10 ms·

Ask HN: Where are all the software-contracting agents?

48 points by biztos 5y ago

A long time ago I worked as a software consultant/contractor in the US, and I'm thinking of doing it again. I mostly enjoyed it but the "find your next client" part was really stressful. Of course, there's another big industry in which talent always has to find projects and vice-versa, and that's the film (and television) industry... in which there are Agents whose job it is to do that matching for a 10% share of the deal. But when I look around I don't see that happening in software. I know some people tried, but I don't think it got anywhere. Instead I still see "consulting companies" that have employees, and "independent contractors" that have to constantly worry about their next gig. For people who want to be independent contractors, but don't want to do the whole networking-for-jobs thing, it seems like Hollywood-style agents would be the perfect solution. Why isn't the software agent a thing, even a dominant thing, in our industry?

beaconstudios 5y ago
Isn't that the point of companies like Toptal?
- biztos 5y ago
  Maybe I'm missing something about how Toptal works? It looks to me like they bill the hiring company $X and pay the talent $Y, but the relationship with the company belongs to Toptal and the difference between $X and $Y is their (probably leaky) secret. So looking past their 3% marketing spiel ("Google only hires the best engineers!") yes, they have a value proposition of reducing your gig-seeking anxiety, but no, they aren't your advocate the way an agent is (supposed to be). I'm not saying that's an unreasonable value proposition, but it's not what an agent does for, say, a television writer. Is that not how TopTal works?
  - beaconstudios 5y ago
    True, I believe they remain a middleman in the transaction. Does an agent not do that? They take a percentage fee, after all. Presumably once the contract is negotiated you work directly with the end client just like an actor would.
    - biztos 5y ago
      I believe the agent's 10% is contractually guaranteed and you deal with them whenever there's a contract to negotiate, but after that you just have to pay them. The point is that if I have an agent, I have a relationship with my client and a relationship with my agent, both contractual and also reputational. But the agent doesn't have a contract with my client.
      - tixocloud 5y ago
        Would this be fairly similar to what a recruiting agency would do?
        biztos 5y ago
        As I understand it, no. An agent, in the film-world sense, traditionally gets a cut of all your work while you are contracted with that agent, and -- crucially -- gets it from you. There is a contract, you're going to gross $X, you owe agent 0.1 x $X. "All your work" because otherwise it would be too easy to make a deal with the producer, and cut out the agent. The risk on the other side is that the agent might not actually do anything to earn the 10%. You usually don't end up keeping your first agent if you are successful. A recruiting agency gets paid on a totally different model, usually a multiplier of the recruited person's salary, sometimes tied to them staying with the company a certain amount of time. The recruiter's business relationship is with the hiring company; the agent's is with you. So for example, for a $100,000 per year regular job, the company might pay the recruiter $30,000 after hiring you, possibly subject to your not quitting or being fired in the first three months. They are only very loosely incentivized to get you a better deal, if at all: maybe the company offers them a fixed fee, maybe they can fill the position with someone else, etc. So in a way it's closer to the moral hazard of real-estate agents. A "proper agent" the way I'm thinking of it, for a $100,000 gig they are going to get $10,000, and if they can get you a $300,000 gig they will get $30,000. But their contract is with you -- and they get their 10% of your gross from every check, if the gig goes longer they get more money. The incentives are quite different. In an ideal world, I would have an agent find me my jobs and negotiate my rate, because they are going to fight to get 10% of a bigger number, and me being happy and thus working more actually makes them more money. Whereas for the recruiting agency, once they get their payout they have little interest in my further success.
bryanrasmussen 5y ago
In Europe it's a thing, at least where I am, plenty of companies that just set up an independent contractor with a company that makes such and takes a 30-50 dollar fee per hour invoiced.
- biztos 5y ago
  That's interesting, how do the contractors and the agency find each other? I'm loosely based in Berlin but there it seems like an even more "BYO Connections" arrangement than in the US, at least if you want to make real money.
  - bryanrasmussen 5y ago
    well there are a number of agencies around, some are rather local to the area, some small international (focused on a few countries), some I have worked with basically just called me like a recruiter - which is all they do - they try to recruit you and sell you for time limited projects. At the beginning I tell them right up how much I want which the rule I was told starting out is you should earn at least two times as much consulting as you do in permanent employment otherwise it isn't worth the extra risk. A recruiter's job naturally depends on being able to have good employees for their clients, but (this part is my assumption based on observing how they work) the ones dealing with consultants have this pressure to a greater deal because there is a higher turnover, medium and large companies hire consultants and sometimes might have a dozen at a time come in on something big, the purpose of the company is to minimize how long they need the consultant so they estimate how long they need them for and make a contract based on that - so for example I worked at a large media company for 2 years paying $100 an hour and VAT on top of that - but the first contract (IIRC) was for 3 months, renewed for 3 months, and then they started asking me for 6 month contracts. When a company hires for 3 months and renews for 3 months and then wants you for 6 months more but you happen to get an offer that sounds more attractive right at that point ( maybe you get a job for half the hours per day but you manage to negotiate $160 an hour and you would rather take it easy at almost the same rate - as happened to me recently) then the recruiter gets an opportunity to bring in more of their consultants, so big companies long projects lots of consultants - more turnover for recruiters closer working relationship with company more need to give them consultants they are happy with because otherwise suddenly that well dries up. so what I'm saying is that you get a good working relationship with the recruiter because you came through for company A and company B then when company C rolls around they are going to try to really sell you there. Of course a bit after your contract with company A is over, if you maintain connections there you can connect with them and get a higher rate than the recruiter can give you while also working cheaper for the company, although often these companies prefer to work with a recruiter so they know the paperwork is all in order etc. I think it does work like the agency model, but not agents for superstars - more like agents for the working rank and file actors.
biztos 5y ago
PS, I'm aware of the moral hazard in the agent model, which already was on HN a while back[0], but then why isn't this our problem instead of the "BYO connections" problem? [0]: https://news.ycombinator.com/item?id=19570735 https://news.ycombinator.com/item?id=19570735
tgflynn 5y ago
That seems like a really good question. I highly doubt that skill at software development and skill at self-promotion are positively correlated. In fact I suspect they are likely to be negatively correlated.
softwaredoug 5y ago
In the US look for small consulting companies with fast changing staffing needs. At my last job, we had a pool of trusted contractors we pulled in for gigs. Clients found our firm through our marketing efforts. We had employed consultants, but staffing needs shrink and grow all the time. When a new client wants 3-4 people parachuted in, we would want to help. So it was great to build relationships with trusted contractors. Much of the time these contractors had little interest in marketing and sales, but liked being contractors, so it essentially worked out like we were their agent. Almost always we kept them in steady risk and also took on much of the payment risk. (We always paid contractors on time even if the client was slow to pay us). I think this is a pretty common pattern especially on the smaller and niche ends of the consulting space. The huge consulting firms can just afford to have a huge bench all the time. But for small firms, that’s not a luxury the company can afford.
- georgeecollins 5y ago
  I have often hired a trusted / skilled person to do software contracting and they in turn subcontracted some or all of the work out to someone they worked with. That situation seems t arise naturally, where lots of people want to hire person X, and so person X starts to say, "I don't have the time myself but I know someone I can work with I trust." The skilled contractor can then handle excess demand when it exists. If I were looking for someone to be my "agent" the first place I would look would be successful individual contractors who are doing similar work. Many may need subcontractors. Also, star cintractors already have a lot of the qualities of agents, and more importantly qualities that would be hard to find in agents if they existed: domain expertise, connections, reputation, communication skills, understanding of the work.
  - biztos 5y ago
    Did your contract say anything about that? If I start a consulting company and want it to grow, then sooner or later I have to play the same game as the big players: Principals come and close the deal, Juniors do the actual work, billing reflects this. What I'm curious about for the agent model is someone who actually proposes to do the work, and does it. In that case, popularity raises the rate instead of dividing the time. Having Brad Pitt act in your movie costs more. If you really are an independent "IC" and are a "star" then you will have offers you want to turn down, right? And dealing with that will be a drag too, right? Hollywood Stars still use agents last I checked.
holonomically 5y ago
Because being an agent in the movie industry is about finding "talent" and being connected to the right producers. Discovering talent for film, just like in modeling and sports, isn't hard. You go to a few plays and theater productions or hang around enough people and notice which ones seem to have a knack for grabbing attention. This is hard in software because software talent isn't visible. Similarly, being connected in software isn't as relevant as in the movie industry because when software companies hire engineers they want to retain them for as long as possible instead of working on a single project and then putting a whole new team together for another one. In short, the dynamics in software engineering are stacked against this being viable. The incentives that exist in the movie industry don't exist in software so copying the movie business model and expecting it to work the same in the software industry is a non-starter. There are probably a few more concrete reasons but those are the main differences I could think of off the top of my head.
- biztos 5y ago
  One of my best friends owns a modeling agency specializing in new talent. As far as I can see, it's very hard work to find modeling talent, which I (stupidly?) think is not even "talent" in the same way that actors, writers, squash-players and programmers are. Also, it's a very very feast-or-famine business and the agency is taking most of the financial risk. For the Hollywood case, I agree that my analogy weakens a lot when we consider all the people writing code for 10 years at a crack. However my anecdata (basically, watching what jobs different friends have gotten) suggests that connections in software are at least as important as anywhere else for the top end, it's just that there's a vast middle that pays pretty well and doesn't actually care whom you know. I read somewhere that Netflix says "we're not a family, we're a sports team," which I find quite interesting (and enticing!) but also seems to be an analogy in search of an agent?
Tade0 5y ago
I have a guy who I originally told to get back to me in a year. He did and has been doing this ever since. I got into one gig through him and stayed there about 10 months. I just got my annual call the other week, but had to refuse because I'm not planning on switching yet, but we'll be in touch. Several times recruiters who I told the same got back to me after a set period. Does this count?
- biztos 5y ago
  I don't know. I also have some recruiters who respect my "not now, ask again in 6 months" reply, but for actual job-jobs. Does your guy call you when he has a gig for you or is he trying to get you to take a full-time position?
  - deleted 5y ago
    [deleted]
victoro 5y ago
In my younger years I spent some time working in the film industry as a PA and reading everything I could to learn about the business side of things. Needless to say, after becoming a programmer, I have often asked myself the same question. The main difference I can think of is that unlike films, which are discreet projects with hard beginning and end dates, software projects never really end. Maintenance can go on indefinitely and usually the most knowledgeable people to do that maintenance are the people that built the project in the first place. That makes some proportion of people likely to stay with a project for a longer time than it takes to just code up the requirements and generally makes turnover cycles less predictable than they are for people working on films. With less predictable turnover, agents (who generally make money at the time a transaction completes rather than continuously) would have less predictable income streams so they are less incentivized to do it. Also, even in movies, from what I saw, outside of top talent who command large contracts, all the other folks didn't seem to have agents. Thats probably because the transaction amounts for a given contract don't make sense for either party to participate. All the grips, electrical people, PAs, costuming, craft services etc workers were finding work just as a software contractor might -- through connections from friends, colleagues, and people they worked with on previous projects. Many are also part of unions for their respective part of the business so I would expect they get some assistance in finding projects from that as well (e.g. if there is a union production in town they are usually required to hire only people part of the various unions -- so if you're one of the only union members in a region you could get work that way). I don't think agents are totally incompatible with the software industry, but I do think it would take a somewhat rare combination of highly paid project with a discreet, somewhat consistent term of employment (maybe coding up financial some kind of financial model or data pipeline for a hedge fund would fall under this?) to make it worthwhile for agents to specialize in.
- biztos 5y ago
  Thanks, that's helpful. I did consider that the grips et al don't have agents, but the few actors I know in LA -- modestly successful people you would probably not have heard of -- all have agents. My understanding is that the agent makes 10% of everything you get, because most agent contracts are exclusive. Agent puts me on Dune 2, agent gets 10% of my pay; I get on Dune 3 because they loved me so much in Dune 2, agent still gets 10% because our contract says she does, unless I fire her in time, which carries reputational risk. I wonder, do people have agents on soap operas, which are probably the closest analogy to corporate software, i.e. projects that go on potentially forever and have some people spending their entire careers working on them? (I had a neighbor who was a soap producer, but not in the US, so not a good source of info for this.)
abstracted 5y ago
Try https://www.turing.com/ https://www.turing.com/ I heard that they have some good opportunities.
- v1l 5y ago
  hmm, account created 15 mins ago to post this.
  - abstracted 5y ago
    haha, I can see how it came across, no ties with turing.com, I interviewed with them recently. I have been a daily user of hacker news for the last decade, never contributed anything on hacker news. I misunderstood that the OP was looking for a gig, and tried to help. In my head, I was thinking what better way to contribute to the discussion than helping someone find a job :D
  - biztos 5y ago
    But they only hire the top 1%, easily trumping Toptal's top 3%!
    - v1l 5y ago
      Who wants to build something that hires only the top 0.1%??
- biztos 5y ago
  Thank you, but I didn't Ask HN for a job, I Asked HN for opinions on why the agent model isn't common in our industry.
  - abstracted 5y ago
    I am sorry, my bad, I misunderstood that you are looking for your next gig. Here is my take, 1. Contract work varies very widely from say few weeks to years. Agent model won't scale here because you as a contract employee can get fired for numerous reasons, and which is pretty common in the industry. If an agent has to make commission, long term reliability is a must. 2. Continuous cut for the duration of the project with the contract employees keeps cash flowing for these consulting companies. Why risk the cash flow when you can earn bi-weekly :)
browningstreet 5y ago
Small consulting companies will have sales/biz-dev role, which I think works in place of this kind of thing.
- biztos 5y ago
  Yes but in that situation I'm no longer Leo DiCaprio, actor; I'm Appian Way Productions[0]. For me the missing piece (hence the question) is people doing that sales/biz-dev work and taking their cut, on behalf of people who would prefer to be independent and just do the projects, not build a consulting company. Of course I'm assuming there are a lot of people like that, but as someone else commented, self-promotion skills and tech skills are not strongly correlated, might even be negatively correlated. I've hired contractors who would never ever be able to be anybody's boss anywhere, but they were really good programmers. Those people aren't going to get very far by making companies, but a good agent could probably get them a lot more money. [0]: https://en.wikipedia.org/wiki/Appian_Way_Productions https://en.wikipedia.org/wiki/Appian_Way_Productions
throw8932894 5y ago
I have opposite problem. Too many unrelated job offers with low salary, irrelevant tech stack or high tech debt. I hired secretary to do initial filtering. Final negotiation is always on you.
- biztos 5y ago
  Anybody can get crap offers, the point of the agent is to get you good offers, because otherwise the agent doesn't get paid. My understanding of the system is that the final negotiation is on you in the film business too, but your agent is supposed to (be motivated to) help. Has the secretary made a significant difference?
  - throw8932894 5y ago
    I get 1 goof offers out of 50 weekly. Secretary filters that, makes first contact, arranges details.... Money well spend.
inetknght 5y ago
One of the biggest differences in your two examples would be the presence (or lack) of a union. Actors have a guild which acts as a union. Software engineers don't.
- biztos 5y ago
  I've commented on that difference before, in a pro-union sense, but I don't see how it makes any difference to the role of agents. What about the presence/absence of a union affects the viability of agents?
gregjor 5y ago
10x Management does this. They have represented me and a few hundred other software/technology professionals for a while now. I have heard about other agents with a similar business model but I can’t name them offhand. See the 2013 article in The New Yorker that describes the 10X Management model. https://www.newyorker.com/magazine/2014/11/24/programmers-price https://www.newyorker.com/magazine/2014/11/24/programmers-pr... Also written up in many other places. The founders frequently show up on Bloomberg News. Pre-10X I worked with a few skilled recruiters who acted more like agents (working on my behalf) than the majority of recruiters. They’re out there but hard to find; a lot of tech recruiters don’t take the time to understand the jobs or candidates and make a good match, but some do.
- biztos 5y ago
  Thanks, that's one example for sure, hope they are still doing it. Before posting this I read a previous HN article about 10x and their "negotiation as a service" offering, and in that thread it seemed like indeed they were in the agent business, but hard to get as your agent. Which makes sense of course if they're good at it. But again I wonder -- if the business model is good, why don't we see more of it? Could it be that the people who make good agents are making better money doing something else, on average?
  - gregjor 5y ago
    Yes, they are still doing it. You can visit their web site 10xmanagement.com to see for yourself. They still represent me. The same founders have a parallel company 10X Ascend built specifically around negotiating for full-time jobs, not the same as the full agent model. I don’t really know how hard it is to get taken on by 10X. The process wasn’t particularly hard for me (in 2013). I know they have a fairly long backlog of applications. I know they prefer people with significant experience and specialized or in-demand skills who already know how to work independently with customers. Agents will of course specialize in fields they understand, and an agent can only credibly represent a small number of clients. I imagine the agent model doesn’t scale as easily as recruitment or “body shop” consulting companies, because it’s more personal and tailored than a numbers game. Like I wrote I have heard of other agents in the software field, but I only have direct experience with 10X Management. I found out about them from a magazine article.
1_player 5y ago
Good question. I've quit my full time job and planning to take a long sabbatical, and I'd like to go back to being a mercenary^Hcontractor again eventually, but preferably with an agent that finds jobs for me. Not a middleman that charges 3x my hourly rate, I've been through that meat grinder before. 10% sounds reasonable, it's not much of a thing in the software engineering world and it seems such a good opportunity that no-one has been able to exploit. You find the client, negotiate the rate, deal with them on the admin side or when I need to fire them, I do the work. It'd be such a nice symbiosis, in my opinion. Why isn't that a thing? Agents that are interested in an arrangement like that, my email is in my profile. (I'm in UK)
France_is_bacon 5y ago
The reason that sports pros and movie stars have agents is because there are limited numbers of movies made per year, and a limited number of slots for sports. Additionally, there are a very limited number of "stars", whether movies or sports. In the tech world, basically, there are an unlimited number of job openings. There are also a lot more great programmers, and this is because there are so many different facets of technology. A security superstar can't be the best in microchip programming or OS programming. A superstar that programs on the IBM AS400 RPG III is different from someone who is an expert in COBOL programming for bank transactions. Finally, unlike sports or movies, the computer programming world does not have unlimited money for talent. The sports and movie world are driven by consumers, and who is popular with consumers, and which stars make or break a movie, or which pro athlete brings the team to a superbowl or championship. In programming, you are dealing with businesses, who just are not going to pay $30 million per year to a programmer, just because they have an agent working on their bahalf. Additionally, since the worlds are pretty small, why would a computer security expert want to give up 10% of their salary to someone, when it is they who have the contacts into the different companies who need them? . That being said, you can look for someone on craigslist or indeed or reddit/r/forhire and take an advertisement for a salesperson. But, personally, I wouldn't work for less than 20%, as I can get that kind of return other places. And, now much can a contractor make in a year? $250,000 at the max? Let's say that for argument's sake. So an agent, at your percentage, would make $25,000 per year. Nowhere near enough to live on, so they would need many different independent contractors. I suppose that would be ok, just like there are agencies that handle multiple movie stars or pro sports players. If I were you, though, I'd try to advertise to get a salesperson to work for you. And when someone calls, you will also have to tell them that they would need to get multiple independent consultants to make it worth their while. Because nobody is going to work for a maximum of $25K per year. If you can even generate that many billable hours in the first place. But, if you have rare mad skills that you can earn $500,000 per year and you've done it before, well, let me know, I'll help you for 20%.

biztos 5y ago
Thanks, that's very informative. Yes I am wondering about the rank and file actors/programmers, if there are only agents for the stars then it's not much of a system. In situations like this do you have insight into the actual billing rate? In my previous contracting work I always knew how much they were making on top of my work, but if I were a consulting company I'd probably take some pains to prevent the subcontractors knowing such stuff, just because of the risk of them cutting me out. Whereas, in the classic agent model, more pay for you is more pay for them.
- bryanrasmussen 5y ago
  Well the amount they take really depends on what they can contract with the company they are selling you to, and sometimes they will make very little money on you in order to get you in there - better a satisfied customer than not. I will switch from USD to DKK which is what I am actually charging in normally. I was working at a large bank and the rate was 700 DKK an hour for me and the bank was paying 725 DKK, it turns out that the bank refuses to pay more than that because well banks are often cheap I guess. So it turned out the recruiter was only making 25 DKK an hour on this because the consultant they sent before me was such a disappointment that the bank was really upset with them and they needed to make it up to them. >In my previous contracting work I always knew how much they were making on top of my work, but if I were a consulting company I'd probably take some pains to prevent the subcontractors knowing such stuff, just because of the risk of them cutting me out. The contracts the recruiting companies give you prevent you from cutting them out during the project and for some time after that - generally around 6 months after. My experience is that the recruiter generally tries to charge 150 DKK on top of what I charge. The place I'm at right now is a Swedish company, the SEK is worth less than the DKK, the recruiting company couldn't get more than 750 DKK so I took a cut to 675 DKK per hour for 6 months with a possible 6 month extension, because otherwise I would have had to wait maybe a month to get a project paying 700 DKK per hour. As noted before you should expect to make twice as much money per hour as you do in a permanent position to take care of the risk involved and also because you have to handle stuff like your own pension, accountants etc. The risk is stuff like not have a job for 4 months, but for example if you manage to work say 2-3 years straight consulting you are obviously doing better at that point than full-time employment. Also as noted every now and then a project comes along with less hours and that can be a good way to recharge your batteries, for example my last project working 4 hours a day 5 days a week still gave me more money at the end of the month than my last permanent position gave me (just wage money though, not if I counted in such things as vacation money or pension in which case I was behind by about 5000 DKK) >Whereas, in the classic agent model, more pay for you is more pay for them. yes, it's true it doesn't work like that in theory but in practice it basically ends up working like that, in my experience it isn't difficult to find out how much they are making on you per hour and then demanding more per hour. If they have a good experience with you, client happy, your renewal coming up and you say you will renew for more money it makes sense for agency to take a cut. At the point you've been working 6 months and the client wants to renew all reasonable agent risk is gone and it's pure profit for them. on edit: clarified a point with how much the bank paid per hour. on edit2: clarified another point about working less hours on projects.
- bryanrasmussen 5y ago
  I will expand a bit on risk - as said should make double what you make in full time job (in wages) but that is sort of a rough estimate. For example my last full time job last year was 60 thousand DKK per month. On top of that get some small pension and some vacation money paid into a state fund. And of course if I get sick I don't have to worry. If you get sick as a consultant you should have insurance for that. So if I work 8 hours a day for 22 days a month at 700 DKK it gives me a little over double, 7.5 hours a day gives me a little bit under. but lets say you get into a dry spell where there are no projects for you, and you spend 4 months without. On the one hand this is basically 8 months of normal employment, if you have purchased insurance for this scenario it isn't too bad. If you haven't you may find yourself in a situation where you need to start using money that is actually supposed to go to paying off your taxes. That's bad because now you get fines for not paying taxes and your risk increases. As someone with ADHD this scenario is really bad for me, so just saying different people might have greater risk than others and should plan accordingly.
  - biztos 5y ago
    What does that insurance look like? What's it called (in Danish if necessary)? I don't think I've seen something like "dry-spell insurance" before. Seems like it would be expensive, since the risk of a freelancer having (or taking!) four months without work is high, right?
    - bryanrasmussen 5y ago
      well in Danish it would be lønforsikring - wage insurance - generally used by people who have a high monthly wage and want something to supplement dagpenge, which is the danish unemployment solution. Have screaming kid right now so can't elaborate more.