Barclays has cut its rates for IT contractors in the UK and US working in the corporate, investment banking, wealth and investment management divisions by up to 10% in another squeeze on pay for temporary staff.
Working as an IT contractor within an investment bank has been a tough gig over the past 18 months. Demand has slowed, temporary resources have been scaled back in most institutions and rates were cut by 10-15% across the board.
In a memo sent to its technology contractors, the bank said that it was reducing contractor rates to “bring Barclays more in line with market standards.” The bank was among the first firms to cut rates for contractors at what was then Barclays Capital in November 2011, before pay was reduced by most investment banks ahead of Christmas that year.
“Unless we hear back from you by 10am on Friday 1st February 2013 that you are unable to accept this rate change, we will assume that you have accepted the change of terms to your current assignment at Barclays,” said the memo. The changes came into effect on February 25.
The new rates are non-negotiable, with Barclays saying in the memo that “should you confirm your non-acceptance by Friday 1st February 2013 then please accept this communication as notice to terminate your current assignment at Barclays to finish on Friday 22nd February 2013 or on your current assignment end date if sooner.”
Headhunters suggest that this hasn't gone down well with contractors at Barclays. Previous cuts were generally accepted with grim resignation, but this time around around 10%-15% of those affected by cuts didn't accept them, say banking technology recruiters.
Taken in isolation, Barclays’ move can be viewed as another example of banks squeezing contractors to cut costs. However, recruiters suggest that this is part of a broader trend of banks reducing their dependence on contractors.
“There’s a big push to get contractors to convert to permanent roles, particularly within development functions,” said one financial technology headhunter. “They’re cutting pay and reducing the length of contracts in an attempt to force them into making the switch to a permanent position.”
Banks like Lloyds and Royal Bank of Scotland, which have traditionally relied on large numbers of IT contractors, have also been adopting this tactic, recruiters said.
Barclays declined to comment.