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What is a reasonable gross margin for a staffing service in a specialized IT field such as SAP or Oracle consulting?

  • Lets use the example of an SAP customer who is willing to pay $150hr for a consultant, what percentage should go to the agency vs the consultant assuming a 1099 or W9 (corp to corp) relationship which eliminates fringe + benefits?

  • Answer:

    If the agency is invoicing the customer, then a portion of $150 could go to (sales?) tax - so you have to take that out straight away. Then you have to consider some other factors: does the consultant get paid only after the customer pays or regardless (so is the agency assuming the risk?) Is the agency managing a relationship with the customer at a level above the direct report of the consultant? Is the consultant part of a bigger project where the agency is taking on risk for the project as a whole? For each yes you'd add $10-$15 to the share of the agency.

Anthony Tauro at Quora Visit the source

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This is a very subjective question. It depends on the market and demands of the consultant performing the work. My https://valintry.com has offices in Orlando, Dallas and Nashville and the going rates for these professionals is very different, and so the margins are going to be different if the price is fixed at $150. Margin percentages are closely guarded by most staffing companies, but there are publicly traded ones that allow you to get a rule of thumb on gross margins. Kelly Services and Robert Half are two examples. They are getting gross margins of anywhere from 25 to 35% on most of their deals (more on highly specialized assignments). So - estimate 70% of the Bill rate goes to the consultant, 30% to the agency. ($105 and $45, respectively). Hope this helps

Brent Healy

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