Their rockstars are actually getting 85% of that hourly rate?
Many contracting firms are taking anywhere from 50-75% if the rate they are charging.
Many contracting firms are taking anywhere from 50-75% if the rate they are charging.
The only firms I know of taking that kind of cut target governments, which carries a lot of risk and is very high-touch. They need a fancy office and a lot of overhead just to stay in the game. Perverse, I know, but the way things are.
The firms in question then charge very high rates to cover all this, and keep a large percentage of it, as you say. The contractors who actually do the work end up seeing about as much as they'd see in private practise (~$800-1000/day from a chargeout of maybe 1800-2200)
Source: friends working for this kind of company in Australia.
The reason this exists is fear. The project sponsor wants to be able to say, "Well, I hired the best," in case things go south.