Dear Developers, a "Free" Headhunter Will Cost You >$10k

Have you ever felt like a headhunter was stealing from you? Not literally taking money out of your wallet, but something just rubbed you the wrong way?

Well, it could be that your headhunter is doing sleazy things or it could be that they actually are costing you money. Here's how.

Headhunters who recruit software engineers get paid when they place a candidate that gets hired. Companies pay recruiters 20-30% of what the candidate will make in their first year at the company. For an experienced software engineer making $100k per year, a recruiter's fee would be $20k-$30k depending on their agreement with the hiring company.

What does this mean for you, the software developer who just received an offer?

As businesses grow, recruiting costs become a fact of life whether they come in the form of job posts, headhunters, or time spent networking. Over the past few months, I've talked to a lot of companies that are hiring developers (with and without headhunters). Of the companies that use headhunters that I've spoken to, about half of them are willing to pass along a portion of the anticipated recruiting budget to a new hire if that person comes to them without a recruiter. This willingness likely stems from the huge demand for software engineers right now, so your mileage may vary in different market conditions.

Next time you're doing a job search, approach companies directly through your network, through a job post, or through a company's website. When you receive an offer, you'll be in a position to ask for a larger salary or sign-on bonus if you know the company has a habit of using headhunters.

Example

You receive an offer at a job where you will be specializing in Hadoop. (Almost every company I know of that uses Hadoop uses recruitment agencies). If you know that the company has a habit of using recruiters, try to determine who has the most visibility into the recruiting budget. This person will be your best bet for negotiating more money for approaching the company directly. At larger companies, this will be the HR representative who gave you the offer. At smaller companies, this is more likely a hiring manager or CTO.

Go to this person and tell them you approached their company directly because of how much you like the culture, people, technical challenges, etc (this part has to come from you). Then tell them that you understand how much recruiting costs can be for developers, and that you're happy to be saving them money. Then ask, "Would you be willing to take recruiting costs into account with my offer?"

Using this strategy, I've heard of one developer getting a $15k sign-on bonus, and another developer getting a 5% salary bump. With software engineers in such high demand, there's no reason why companies shouldn't pass along some of the money they save recruiting you if you go directly to them.

About Hirelite

Hirelite helps software engineers talk directly to companies by facilitating web-based "speed interviewing" events where developers video-chat with a series of companies for 5 minutes each. Our next event is this Monday, November 1st at 7pm EST. The companies attending are all NYC based, but we're accepting job seekers from around the US who would be willing to relocate.

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5 responses
What an interesting concept. From working in house as a corporate recruiter and on the recruiting agency side as a "headhunter", this seems like more of a pipedream. I wish life was really like this, but unfortunately, it is difficult for me to go directly to Toyota to purchase a car without using a car dealership or go directly to Sony to buy my TV without using a distributer. I respect where your company is coming from and I appreciate the value added service, but recruiters provide balance in a chaotic employment market. There are people who choose not to work with recruiters and succeed, but it is more convenient to work closely with a recruiter who you trust. there is value added service provided with regard to negotiating and understanding the salary requirements for a position. A good recruiter also takes the time to help a candidate understand more about the company, the position, and the salary requirements. For instance, I would rather have a clear understanding of what the position entails before I interview than to go into an interview based on information from someone in HR or a website. The goal never changes whether you work with a recruiter or not. Recruiters want the candidate to take a position, but they also want overal fulfillment. What you failed to mention is that contracts with companies who pay 15-25% FEES for new hires are set up with clauses requiring the candidate to work for a certain amount of time (usually 90 days) before a recruiter is paid for his services. So, a recruiter wants the candidate/client to be happy or else they will not get paid. It must be a complete fit. I have never heard someone say they were paid less money because they worked with a recruiter. When I recruited in house for a company, a person fell into a certain job grade and they were paid the same as anyone else whether I recruited him/her in house or if they came from a recruiter who I paid a fee to. There was no difference.
— John Mc
@John - I agree there are good recruiters, and for some companies, they're a decent option. My big problem is that the fundamental cost of the transaction is too high. Something a headhunter can charge $30k for can be done much more cheaply and with better quality (if you get a domain expert involved).

What types of roles do you typically recruit for? Are you primarily contingent or retained?

— Nathan Hurst
> I have never heard someone say they were paid less money because they worked with a recruiter.

MAYBE it doesn't happen much in larger companies ... but even within a fixed pay scale, there's a low end and high end.

In any case, it's happened to me twice with contract positions, and I'll bet it happens for regular employment too.

— Scott Lawton
@Scott - Thanks for sharing that. For contract positions, recruitment agencies are even more sinister: they take a cut of your hourly rate for as long as you work with that company.
— Nathan Hurst
As a recruiter of forty plus years never, never, and I mean never, have I cost a candidate a penny when the company pays a fee. What I am reading on this blog, for the most part, is totally bogus. A very good recruiter in the business for the long term can get the candidate more money than they could ever get on their own. Period. It is downright silly to think a recruiting fee lowers a person's compensation unless the candidate let's it happen. There is no excuse for a candidate to have put themselves in such a position in the very rare case that MIGHT happen. Shame on them. I can negotiate far, far better than any job candidate simply because I have done it hundreds and hundreds of times through the years. A candidate only negotiates his financial package a few times in their career lifetime. I can assure you most candidates leave money on the table no matter how well they think they have negotiated their compensation package. A strong, ethical recruiter has much, much more information to work with during negotiations than a candidate can possibly attain. A strong recruiter understands that the negotiations begins long before a candidate is located. If a job candidate is unhappy with a recruiter it is their fault if they continue to use that recruiter. There are many red flags easily identified in the early stages of working with a recruiter to alert any candidate to stop working with weak or bad recruiters. If a candidate ignores these early warning signs it is their fault if they accept the hand that was dealt to them. There are thousands of highly skilled ethical recruiters who really care about their candidates and only want what is best for them. A very, very low percentage of recruiters get paid 20% and far fewer who get paid 30%. During recession times recruiters are forced to take much less less 20% more often than not. Also, it stands to reason if a recruiter cannot negotiate a better deal for themselves with the employer than a 20% fee they certainly cannot get the best deal possible for their candidates. By the same token I will not work with average companies who do not take care of their employees or average candidates who do not value the considerable skills I can bring to the table. There are too many great companies and candidates to work than to work with the average of either.

Become better informed and YOU will take control. If you do not, it is you who suffer. Not the recruiter or the employer.

My experience has taught me the candidates who complain the most are either the least informed or the weakest candidates.

One last thing. How many of you on this blog having taken the time to read, study, and practice how to negotiate from a position of knowledge and strength? I already know the answer after interviewing more than fifteen thousand applicants through the years. Less than fifty applicants out of thousands and thousands have understood or cared enough about the negotiation process to do it the right way.

— Robert
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