HSBC and RBS shed scores of IT contractors

Two of Britain’s best-known banks have spoken up about their decisions to this month make hundreds of IT contractors jobless.

HSBC, which has axed droves of IT contractors from its Canary Wharf office and RBS, which is axing 230 IT contractors from its London hub, both blamed the losses on the need to make cutbacks.

A spokeswoman for HSBC told ContractorUK: “We are continually reviewing our business to ensure the bank remains efficient and competitive. Our programme to deliver total cost savings of around $6billion (£4.7bn) by the end of 2017 is on track.”

Asked about its planned cuts, unveiled a few days after the HSBC announcement, RBS said: “Our proposed plans are designed to reduce the number of contractors we employ and strengthen our permanent workforce and while we are downsizing in London, we are reinvesting in other UK hubs.”

Contractors are largely unsurprised. A single bank cutting contractors -- or their rates -- usually acts as a starting pistol for other banks to reduce their temporary IT workers too, by pay or volume. Or both.

'Not out of the blue'

But both HSBC and RBS have also been openly planning reductions to headcount for some time. For being long-trailed, each bank's well-publicised plan seems to have softened the blow.

“It's not out of the blue”, an affected IT contractor at HSBC acknowledged.

“If you have been reading your emails…you would know it's been coming for the last year. If you cannot spot something like this coming after all of the comms [communications], you shouldn't work [in] this way.”

Another tech contractor at HSBC agreed that it seemed to be the nature of contracting. “Business is business,” he reflected, “contractors get hired and then get let go.”

'Hire and fire attitude'

But one affected IT consultant suggested it was the nature of HSBC, which has repeatedly cut IT contractor rates, in 2015 and then in 2016 for example, on top of making IT departmental layoffs by offshoring.

“HSBC is the worst for the hire-and-fire attitude,” the consultant said. “My project last year got canned after three months only; my friend started in a different area after I [had] left, and his project got canned [too], after [only] two months”.

Yet others say it is this very ‘hire and fire’ approach that creates work for such niche, freelance IT specialists. The obvious exception being when that work is exported offshore.

“RBS’s fixation with cutting employee numbers, restructuring and offshoring work that could reasonably be done by displaced staff within the RBS IT community is unacceptable,” Rob MacGregor, national officer of the Unite union said last week.

He added: “This British-taxpayer funded bank should be concentrating on investing in jobs here in the UK, rather than wholesale cuts.”

'Massive burden'

But again, some affected contractors are unfazed because it was expected. “The movement of RBS IT's department from the UK to India has been ongoing for years,” said one. “Even this set of redundancies have been known about for ages.”

However, MacGregor says the plans at RBS, which is still 71% owned by the taxpayer, are not without consequences, regardless of how prepared affected contractors might be.

“The massive scale of IT job losses will sap morale, productivity and faith in the company,” he said. “Such massive staff reductions will place a massive burden on any long-serving remaining staff who retain the bank’s systems' knowledge.”

Also according to Unite, “just a fraction” of RBS’s IT function will remain by 2020, leaving the bank “operating a skeleton service” for its customers.


But the union is basing its forecasts on only initial figures RBS has provided (alongside the loss of 230 IT contractors -- equating to 65% of RBS’s temporary IT workforce, 650 permies are earmarked to lose their jobs too).

The RBS spokesman said: “As we develop long term plans for our technology business, we have in the interests of transparency, started to share our emerging proposals on a future operating model with Unite.

“We have not consulted on any headcount reduction, instead sharing a direction of travel with Unite which is subject to change.”

The admission that the number of RBS IT contractors facing termination could exceed 230 may unsettle those vying for banking clients, especially as HSBC declined to put a total on how many IT freelancers its cutback has returned to the IT contracts market.

'Reduce costs'

But IT job losses this summer will not necessarily be confined to financial services.

In a statement last week and on the back of poor trading figures, Ericsson declined to rule out technology job losses in the UK, where it operates 11 different sites.

The telecoms firm declined to give specifics, saying only that its plans to “reduce costs and increase efficiency” would “primarily” affect “service delivery and common costs”, but not R&D.

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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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