Ethics Question

[Scott Maclary]

So here is the deal, I am an American programmer, good grades from a good undergrad with 5.5 years programming experience. I am working as a contractor right now making $65/hour in Chicago and I was placed on my current client through a headhunting company who charges X amount of dollars for me (I bill the headhunter every month).

The handwriting is on the wall that I am going to be replaced by cheaper Wipro labor, though I am not sure how cheap. I am pretty sure the headhunter charges much more per hour for me than I make, and this figure must be more than the hourly rate for the Wipro guys they are interviewing to fill my position as I've done a good job and there is no other reason to replace me.

The question is...is it unethical to discuss my rate with the client? If I am going to lose this position because the headhunting company is trying to charge 150/hour for me that would really be upsetting, since they could easily lower their rates to 100/hour, even 90/hour and still make money off of me. I am pretty sure that my rate of 65/hour is less than Wipro corp is charging, so if that headhunting company could come down we'd all be golden.

What do you people think?

[Ram Bhakt]

Originally posted by Scott Maclary:
So here is the deal, I am an American programmer, good grades from a good undergrad with 5.5 years programming experience. I am working as a contractor right now making $65/hour in Chicago and I was placed on my current client through a headhunting company who charges X amount of dollars for me (I bill the headhunter every month).

The handwriting is on the wall that I am going to be replaced by cheaper Wipro labor, though I am not sure how cheap. I am pretty sure the headhunter charges much more per hour for me than I make, and this figure must be more than the hourly rate for the Wipro guys they are interviewing to fill my position as I've done a good job and there is no other reason to replace me.

The question is...is it unethical to discuss my rate with the client?

Not at all. In fact, I am surprised that you are working through a middle party. See the thing is that middle party is pretty much a necessity for H1Bs (can be discussed separately), but for an American citizen it is usually easy to avoid going through middle parties. Even for a permanent resident, middle parties takes very minimal cut.

Anyhow, you should go ahead and talk to the client about it. But find out for sure first that it is indeed a pricing issue. In my experience, if there is a budget problem and if they are giving out the work to offshore companies, it is usually a corporate wide decision. You cannot do anything even if you are willing to work for free. I am suspecting that that is case here because Wipro is involved. It is a huge company and they do not go after one or two positions. They go after the whole department.

Originally posted by Scott Maclary:

If I am going to lose this position because the headhunting company is trying to charge 150/hour for me that would really be upsetting, since they could easily lower their rates to 100/hour, even 90/hour and still make money off of me. I am pretty sure that my rate of 65/hour is less than Wipro corp is charging, so if that headhunting company could come down we'd all be golden.

What do you people think?

I don't think the middle party is charging that much because there is just not that kind of margin in this business for small middle parties. They take more like 10% to 20%. So find that out first. How much is your middle party making. Anything more than 20%, you should curse yourself. Seriously, dump that middle party. (I have seen this happening when the hiring manager and the middle party guy have a secret deal).

There is another thing that you need to find out: how much experience does the position require and whether the job will be done in US or offshore.
If the job is done in US, then it is possible that no way Wipro can pay substantially less than what you are making (note, not what the middle party is charging) for a simple reason that H1Bs also leave the project for better salary. So contact Wipro itself. At the worst, you may have a salary reduction but you can still keep working at the same location. Find out the contact information of wipro's Business manager and contact them. There is a good chance that you will get in and they may even make you manager (with more salary). I know that they are always looking for local people who can move from just being a developers to team leads and offshore coordinators.

If the job is to be done offshore, I am sorry but I don't think there is anything you can do.

Let us know how it goes.

[Joe Richard]

Scott,

It depends on the contract you signed with the headhunter and the contract between the headhunter and the company you are doing the work for. You can discuss your rate but before you go start to work directly for the client make sure there are no legal ramifications.

Joe Richard

[Homer Phillips]

If the client intends to pick you up I think they would have or will be talking to you. Only you can read the signs. You need to watch the signs. If your boss is not singing your praises then I'd be really wary.

I think when you get replaced by a cheaper replacement the story coming out of the client hardly ever sounds like this. Scott was a great worker and and an assest to the company. He came to work on-time and regulary met the goals we set for him. IMO, more often than not, the company will find a reason or trump up the charges as to why you were released.

IMO, lots of people, and often it's part of the companies culture, to run down contractors. If you quit them then you are not a reliable guy. If they let you go, then you've been fired and are tainted goods.

I hope you are a skilled politician and an excellent salesman besides being a technical worker with 125% of the skills the next hiring manager has on the wish list.

Then again your pimp might flip you into a better job.
[ January 07, 2006: Message edited by: Homer Phillips ]

[Tim Holloway]

Actually, I would not be surprised to learn that the intermediate company is charging $150-180 or even more per hour. That pays their salaries of management, support, their offices, advertising and so forth. They might have tight profit margins, but even so, there's a lot of things they have to pay for as well. Though, alas, medical insurance and retirement is rarely in that list. At least for the line-level people.

OTOH, thanks to the current disparities in cost of living, I also wouldn't be surprised to hear that Wipro can charge $50-60/hr to do all of the above plus a programmer or even 2.

[Scott Maclary]

In fact, I am surprised that you are working through a middle party.

I wouldn't be working through a middle party except I had no other way to find contracts. When I started out searching for a position in contracting I placed my resume/cover letter on Monster and Dice and the only people that contacted me where middlemen. How do you find companies that need Java programmers short of blanket emailing/calling HR departments?

In my experience, if there is a budget problem and if they are giving out the work to offshore companies, it is usually a corporate wide decision.

I think they are slowly working their way in, getting a few guys from their company in the door here before they go for the jugular, the entire department, and moving it offshore. I feel like reciting an edited version of a famous quote to my boss who is a director "First they came for the Programmers and I did not speak out because I was not a Programmer. Then they came for the Team Leads and I did not speak out because I was not a Team Lead. Then they came for the Managers and I did not speak out because I was not a Manager. Then they came for me (director) and there was no one left to speak out for me."

It depends on the contract you signed with the headhunter and the contract between the headhunter and the company you are doing the work for. You can discuss your rate but before you go start to work directly for the client make sure there are no legal ramifications.

My contract didn't say anything about discussing the rate. But I don't know what the contract was between my middleman and the client. I feel wierd asking them "how much do you pay middleman for me?".

OTOH, thanks to the current disparities in cost of living, I also wouldn't be surprised to hear that Wipro can charge $50-60/hr to do all of the above plus a programmer or even 2.

Wipro's guy is living here stuffed in a house with a bunch of other Wipro consultants. I don't think they pay these guys that much, just offer them the chance to work in the US and make a little more money than they would in India and those two things combined are the carrot. Fortunately, they still have to live here during this time period and are subject to most of the same expenses I am (except the reduced rent for living with a bunch of people) so they can't pay them less than 65-75/year which means they can't charge too much less per hour than my 65/hour. Also I've found that these low cost workers tend to jump ship at the drop of a hat as well, since even a small increase in dollar amount for them is a large percentage increase.

[Chris Hani]

Acutally,
I am wondering if this is even the problem of ethic.

Here is what I am thinking.
The reason that the middleman doesn't want you to discuss rates with the client is clear for me. They don't want you to do it not because of your own good but becuase of their profit. Like your case, suppose the client pays for 100/hr to the middleman now. And you make deal of 85/hr to the client and the client choose you cutting the middleman. Isn't it the most dreadful result for the middleman?

My middleman clearly states that I cannot discuss my rates with client and other middlemans in the client company. I don't think it is fair to me so I would rather break it if a good opportunity comes.

For me, it is not the problem of ethic BUT...

Will I get any disadvantage if I break it?
That is my real question.