Goldman Sachs cuts IT contractor pay by 15%

Goldman Sachs has joined the growing list of banks that have cut the pay of IT contractors, having told them to slash their rates by as much as 15% or become jobless.  

Quietly issuing its ‘take it or leave’ pay reduction last week, the US bank said IT contractor day rates must drop within the 15% threshold across its global operations.

Claimed to be in line with current IT skills market values, the rate “adjustments” follow a corporate-wide review of expenses to reflect Goldman’s weaker revenues, and its net loss in the latest quarter.

Although the bank declined to be drawn on any part of the pay cut announcement, Contractor UK understands that all Goldman IT contractors will work at their lower rate from January 1^st.

Refusal to accept the downgrade triggers termination. IT contractors at UBS, Lloyds, Barclays, JP Morgan and, reportedly since Friday, Merrill Lynch have been hit with the same proposition.

Perplexing, then, appears the view of IT staffing firm Genesis which, speaking to Recruiter magazine after Merrill’s announcement, claimed that “blanket cuts are not happening so much any more”.  

In a statement to CUK last night, another interim IT skills agency sounded in agreement, saying not a single of its clients “has a major programme” of rate cuts in place, at present.

But a third IT recruiter who is closer to financial services did attest to the pay ultimatums which, when enforced, “the vast majority” of contractors are unable to negotiate better terms in return for accepting.

David Ward, a director at SQ Computer Personnel explained: “In some exceptional cases, some contractors have been able to negotiate a lesser reduction or defer their reduction to their next renewal.

“In general [though], contractors have taken on board that it is a result of economic factors affecting the wider industry which were largely unforeseen when they initiated their contract.”

Taken alongside a tip that freelance IT candidates in financial services should grab a ‘long-term contract at current rates while they still can,’ permanent IT roles may start to sound like an option, even for long-serving temporary professionals. 

But in its advice, pre-screening firm HireRight made clear that full-time IT candidates actually appear worse off, chiming with separate analysis of IT hiring plans for Q1 2012.

“Only yesterday, I spoke to a large recruitment firm and was told that their consultancy division is now outstripping their permanent desk in placement [numbers],” HireRight’s boss for EMEA Alexandra Kelly said. “They expect this to continue. “

Any spike in IT contractor hiring isn’t on the agenda at HSBC, however, despite the bank announcing earlier this month that it will do without 60 IT employees. “Specifically on IT contractors” said an HSBC spokesman, “we are not actively recruiting or letting staff go above and beyond business-as-usual.”