Online recruitment blissfully oblivious - 03/2001

The new agency regulations will be enacted shortly and time is running out to have any say in the consultation process. Many recruitment companies are still unaware of the massive impact these regulations will have on their business. Some of the provisions appear unworkable and the once simple process of submitting prospective CVs to a client is set to become a logistical nightmare for clients, agencies and contractors.

Although there has been much publicity about the temp-to-perm proposals it is the temp-to-third party proposals that will potentially damage many smaller and medium sized agencies. These proposals will allow a client to transfer contractors from the initial supplying agency to a different agency four weeks after the contract terminates, without paying any fee to the initial agency.

The top 20 IT recruitment agencies currently account for 64% of the IT recruitment market and these agencies are in a position to exploit the new regulations and force out smaller agencies with lower margins and preferred supplier arrangements. Clients are aware of the opportunities and are ready to use the new regulations to reduce costs while the larger agencies are set to increase their market share. Ann Swain, chief executive of ATSCo who represents most of the largest IT agencies says, if implemented, the regulations will herald an unprecedented period of poaching and predatory tactics in the IT industry. Smaller IT recruitment companies will be endangered, contractors will be bought and sold and consolidation will drive out competition.

There are many other new responsibilities in the regulations that will affect every agency's trading terms and require changes to procedures and documentation. The interaction with the IR35 legislation will effect both agencies and contractors. It is important that those in the industry understand the implications of the new regulations and contribute to the consultation process if they feel that their business may be unfairly prejudiced by the terms of the new regulations.

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