IT contract renewal - what to expect of agents

In its strictest sense, 'contract renewal' almost does for IT contractors what it says on the tin - the potential renewing of your contract with a recruiter and their/your client.

This means that, near the end-date of their fixed-term agreements, IT contractors can renegotiate their contract almost as if they were negotiating for the first time.

When approaching renewal, a contractor should expect honesty and integrity from the agent, encouraged Paul Jameson, managing director of IT recruiters Outsource UK.

But agents who talk of contract 'extension', as opposed to 'renewal,' risk misleading contractors into seeing the contract continuing as guaranteed, or the only outcome.

Of course it's not. In the worst case, the bench could be the result of talks at contract renewal stage, quite apart from the lesser, but more common evil of a rate reduction.

The upside, however, is substantial. Alongside the prospect of more suitable terms, renewal is the contractor's moment to secure a 'higher rate, new skills or a better role.'

As well as this effective promotion, contract renewal is also where contractors can get 'first refusal' on permanent or international openings, added IT recruiters Arrows Group.

But whatever the nature of any role put forward at renewal stage, it is not down to the agency to decide its duration, be it a new contract/job or one that is being extended.

Agents who suggest otherwise are not being honest or integral and, Mr Jameson warned, risk earning "nothing from the process if the contractor leaves."

"Extensions come from the client deciding that they need the contractor for an extra 'X' months," confirmed Jeff Brooks, IT sector chairman of agency staffing body the REC.

"Their proximity at work means a line manager might ask the contractor when they are due to end and, after the reply, will say 'I'll need you for another three months.'"

Even if the line manager does not approach them, contractors can always speak to their end-user directly to see about being extended, Arrows Group recommends.

Then, said Mr Brooks of IT recruiters Prime Sourcing, "contractors should feel that they can telephone their agent, and say 'It looks like I'm going to be extended.'

"This heads-up to the agent lets them get the ball rolling on the contractor' s behalf, and should result in the agent contacting the necessary personnel at the client site."

If the client is tight-lipped about the prospects of extension, the renewal process more formally opens by the agent contacting both parties three months before the end-date.

Such a notification is usual on 12-month contracts, said Arrows Group's managing director Adrian Treacy, and falls to six weeks prior-to-end for three-month contracts.

The REC reflected: "A bad agency will phone the contractor a matter of days away from the contract end-date, having not contacted them since they were placed.

"The best will have supported the contractor and been in touch with them throughout the assignment...[or taken other steps] so there's no nasty surprise when its end nears."

Once all parties have renewal in their sights, contractors like to ensure that their negotiations are not restricted to, or solely reliant on, the agency and what it claims.

But only negotiating with the client is difficult; not least because the contractor's agreement is with the agent, who the client has appointed to get them the best deal.

"Some managers may like to talk about extensions on a more personal level," Mr Jameson said, "but most clients will not want to negotiate directly with the contractor.

"The agreement is a commercial agreement supplying services, not employment; and numerous contractors each wanting a negotiation with the client is time-consuming."

Still, the REC says some contractors sometimes feel so "exasperated" with their agent that they tell the client, which results in the client "putting pressure" on the agent.

The danger here is that contractors can come across to the client as being "too money-focussed," Arrows cautioned, and might be referred back to the agent who they outed.

The most compelling argument for contractors facing renewal to use their agency is because contractors have already paid the agent for the process, preferred Mr Brooks.

He explained: "Contractors should expect the agency to support them in any negotiation at renewal; even if the negotiation is simply an extension to the end date.

"Its the agency's job - the onus is absolutely on the recruiter. The agent is taking a margin and they should do some work for it by managing the agreement."

Yet when negotiating with both the client and the agent, contractors who are successful at contract renewal say keeping each party aware of the other's proposals is the key.

And because the leanings of the client can be gauged regularly, the agency is the party who the contractor can formally meet with to discuss renewal, said Hays IT.

"We would recommend arranging a face-to-face meeting as it [helps to] build a successful relationship with your agent," said Hays' contracts manager Liam Doyle.

"Ensure to keep in regular contact, so that your recruiter will know if you are looking for new contracts and can put you forward when relevant opportunities arise.

"Be clear about your [requirements,] career goals and areas where you are happy to be flexible so your recruiter...can find a client organisation that is best suited to you.”

Editor's Note: Further Reading - Why renewal is IT contractors' top priority, When IT contractors push for a rate rise, Contract rate negotiation: How to negotiate a rate rise.