by Steven J. Owens (unless otherwise attributed)
The advantages and disadvantages of working in the consulting arena greatly depend on the nature of the "consulting company" you're working for. A great many job shops call themselves consulting companies. "Job shop" means they're the equivalent of high-paying temp agencies. This can be a good way of making a living (I use job shops myself) but it's an extremely different beast than being a full-time employee for a true consulting company. Make sure you know which one this is. Unless you have friends that work there, be careful. If it's truly a consulting company, then the advice below won't be applicable.
Job shops (or contract shops) are common in the computer industries, and come in a couple varieties. They're all middlemen, but some keep their employees on full-time at slave wages, while others just hire and fire employees as needed or not needed. NONE of them will admit to the latter approach, of course, but it's accepted as typical in the industry.
Note: It may seem like I'm being a little harsh on job shops, here. There are good job shops out there - and often the major difference is not how they act, but rather how honest they are about it. If you're working for one of these truly honest and decent job shops, more power to them; in my experience the best job shops have been the ones that were frank and open about how the game is played.Be an adult and a professional. Be loyal to good job shops. Understand their business model and their margins, and respect the value they bring to the table. They don't deserve a free ride, but they do deserve a cut. When they call and you're not available or not a good fit, try to put them in touch with a colleague who is. If you line up a contract and there's no shop involved yet, bring them in (a lot of large corporations have rules that require them to use a job shop, rather than hire you directly as a 1099 contractor). Do what you can to make them successful, so they'll be there the next time you (or some other colleague) need them.
A very few, maybe 1% of 1% of the shops, actually do team-based consulting jobs where you go in as part of a permanent team. Of the few that do this, most of them will put the team together for the project, so you won't get the continuity and team work that you might expect from a traditional project team.
The hire&fire shops at least usually pay decent rates (if you know what you're doing and bargain for it). The end customer is paying for disposable people and expects to pay highly for it. It's still very typical for the job shop to expect 50% of the take (and they won't want to talk with you about how much the end customer is paying).
The typical contract shop or job shop (the hire&fire shops) will want to do everything they can to encourage you to depend on them totally. They want to turn you into a product they can shop around to the highest bidder. The thing you want to do is turn that around; deal with several job shops, make sure they know it, and make sure they understand you're ready to walk away at any point if you think you're being jerked around. (Do this politely, but firmly; job shops are the used car salesmen of the computer industry).
Double submissions can be poison; the process of hiring through a job shop is usually cluttered with legal documents ensuring that the shop gets their cut. As a result, in any confusion the hiring company will usually just chuck both resumes rather than get in a battle over who gets the commission. If it happens too often they'll start chucking any resume with your name on it as soon as they see it. Let this go on long enough and you'll have trouble getting any large company in the area to hire you.
A margin of 50% is typical - and unreasonable. 15% is a reasonable bare-bones minimum to cover their overhead costs Anything lower than that and it's not worth their time. Most job shops employ you as W2, so right off the bat they have a 7.5% employment tax to pay. On top of that, they do have expenses.
Let's imagine for a moment an ideal situation where you set up a contract, negotiate and agree on your take-home rate, and you and the client bring it to the job shop (I've actually done this; most major corporations have internal regulations prohibiting them from employing you directly as a contractor).
In this case, the job shop has no expenses and nothing to do - except serve as legal insulation between you and the client, handle the accounting and tax paperwork, and float your weekly or biweekly paychecks (large corporations typically take anywhere up to 90 days or more to get around to paying invoices). That's worth at least 15% to you, and probably a few more percent. In the more typical case, allow for a bit more for them to pay for their office and make a profit - 20% to 25%.
Job shops are entitled to make a profit for their efforts, but despite their protestations the vast majority hardly provide you with any critical service; they're middlemen, pure and simple. Unless you find one of the hidden gems of the industry, their marketing services are usually laughable. They rarely have the expertise to understand what you do, let alone to market you more effectively. If you find one of those near-mythical shops that use reps who actually do understand what you do (I know of one) then by all means, cultivate them, bring your friends and colleagues to them, reward them with your loyalty, because places like that deserve every bit of it.
Job shops do save you some time and energy in terms of paperwork and (sometimes) accounting and they do sometimes turn up a good contract lead.
Numerous times I've gone through the entire process, asking at every step of the way, "Are you sure this job is/isn't an XYZZY job?", being assured every step of the way that it isn't, only to find out ten minutes after I sit down with the interviewer that indeed it is. You can waste a lot of time this way.
In general, things to remember; regard the job shop as an agent; your real customer is the hiring company. Keep notes; ALWAYS keep a phone book with the names and contact info of anybody you come into contact with. Especially, keep track of people who impress you as competent consultants, and people you know you made a good impression on.
It's not at all underhanded for somebody to like your work and call you back, or for you to hear of a job at a company you once worked at and ask somebody you know there about it. If you're no longer working with the job shop you were working with when you met them, you're perfectly entitled to take the job to another shop (most major corporations have rules that prohibit them from hiring you directly). If you still have some sort of contractual obligation to the original job shop, you can still acquire the job and take it to them - this gives you a heck of a lot more bargaining leverage!
Note: One strong caveat - it is unethical for you to take follow-on work from a contract, without involving the original job shop. All other things being equal, if they brought you to the dance, they deserve your attention. It can get fuzzy here, so think carefully to avoid behaving unethically.
Also, people often move from company to company, or even into job shops as job reps. You never know what that guy you worked with last year is doing now; he may be in a job shop and looking for somebody just like you, or he may be running a department at another company and need somebody, or he may even be running a new project at the old company and have no idea how to get in touch with you.
If you get contacted about a job and you can't take it or it doesn't fit you, don't hesitate to ask the caller if you can refer somebody else, if you know somebody who'd be right for the job. Sometimes you get finders fees. I personally refuse finders fees - the amount of money usually isn't worth the amount of second-guessing my motives I'll put myself through. But that's me. More importantly this kind of activity can help you build a network of fellow professionals who will keep you in mind and refer jobs to you.
Well, that's pretty much my brain dump on the topic. You may find more info at www.dice.com, at the monster board (www.monsterboard.com), or at www.cehandbook.com.