What to do if you’re a contractor working in the financial sector who’s been hit with (another) 10% rate cut? Last year, when the banking world was floundering under an ever-growing number of job cuts, the answer would be to take it on the chin. Now, the solution for many is to walk.
Barclays this week rolled out another 10% rate cut for all contractors across departments in the UK and U.S, according to sources close to the situation. This will obviously hit thousands of IT contractors, but will also affect all 12,000 contingent workers across the organisation.
“While Barclays remains committed to paying competitively, we have reviewed our contractor rates as part of our on-going cost management programme,” said the bank in an emailed statement.
According to our sources, this hasn’t been received in the way the bank would have liked – many have refused to sign the new terms and conditions and simply quit, including an entire team of 20 developers working on a project related to Barclays’ wealth management business in London.
A large proportion of that particular team were seconded across from HSBC, according to sources close to the situation, and decided to unilaterally quit in the wake of the rate cut. The remainder of the team decided to do the same.
“One contractor on our books working for the investment bank joined Barclays in 2009 on £550 a day. Under the new rates, she’s now on £360 a day. Not surprisingly, she decided it wasn’t worth it,” says one IT in finance headhunter.
This is the second time that Barclays has implemented a pay cut for its contractors in 12 months, after curtailing rates by up to 10% for temporary IT staff in February 2013. Again, the new rates are non-negotiable and contractors can either accept them or move on.
Barclays is one of two banks currently curtailing IT contractor pay, according to our sources, the other being (predictably) Royal Bank of Scotland, which cut rates by 10% earlier this month.
The most effective way of chopping contractor remuneration without experiencing an exodus is to follow a ‘unionised’ method whereby all the major banks pull back at a similar time. In the current climate, where confidence has returned to the contractor market, cutting pay will prompt many to seek pastures new.
“A lot of banks are starting new projects, particularly related to change and greenfield IT programmes – there are no shortage of new job opportunities,” says another IT in finance recruiter.