Goldman Sachs is demanding UK contractors take a compulsory 15 per cent cut in day rates, and staff have been told by agencies that this was a "take-it-or-leave-it" offer without room for negotiation. The cuts begin this week, and there are expected to be some job cuts too. Goldman Sachs has previously announced a ten per cent …
Is this the same Goldman Sachs
who are still planning on giving ~$7 billion in bonuses this year?
Weeheee here it goes
now that banking is not so competitive they will be reducing IT left right and centre. It is not like much is happening.
Banking is one of those beast that is too covered by law, not sure if people could group together and open a bank, but I am sure where there is a will there is a way.
We need some new startup banks, founded on proper principles, highly optimized for security, and backed by something tangible, bring banking back to basics.
Problem is Labour is in power, no vision. Can't they just do the decent thing and call a general election now. They are the fundamental problem for any recovery the sooner they go the better.
Someone is making a lot of money here
I'm hearing of companies raising prices, while forcing suppliers to cut their prices plus cutting payment terms, all to raise the bottom line. When the dust has settled on this "credit crunch" (read taxpayer/customer rape and pillage), there will be a helluva lot of victims of this cash grab by the big multinationals.
As a contractor, if I was asked to cut my rates, there would be a short burst of expletives followed by me walking out of the door. If they then wanted me back, with my fairly specialist skills, they might find my rates have gone up!
I will if the managing partners will
But why would I take a 15% cut to save their huge pay packets and bonuses? Let's see them tighten their own before they tighten mine.
AC for obvious reasons.
...the GS contractors will have to cut down to 2-digit hourly rates. ;)
Boom and Bust cycle
In 5 years or so, those who have been burned by this sharp practice now will treat their Clients in the same manner if there is a boom (despite Gordon Brown's predictions, there is a cycle and it won't be broken).
As for IR35 - hey Mr. Tax Man, take a cut or have your contract terminated? Sound like employment?
@expletives & walking out the door
Go ahead. That's 5 other contractors right there who don't need their rates cut. And if you think the current market is conducive to throwing your toys out of your pram and going and 'falling into' another IT job in the City, good luck to you.
Most permanent staff are taking a 15% or more cut (in terms of no bonuses) and many are being laid off. Being petulant like this is just dumb, and the kind of attitude that most companies would rather get rid of anyway.
Paris, because even she's not so stupid as to realise that in the current environment keeping your job is a good thing, even if your rates go down.
@AC: Taking a 15% paycut...
...is all very well, as long as it doesn't result in your own financial position becoming untenable. I can tell you that if I was forced into a 15% paycut I would have absolutely no option but to try to find another job as quickly as possible, because oddly, my bank wouldn't be terribly amenable to my overdraft starting to increase by several hundred quid per month on an ongoing basis, and they wouldn't be very friendly and understanding if I stopped making mortgage repayments.
Given the current economic situation many of us have had 'real-terms' paycuts already - my cost-of-living raise this year was 3.5% but real-world inflation is running at several times that - and are therefore in many cases in an increasingly tenuous financial situation already. We all have fixed outgoings, and in many cases these have increased dramatically.
I'm not saying that walking out the door would be an easy option - quite the reverse given the problems one would face finding another job - but rather that than slow, painful descent into bankruptcy.
@@expletives & walking out the door
BT did this in the past and all that happened was that the most specialised knowledge (knowledge, not skills) walked out of the door and into other market sectors which set them back quite a lot, especially in terms of reputation.
I'm currently contracting in the finance sector in Canary Wharf and I've just negotiated my rates *up*. It is possible. But I agree about not throwing your toys out of the pram. Most unprofessional :) I prefer to throw them in their faces :P
@expletives & walking out the door
Thanks Anonymous Coward. You must either be a manager who doesn't see people, but see's resources and enjoys royally shafting people right up the a$$, or a coward.
What's wrong with sticking up for yourself. There are no unions with any power or inclination to do it for you nowadays.
Also, it's not the first time these banks have pulled this trick, and there's always enough cash to pay the shareholders at the end of the year. Funny that.
@overdraft + Richard
Having contracted for 10 years myself, I can certainly say that if you're running so close to the wire that a 10-15% pay cut would render you overdrawn that quickly, then you need to either reign in your spending, or you're screwed regardless. City contractor rates are very good, and I can tell you right now that any contractor having to take a 15% rate cut is hardly going to be living on the breadline - least of all those lucky enough to work at Goldman, for whom a 15% cut might just take them down to the rate that most people get in other jobs.
@Richard: I'm not a manager, I'm a developer, and more importantly a realist. And in the current environment throwing your toys out of the pram and storming out in a huff is not "sticking up for yourself", it's cutting off your nose to spoil your face. Have you seen the market out there?
Take a look at http://tinyurl.com/6nhoch or just read a newspaper, and you'll see that at the moment, having a job is a very nice place to be (and it's only going to get worse - much much worse). Very few people are expendible, and if you are then your rates are probably so high that 15% would still leave you very well off indeed.
So sure, kick off and hand in your notice. But if you think dropping 15% on your rates sounds bad, wait until you've been out there earning nothing for 6-12 months because the other 300,000 IT staff who've been laid off already were ahead of you in the queue for the (very) few remaining jobs.
I know what I'd rather do.
"I will if..." again
Luckily, I have skills that are in demand and, more importantly, I am a little squirrel nutkin and have always saved like a maniac. So I now have a high five-figure sum in short- and long-term access and can take a few years off if I choose. Because I went through a couple of earlier economic downturns and will never be caught like that again. </smug>
However, I do feel for guys who are up against it, being asked to take a pay-cut, and know the top suits are still going to get their Ferraris this year.
"I know what I'd rather do."
Take a pay-cut like a good little sycophant? Not if any other remotely viable option exists! If the company can get you to agree to 10%, then why not 20%? Or 50%? In fact, we'd like you to go on a daily rate and start putting in some longer days... say, 12 hours... no, for the same pay...
Yes, the market is tough at the moment, but even the most clueless and short-sighted companies need things doing in short order... and they don't look to hire permies to do it, certainly not when cashflow is becoming unpredictable for the whole organisation. For the smarter and rational companies, it's always going to be a cost-benefit tradeoff irrespective of the market.
From a sufficiently perverse frame of mind, this market *increases* a subbie's value: there is a clear benefit to being able to slash personnel costs at a week's notice - it can make the difference between a department being reduced or being culled entirely, so being a "willing sacrifice" can save a manager's job. How much is that worth to him? He might even get a promotion for such an aggressive reduction in costs!
But, yes, the supply-demand curve has gone a little squacky at the moment, and I wouldn't want to be contracting at the moment. I have in the past, and I probably will again in the future, but not while the market is flooded with recently-ex-permies who think contracting is just like their old job but with more pay. It's going to piss them off, it's going to piss the hiring managers off, and it's going to piss the agencies off... everybody loses.
"always enough cash to pay the shareholders at the end of the year"
Pay attention now.
15%? Could be worse
I've been contracting for 15 years myself. Back before the internet bubble imploded I would have been the first to react by shouting various expletives at my then manager followed by flipping them the bird right before I stormed out of their office and employment at the mere hint of any reduction in my rate. Upon arrival at home I would press 'play' on my answering machine and write down the contact info and finally return the calls for the 15+ daily job solicitations from recruiters offering me a blank cheque for my skills.
I did actually quit a job back then simply because I didn't like my boss (note: I did not use expletives or flip them the bird, I emailed by resignation). I did not have a job waiting or even an interview at the time I quit. I was working within a week and a 25% rate increase to boot.
The good old days...Now I have so many of my IT buddies out of work (some for more than a year) and the answering machine is awfully quiet these days. My staff was reduced by 40% over the past year even though our workload has only increased which means we are all working much longer hours and weekends. Those of us still here consider ourselves lucky even though we no longer have any semblence of a social life. I can't speak for the rest of my team but I would gladly take a 15% cut if it meant we could re-hire some of those that were axed.
I concur with AC's comments - if a cut of 15% means the difference between cheque posted or overdrawn you must be leveraged to your eyeballs. In IT everyone is expendable!
Nonetheless I do believe everything will right itself eventually..just not in the foreseeable future. Keep your resume and skillset current!
Everything in life is temporary, including life itself!!!
Surely its the managers/traders who got the banks into the mess that should be out of the door and not the IT staff...
IT helps them achieve what they need to do - so shafting the IT workers isn't the best thing to do.
Oh contracting will return again very soon
They need to clear the decks now, it is just the quickest way to show a better quarter.
The real trick is to create a business in your off time, perhaps something that compliments or perhaps something a little different.
But, contracting is best for business and IT, there is no point hiring people full time, they are just there because the full time staff you do have don't know how to use a computer system.
Contractors you move in and out of your business, if you are clever you keep them sweet, and that doesn't mean giving them notice, it means paying the bill, see most don't give two rats' arses for a month heads up, most expect to work when required, and be paid accordingly.
Though I would expect a sharp increase in cyber shennanigans at this time, most businesses don't do this correctly and a lot of resentment gets built up, shits lists are probably being formed as we speak, and life long enemies being created :)
Mates of mine at JP Morgan tell me several divisions there are also telling all contractors to take a 15% cut or else too.
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