Clients move away from Master Vendor Agreements

We are seeing a big exodus of clients moving away from restrictive so called “Neutral Vendor” agreements in favour of the more traditional client/agency relationship.

Many clients have been sold to at a high level, with promises of reduced recruitment costs and overheads. Master Vendors with extremely slick stories have moved out of the Recruitment Business and into the space that was traditionally managed by HR. They promise to reduce agency costs, streamline the recruitment process, and take the hassle of recruitment away from the hiring managers and HR departments.

Natalie Bowers, Vector's Investment Management Specialist, comments that “in reality the model of these so called 3rd Party Vendors is to seize control of the PSL, reduce the margins of supplying agencies, and therefore reduce the quality of agencies willing to work with those clients in an attempt to gain all of the Client’s recruitment activity for themselves. Then poacher turns gamekeeper and it is not unusual to see these Master Vendors attempting to “clean up” from within their position of strength within the clients own offices. Barring specialist agencies from dealing with clients directly, imposing punitive contracts and low margins on those agencies that are unable to compete on skill and can only do so on rate.

These clients are then left with the dregs of the Agency market, and a Master Vendor in disguise placing ads on Jobserve in an attempt to actually fill the clients roles themselves with no real knowledge of the market or the clients own business requirements.

This year has seen many of the larger and more switched on Investment Management clients waking up to the scam that is the Master Vendor. Many contracts have now been terminated or are in the process of being reviewed as clients finally take back control of their own recruitment and move that process in-house in an attempt to lower the cost of recruitment and increase the quality of recruitment being done on their behalf.

Master Vendors rely on a low margin, low quality and high volume business model. Maybe in today’s market place of high quality and low volume, where every single recruit has to be a perfect recruit, these restrictive deals no longer make sense to either party.”

Natalie Bowers, Investment Management Specialist