IT contractors in investment banks hoping to secure a slight rate rise by switching jobs are likely to be disappointed – firms are demanding to see current rates before signing off on new hires to ensure they don't over pay. However, there are signs that contractors are still willing to move roles, even if money isn’t the main motivation.
Shortly before Christmas Goldman Sachs joined the ranks of investment banks that have cut back contractor rates by 10-15%, along with some institutions that had avoided doing so in November – namely HSBC and Bank of America Merrill Lynch. The likes of Barclays, BNP Paribas, Deutsche Bank, Lloyds, Nomura, RBS and UBS had already rolled out rate cuts.
Now that we're into January, these rate cuts have been imposed and it stands to reason that many contractors would perhaps try to secure a new position, giving them a better chance of negotiating a more favourable rate.
However, banks are more stringent than ever when taking on new IT contractors.
"Before investment banking clients make an offer to a candidate, they're demanding to see a copy of their latest contract to ensure that they don't pay more than their current rate," says Ben Cowan, director of the contract desk at Astbury Marsden. "As the rate cuts are more or less universal, most banks are keen to avoid starting a bidding war."
In fact, most contractors are simply accepting the cuts as a grim new reality. "We haven't encountered a single candidate who has handed in their resignation because of the rate cuts," says Alessandro Ferro, principal consultant IT into banking, at recruiters the JM Group. "Most have accepted them, some have tried to fight the cuts but have largely been unsuccessful."
More contractors are seeking pastures new, however. This is partly down to the fact that some banks – notably RBS and BarCap – have reduced their contractor headcount. It's also because contractors are pursuing new roles for reasons other than money.
"Contractors realise that more money in a new job is unlikely, but they are either seeking a new challenge, or looking at longer term contracts in an alternative employer," says Cowan.
Ferro suggests that IT contractors working on governance, compliance or risk projects have been sheltered from cuts as well as some people working on front office derivatives-related initiatives.
"There are still a decent number of opportunities for IT contractors in consultancies and from the buy-side, so not surprisingly more people are considering switching from investment banking into these roles," says Ferro. "However, there remains a surplus of candidates and employers are increasingly picky."