It’s been a while since the last post and high time I wrote about the “grey market”. No, not some dodgy Apple kit, in this context it relates to a number of “Umbrella Companies” that are actually owned by recruitment businesses but pretend they aren’t.
Some are relatively overt about it and exist to perhaps serve their own contractor base and/or use group structures “imaginatively”. Others are far less so of course and also have a history of offering very high referral fees to build contractor volumes. Why would a recruitment business send it’s contractors to a potential competitor related business? I’m not saying that there any data protection breaches but is it best practice? I also believe that clearly masking the relationship tells you something, why hide something if it’s a genuine stand alone business? It is difficult to tell at times and any decent Agency would want to look at group structures and associated companies as part of preferred supplier due diligence. I have seen Umbrella operations bring down related Agencies and vice versa. This happens as a result of one simple fact, it’s not a core focus for the Recruitment business and is a tad harder than you might imagine.
Here at good old Parasol we are quite proud of our independence and I really don’t mind competition, it keeps you sharp. I do mind a lack of transparency and practices in an industry that needs to remain friendly with our legislators. Surely we should all play to strengths and if you are an Agency boss thinking of entering this “easy” Umbrella life then give me a shout, happy to explain how and why you should to do it properly.