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How can an agency stretch everyone so thin and then also drag their feet on hiring new people?
Oh, they're cheap
They don't have the right mix of talent - level of experience, industry experience or function. For example, maybe they have a lot of staff that work on Consumer products, but they need staff for Pharma work. Or they have a lot of senior staff and few junior to do the work.
Hopefully they are planning for growth. Or reduction in force or both. Laying off people due to workloads is one way to deal with low performers.