Barclays has rolled out another 10% rate cut for all contractors in the UK and U.S.

13 March 2014

3 minute read

Barclays has rolled out another 10% rate cut for all contractors in the UK and U.S.

Bye bye

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.

Related articles:

So, you were thinking of getting a little project management gig at RBS? Baaad luck

Behold the new Asian hotbed for contract roles in banking

The hot recruitment area providing an escape route for bored back office workers

AUTHORPaul Clarke

5 comments

An
An IT Contractor to move from
22 September 2015
I have just finished my contract with HSBC and about to get an offer from Barclays. I'm given a range to put my rate in and I'm thinking if needs to be competitive or go with the highest rate possible? I started thinking to put an average rate but now have second thoughts what if they run another 10% rate cut, just like Bank of America just did last week (Sep 2015)?
Reply
Hu
Huggy Bear
9 April 2015
There is also something that I fail to see mentioned and that is the compulsory "vacation" time contractors are required to take at Barclays. At first it was 10 days and now it is 20 days. So in addition to 10% cuts (possibly 20% if you have been at Barclays for more than a year),you are also losing 20 days of work....I would call it a furlough as opposed to "vacation" or "holiday".
I enjoyed my time and the work at Barclays but just couldn't afford to work there any longer.
Reply
An
Another Contractor at HSBC
17 July 2014
Had a take it or leave it 10% rate cut here at HSBC on 1st July, Effective 4th August.
Why can they not stick to the contract and renegotiate at renewal.
Reply
An
An IT Contractor at HSBC
30 June 2014
I've just been told of a 10% cut myself. I've apparently avoided previous cuts, but I'm not at all happy about it.
The solutions I provide save them many, many multiples of my cost and no one in my area is capable of writing to the same standard. Very short-sighted...
Reply
An
An IT Contractor At Barclays
17 March 2014
Here's the thing that this kind of naive rate cut doesn't seem to take into account. If I am enjoying my work (which I am) I might work on the train on the way to work and on the way home. I might do an extra couple of hours in the evening and I might do another few hours at the weekend. I'll do all of this because I like solving the problems and I like the people I'm working with, and I want to help the business deliver the things they have probably foolishly promised. This is true of many of the developers around me.
In the end, all of this UNPAID overtime results in me doing about 2 days extra a week. That means that I am doing 40% more work than my contract requires of me without requiring any more money from Barclays. Now, if I receive an email like that (which I did), I wonder why I am doing this extra work. So I'll stop doing it (and I have).
So now, Barclays has achieved a 10% rate cut on my daily rate, but has lost 40% of the time I was putting in. This is a net reduction in value over each week of 30%. This means that Barclays will pay me 30% more (each week) than they were for delivering the same amount of value.
The next thing that will happen is that the business sponsor will ask what we can do to "get back on plan" or something like that and will start talking about paid overtime. If I now do another day a week, Barclays will now be paying me about 10% more than they were before the rate cut and still be getting 10% less value out of me.
Now, if I was a shareholder reading that, I'd be asking some questions at the next AGM, such as: why are you (the person who decided on the rate cut) throwing our money away like this?
The answer will probably be something involving "profit centres" and "cost centres". That is a non-answer. If anybody really thinks it's an answer, I suggest reducing the cost of all cost centres to zero by getting rid of them altogether. Let's see how long the bank lasts after that.
I stress that I am not an unusual developer in this regard at least. We usually work much more than our contracts require of us until something like this happens.
Reply