Do you work for a company that hires contractors? Have you ever wondered why they use several companies instead of just going to one company for all of their work? This happens quite often, so i wanted to explain why it happens.
Why would this be good to know?
If, like me, you work for a contracting company, it’s good to know why there are competing companies working for the same client.
If you’re a permanent staff member, it can be helpful to know why the company wants to deal with more than one contractor when it might seem like a waste of effort.
It Reduces Risk to the Client Company
A client often looks to contracting companies to help them with projects. If they have a large need for people to work on the projects, then they get a lot of contractors in.
If they were to get all of their contractors from the one company, it might make the administration a bit easier.
However, doing this can mean more risk to the client company. If the contracting company goes out of business, does something immoral, or doesn’t provide the best rates, it’s not good for the client company.
They may also lock them in to a contract that isn’t very favourable, and given that the contracting company has all the staff, there’s not a lot the client company could do if they want their projects to finish on time. Because getting a new team of contractors takes time.
So, having contractors from multiple companies reduces the risk to the client company.
Improves Competition for the Contracting Companies
If you have one contracting company providing services to the client, then they don’t have a lot of incentive to improve. Sure, they may want to get more people at the client site, but they are the only contractor so there isn’t a big urge to improve rates or quality of people.
Having multiple contracting companies means that they are all competing with each other for the same roles for their staff. If there is one role available, the client may ask each of their contracting companies to fill the role.
This means the contracting companies are now competing for the same role. They will try their hardest to find someone suitable and try to get them to the client in the quickest time and for a reasonable rate.
Competition like this is good for the client as it ensures they get a better response and maybe a better quality candidate for any new roles.
Easier To Get New People
The final reason why some companies have teams from multiple contracting companies is that it’s easier to get new people.
If the client asks one contracting company for a .NET developer, they may employ many but only have access to a few that are available or will be available soon. They also only have a certain capacity to interview new people.
If, however, there are multiple contracting companies, there are more people available for a role, and more people working on the hiring process.
For the client, this means it is easier to get new people if there are multiple contracting companies involved.
So, if you were wondering why a client works with more than one contracting company, it should be clearer now you’ve read this article.