Yes absolutely, I've been on both sides of this (the contractor being "sold" as well as employing short-term contract developers through an agency like this). I will say though that a couple of times where I was able to find out how much the client was paying for me, there wasn't as big of a gap as I had expected - I think the largest was about 6%, and when I was a lead my employer was losing about $15/hr on me. I have to assume the team as a whole was profitable enough that they weren't that concerned with it.