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Contract rate coming under pressure

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    Contract rate coming under pressure

    Hi All,

    I'm a front end development contractor, current contract is due for renewal soon - I'm under contract with a company that effectively hire me out to their client. Coincidentally, the contract between the client and the company I have a contract with is also due for renewal at the same time.

    On recent calls they've mentioned that the client will be putting their rates under pressure - clearly 'prepping' us for them to reduce our rates.

    The rate I'm currently paid is a little below market rate, but I've enjoyed working for the company so that hasn't been a problem. However, they are certainly considered expensive by their clients - they make a huge markup on our day rates (something I'm comfortable with, not complaining - they've built a brand and have provided me with projects that I wouldn't have been able to get myself directly).


    A few questions:

    Is anyone else seeing their day rates come under pressure?

    Should I be willing to accept a day rate reduction in the current climate? My concern is that they're taking advantage of the instability and obviously being taken advantage of isn't a good road to go down.

    Any general thoughts on the current market/outlook?

    #2
    Yes I had one last month but the consultancy swallowed half so was peanuts. I was pretty nervous about renewals as 3 out of a team of 5 have gone since Feb so snapped their hand off.

    It's not always about taking advantage of the situation. Many companies impose year in year reductions on their suppliers so might not just be taking the piss.

    Do what you can to negotiate. Make sure the agent takes a cut as well but any gig in these days is gold dust.

    OK read it again so no agent. Depends on how much the cut is and how comfortable you are with it. I still think you've got very little choice at the moment but at some point when it returns to normal and you've got the option to walk you ask for market rate or leave.

    The market is absolutely dire and we are in the worst period for contracting ever. We've got IR35 looming and a global pandemic going on you know. Check jobserve if you want to see it for yourself but I'm a little surprised you are asking what the market is like right now.
    Last edited by northernladuk; 23 May 2020, 11:05.
    'CUK forum personality of 2011 - Winner - Yes really!!!!

    Comment


      #3
      Interesting - appreciate the input.

      From my perspective, we've actually seen an increase in work coming in due to COVID, but it could be pure luck of how we were already positioned, and I don't expect it to necessarily last. E.g. some previously dead online entertainment based projects for clients have finally caught some traction due to increased demand for online entertainment.

      Also, a contractor that was let go around April walked into a new contract within 24 hours.

      Looking at jobserve, I don't really have a feel for how this would compare to normal - I expected there to be fewer contracts, but not as dire as you're suggesting (IR35 aside). Do you have a feel for how many contracts are available now compared to e.g. same time last year?

      Comment


        #4
        Originally posted by sbsbsb View Post
        ...I've enjoyed working for the company.... have provided me with projects that I wouldn't have been able to get myself directly....

        Should I be willing to accept a day rate reduction in the current climate?
        Is the increased value of the work they provide you (relative to other work you could get yourself directly) greater than the value of the amount they would reduce your rate by?

        If yes, accept reduction and continue in the gig. If no, decline and move on.

        Comment


          #5
          It does hurt to have your rate pressed down but like you say, due to current situation the market is very bleak at the moment so if I was you, I would hold on to any remaining peice of contract available you hve and take advice about moving on with a pinch of salt.

          The market right now is not as easy as some people think it is. Many contractors who have years of exp behind them (let say 15 - 20+) think they have the power to leave & move on quickly to new gigs despite difficult sitautions but the harsh reality is the job/gig market (whether its perm or contract) is completely diabolical in current times.

          Comment


            #6
            In the end it comes to who blinks first. It they see you as a valuable asset, then it will be them. If they don't, then you've lost the work.

            If they have a markup of 50% and they put pressure on you, chances are if you resist and they like you. they'll give in. 40% markup with a known quantity is worth more than risking a new guy and having 50% markup.
            Down with racism. Long live miscegenation!

            Comment


              #7
              Originally posted by BritishLad88 View Post
              Many contractors... think they have the power to leave & move on quickly.... but the harsh reality is the job/gig markettract) is completely diabolical in current times.
              That rather depends how supercilious one is.

              You're right, though. For many contractors who think they're god's gift and simply refuse to take a gig at a "demeaning" lower rate, well, they certainly will find it hard to simply "leave & move on quickly" in the current climate.

              If, however, you're the kind of contractor who's already managed to remove his head from his own backside (or who never had it up there in the first place), will find that there's as much work now as there's ever been in recent times, and in certain industries, perhaps even more so.

              Comment


                #8
                Originally posted by sbsbsb View Post
                Looking at jobserve, I don't really have a feel for how this would compare to normal - I expected there to be fewer contracts, but not as dire as you're suggesting (IR35 aside). Do you have a feel for how many contracts are available now compared to e.g. same time last year?
                Head over to ITJobsWatch and select 'contracts', 3 month period, and select your trade or skill of choice.

                Some titles and skills are showing that the live vacancies are 1/4 or 1/3 the numbers seen during same period in 2019 or 2018.
                In rare cases the demand for skills has held up slightly around 50%, but not many like this.

                Add to that the vast number of others looking for work, the fake jobs, and you've got a pretty awful market.

                Comment


                  #9
                  Originally posted by northernladuk View Post
                  Yes I had one last month but the consultancy swallowed half so was peanuts. I was pretty nervous about renewals as 3 out of a team of 5 have gone since Feb so snapped their hand off.

                  It's not always about taking advantage of the situation. Many companies impose year in year reductions on their suppliers so might not just be taking the piss.

                  Do what you can to negotiate. Make sure the agent takes a cut as well but any gig in these days is gold dust.

                  OK read it again so no agent. Depends on how much the cut is and how comfortable you are with it. I still think you've got very little choice at the moment but at some point when it returns to normal and you've got the option to walk you ask for market rate or leave.

                  The market is absolutely dire and we are in the worst period for contracting ever. We've got IR35 looming and a global pandemic going on you know. Check jobserve if you want to see it for yourself but I'm a little surprised you are asking what the market is like right now.

                  I would have thought uncertainty was when the flexible workforce shines so it's a valid question imo.

                  Comment


                    #10
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