HSBC and LGIM cut IT contractor pay rates

HSBC and Legal & General Investment Management (LGIM) have slashed the pay of some of their IT contractors, telling them to work for less money or consider themselves jobless.  

Although issued in isolation of each other, both ‘take it or leave’ ultimatums came into force at the respective organisations on the same day, Monday August 1st 2016.

Since then, IT contractors at HSBC’s retail unit have agreed to cut their rates by 10%, and IT contractors at Legal & General’s investment arm have agreed to cut their rates by 5%.  

Similar pay cuts resulting in termination for those who refuse have been applied this year to IT contractors at the UK offices of Morgan Stanley, Credit Suisse, Barclays and Citigroup.

But unlike these four banks, HSBC has not cut rates for all its IT contractors, similar to the IT pay reduction in force at Clydesdale Bank which is also not ‘across the board.’   

Affected IT contractors at HSBC aren’t in a forgiving mood however. “I'm getting fed up at HSBC as we’re now facing a second 10% cut,” says one. “[I’m] looking at new opportunities.”  

Despite the contractor’s claim, HSBC’s previous rate reduction to IT contractor pay was made back in October 2015 (both before and after IT contractors voted HSBC as ‘Best Client’), and it affected a separate division.

When ContractorUK sought clarification about the latest rate cut, a spokesperson for HSBC would only say: “As part of our continued efforts to control costs, a pay rate reduction has been applied to some UK contractors.”

Contractors in IT at Legal & General Investment Management appear less fortunate, as there are no exceptions meaning all are caught by the reduction, but it is only for half as much.

Reflecting on the 5% cut, an IT recruiter who has placed LGIM contractors at other outfits in the past said that the FTSE 100 company has introduced it as part of general review of its project budgets.

A spokeswoman for LGIM declined to comment, but the recruiter believes the company’s investment arm is probably happy with how contractors have responded. “It’s only a token trim,” the agent said.

“It seems so small that the contractors I have spoken to it don’t really seem too bothered and it certainly hasn’t made any of them put themselves on the market…[they] still feel fairly comfortable.”

Yesterday, LGIM reported a slowdown in new client funds and a 3% dip in operating profits, as it said its overall business (operating profit up 10%) “cannot be immune” to “uncertainty.”

Similarly cautious yet reassuring noises were sounded earlier this week from HSBC, which described its 29% fall in half-yearly profits as a “reasonable performance in the face of considerable uncertainty.”

Editor’s Note: Related Reading

Contractors’ Questions:  What to do if a rate cut looms?

Contractors’ Questions: What to do if my rate gets cut?

Beating the IT contract crunch: i) client cuts

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Written by Simon Moore

Simon writes impartial news and engaging features for the contractor industry, covering, IR35, the loan charge and general tax and legislation.
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