How do Transparent Bill Rates help Clients? | DCR Workforce Blog

How do Transparent Bill Rates help Clients?

Should clients insist upon being privy to the myriad components of a bill rate? Till recently, the industry dynamics have been such that many clients would pose this question themselves while suppliers were not willing to have their markup open to scrutiny. While the quality of contractors sourced may be the primary concern of every client, concerns about cost are generally never far behind. Thus every client has a need to negotiate rates down to the extent possible. This may be why suppliers these days are differentiating themselves on this front and offering transparent bill rates.  But how exactly would clients benefit from knowing the actual amount their contractors are taking home as pay?

Opacity’s Outcomes:

When a supplier is not transparent about the pay rates and pays variable rates to different contractors to boot own margins, there is a possibility that two contractors, with similar skills, engaged in similar tasks with the same client happen to compare notes and realize that one of them has been shortchanged.

  • The morale of the worker may be affected and reflect upon the quality of performance on the job.
  • There may be attrition on the cards even.
  • The worker may switch to a different supplier after completing the task – thus sealing any possibility of being called back by the client – which would result in the loss of a trained and capable alumnus.
  • In times of upwardly mobile bill rates, clients who take no interest in such details, pay flat rates ignoring market reality may squeeze a supplier’s margins too heavily or impact the worker’s pay rate adversely – thereby inviting lower quality workers.

Effects of Transparency:

Clients today may demand to know the pay rate or may specify a rate with the requisition – and only negotiate the markup with the supplier.

  • Knowing the pay rate will help a client to ensure that all the contractors in the team have pay rate which are equitable and not hugely at variance with each other – and probably meeting market standards. This approach gives away the supplier’s markups, overheads, margins and profits to a client and lay the door wide open for negotiations.
  • By defining a specific pay rate a client wields a lot of power and can ensure that the contractors are paid better. Managing and forecasting costs becomes easy with this approach – but the downside is that with the kind of volatility which marks bill rates against permanent wages, clients will be required to keep abreast of market rates and fluctuations and be responsive to them as and when required.  However, this may not be considered an ideal option by those who would rather have a package deal which offers a lower pay rate but provides benefits like insurance, 401K participation and paid leave.

When a client gets a contractor who appreciates the fairness of the pay rate received, there may be some indirect benefits as detailed below:

  • Increased levels of engagement from the employee.
  • Lower chances of the worker moving to a different supplier
  • Increased trust in the management and a resulting loyalty, reducing turnover and attrition.
  • Assurance that the worker would be willing to return to work if required and gaining a competitive advantage over other clients.
  • Satisfied suppliers and workers offering longer association and relationship.

It is ultimately a decision which would be dictated by the ground realities of one’s industry taken in conjunction with the market trends.

The content on this blog is for informational purposes only and cannot be construed as specific legal advice or as a substitute for competent legal advice. They reflect the opinions of DCR Workforce and may not reflect the opinions of any individual attorney. Do contact an attorney for advice specific to your issue or problem.
Lalita is a people/project manager with extensive experience in operations, HCM and training and development across industries like banking, education, business consulting, BPO and information technology. She believes in a dynamic approach to life and learning as change is the only constant.