working through an agency

Recruitment agencies often deliver a number of shortcuts to contract opportunities thanks to their well-established connections. However, it’s important to remember that this ‘easier’ route to market comes at a price. Agency commissions tend to be a minimum of 12-20%. In most circumstances they will mark up your rate so the client foots the bills for your rate and theirs. Specialist consultancies with highly qualified, experienced contractors can charge as much as 60% on top of your rate.

Most agencies do work on fixed margins with their contractors, which tend to be better for contractors and clients alike. Working with an agent gives you access to more contracts, with the average agent closing up to three contract deals each month. Some companies only source their contractors, consultants and freelancers through agencies, in a bid to secure vetted candidates.

Sourcing your own contracts

Doing it yourself can put a drain on resources as your time is already spent fulfilling a number of contract roles. Networking and cold calling are the primary methods of lead generation for many contractors, two tactics that have varying levels of success. Networking is the preferred technique for many as explained in this blog post from Contractor Calculator:

“Networking is by far the easiest method of securing a contract directly with a client. If you do not have contacts who can help secure you a position then finding a contract from a cold start is an uphill struggle. Without networking you are essentially pitching your sales skills against those of the experienced sales agents.”

There are benefits to sourcing your own contracts. Many independent contractors can secure higher returns as a result of working directly with the client, the absence of agency commission giving you the opportunity to up your own rates. Sourcing your own contract work means you are your own sales person, and can provide a more thorough representation of your skills, qualities and experience.

Which is right for me?

There are pros and cons to both sourcing your own contracts and securing work through an agency. Figuring out the approach that works for you is important. According to a study by IPSE, 52.1% of contractors work solely through agencies compared to the 31.8% of contractors who work direct. Having the best of both worlds is possible, but developing a marketing plan that works is the first step to securing work independently.

However you try to find contract work, the right payroll solutions will ensure you’re paid on time and that your finances are on track. Find out more about our products by calling our new starter team on 01992 374 144, or emailing

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