"My dismal reality as a tech contractor in banking today"
I'm a software engineering contractor who's spent more than 20 years working across a number of top banks in London. Most of the people I know who were contractors aren't doing it anymore.
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Before the pandemic, 'Outside' contracts were the norm; this meant that you'd personally invoice the bank for your work. There was a lot of flexibility and freedom with those contracts. Those are very rare in banking now, practically unheard of.
Taxation changes mean that banks are instead going for 'Inside' contractors, where the bank contracts you through an umbrella company that calculates your payslip for you, eliminating that flexibility. Pay as you earn (PAYE) contracts are also popular. With those, you're contracted through an agency which handles national insurance for the employer while you handle employee national insurance. Pay is much worse on these contracts: if you were earning £1,000 per day on an inside contract, you'd only earn £750 on a PAYE
The bigger problem with these agencies is that they're outsourcing roles to cheap offshore engineers to improve their own margins. We're getting slowly priced out of the industry, and people are being forced to join banks full-time.
This isn't helped by two-year contract renewal limits put in place by a number of banks. One colleague at a major US bank had to take three months out of his role and, when he returned, found that his team had moved over to a consultancy arrangement. He wanted the same money that he was on during his previous contract, but the consultancy didn't want to give it to him. He was able to stand his ground because of how well he knew the team; others might not be so lucky.
I don't understand why banks would add these renewal limits. I suspect that it's because, once you've been there for a certain, continuous amount of time, you gain legal protections and can claim workers' rights if you're wrongfully terminated. In the old days, contractors would work at banks for 10/15 years at a time. Now, when they're in the last six months of their contract, they're checked out and looking over their shoulder as they search for a new job.
The irony is that the market is heating up. There have been many more roles posted in 2025 than I saw this time last year and I expect there will be even more later in the year. With the fall in pay, though, is it worth sticking around for those jobs?
Paddy Goodwin is a pseudonym
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