BP reduces IT contractor rates by 15%
BP has slashed pay for IT contractors, in what ContractorUK understands to be the first ‘take it or leave’ rate cut to hit the UK's technology freelancers in 2015.
Addressing its temporary computer personnel, the oil giant told them to lower their rates by a hefty 15% or lose their contracts.
That compares to a 10% IT contractor rate cut proposed but not in force at a major bank. It also compares to individual cuts of up to 10% for some oil and gas contractors.
But IT contractors in the oil and gas sector have, until now, enjoyed a long period of “stable” rates, according to a director at a London-listed recruiter.
BP blamed the 15% cut on its need to downsize and the collapse in oil prices. The company also cut rates in March 2009 though this new reduction is bigger.
In fact, it is one of the biggest rate reductions to have been unilaterally imposed on IT contractors since the financial crisis of 2008.
Yesterday, a BP spokesman told ContractorUK. “The oil price has halved since last summer which unsurprisingly has had an impact on our business.
“[So] we are asking for a 15% reduction and looking at how to reduce our complexity and cost-base given that BP is one-third smaller than it was five years ago.”
A leading jobsite for IT and technical contracts couldn’t fault BP’s explanation.
“This rate cut reflects what is going on in the oil sector, where challenges are denting revenue and contractor volumes,” says Anthony Sherick, managing director of Technojobs.co.uk.
“The change in the oil price, in particular, has seen a number of oil companies adjust their staffing plans, and this 15% rate cut is just another consequence”.
Volt, an IT staffing firm, echoed this ‘business as usual’ sentiment when ‘needs must.’
It said that while the 15% cut was obviously “unwelcome” for contractors, such workers represented an area of “significant spend that might most readily be reduced in a crisis.”
Yet as their own market is not in crisis, and because the majority of tech skills are transient, IT contractors at BP who’ve accepted the cut may not be at the company for much longer.
Volt’s managing director Richard Herring explained: “The contractors have [likely] agreed to pay cuts at this stage, [but] there may be a risk that they ultimately move to a new assignment [outside of BP] that is paying a higher rate.”
And there’ll be plenty for such IT contractors to choose from according to Technojobs’ Mr Sherick, as the “volume of IT contracts” his site is posting “keeps rising month-on-month.”
The same market buoyancy for IT contractors (and a reviving economy) is why Volt thinks BP’s rate cut won’t be copied by other firms. Within Oil and Gas though, it may “set a precedent”.
If it does, another agent thinks BP will become resented by contractors in Oil & Gas because, to date, their typical rate cut is just 10% and -- even then -- “lots of exceptions” are secured.
The director at the London-listed agency added: “They [clients] talk a good game until some IT contractors decide they’re going to leave…I guess everyone’s got to make money or it’s not worth it.”
The agent’s comments coincide with an admission from BP boss Bob Dudley that he earned $12.7m (£8.4million) last year, mainly thanks to deferred bonuses and performance awards.
“His salary rose about 3%,” the BP spokesman clarified. “His performance-related rewards for leading the company’s improving fortunes over the period of 2011-2014 took his overall performance-related package up by about 25%”.
Editor’s Note: Related Reading –