Virgin cuts IT contractor pay rates

Virgin Media last week became the first UK giant of 2010 to offer hundreds of IT contractors a speedy exit if they refused to drop their pay rates by 15 per cent.



From April 5th, 400 IT contractors earning more than £300 a day were told by the firm's management that they would implement the cut or face termination.



It represents the second recent 'take it or leave' pay ultimatum that Virgin has issued to IT contractors, after the firm cut their daily rate last year by 10 per cent.



A company spokesman explained: "We regularly review the arrangements we have with suppliers to ensure we are getting the best value from these relationships."



The spokesman declined to be drawn on whether Virgin was worried that contractors hit by the latest pay cut may 'jump ship' to a rival firm whose rates are intact.



Asked about the cut, an IT market analyst said that, although such ultimatums were not as rife as last year, they may be a sign of things to come in the public sector:



"The Conservatives today say that their government will renegotiate contracts with subcontractors, particularly IT, or get rid of them. So perhaps we better get used to it."



The rate cut for Virgin contractors follows the firm's fourth quarter results, showing profit rose 15 per cent, while free cashflow leapt 55 per cent on the previous year.