Capgemini tells contractors to bite 15 per cent cut Capgemini has told contractors working on its Aspire contract to accept a 15 per cent cut or leave. Blaming the recession, Capgemini asks contractors to work with their agencies to cut rates. Aspire is CapGemini's outsourcing deal with Her Majesty's Revenue and Customs - it cut 600 jobs on the contract back in late 2007. The …
Funny, seems that lots of people are telling me demand for contract staff has risen, due to uncertain economic conditions. While conditions are difficult it is hard to justify employing a resource on a permanent basis, when you can more easily justify hiring a contractor for the duration of a project. It also allows the flexibility of being able to 'fire' them fairly easily, should the need arise. Seems like Crap Gemini chancing their arm to cut costs. If they hire cheaper contractors, they'll get less experienced contractors. The experienced ones will either see out the contract and move on, or, the best ones, will leave straight away and get a better rate elsewhere. How marvellously short sighted
Oh, and do we have to have all the "Serves the money grabbing contractors right" comments?
While I appreciate the need for contractors, I've never worked out why they complain when rates drop. Most contractors I know have swapped a steady job (e.g. 'regular employment') for higher income.
If they wanted the job security, they should have taken a job.
The whole point of contractors (and presumably the contractors are aware of this) is that you can hire/fire them at the drop of a hat, giving you a nice flexible workforce.
Geez
As a contractor they can do this. I recall a certain large british telecoms company reducing there contractor wages down to a maximum of £43 an hour. then later reducing it by a further 20%
I also recall one guy being paid over £200 an hour beofer the cut.
Want contractor wages ? take this risk. Want job and wage security be a proper employee.
I thought the whole point of being a contractor was that you gained the flexibility to charge whatever the market demanded. And in return, you lost the security of being an employee.
If CG are wrong, as some posters have said, and the contractor market is in fact quite buoyant, then they've just shot themselves in the foot because all the good contractors will leave. And even if they manage to replace them, they'll have to manage all the churn resulting from changing project staff.
You've got to take the rough with the smooth. Why shouldn't CG try to maximise their profits? That's what the contractors are doing, after all. That's business.
Unfortunately they hold all the cards. It is unlikely that they are saying "we wish to reduce rates by 15%, discuss" so much as saying "you take a 15% cut or you can leave. And we will remember this 'lack of flexibility' if you ever apply for a contract with us again".
It is the nature of contracting, you can get similarly stiffed quite easily, which is why your rates are comparatively high (compared to permanent staff). If the market is bad as they say then at least you will have your income, and if you believe the market is actually buoyant then you would politely decline their offer and go elsewhere.
It may be possible to negotiate with your agency, they will not want to lose the income and they would prefer it if they were seen as providing the most reliable and flexible staff (and so become preferred supplier) so that the agency shoulders more of the cut, but that will depend on whether the agent thinks he/she will get more commission that way or by replacing you.
Almost certainly CG have had thier budgets squeezed by HMRC for 2009 & as a result they're looking for cutbacks wherever they can find them.
Part of being a contractor is accepting that there will be good times & bad times & responding to both situations. With most IT & finance companies typically reducing headcount by 10%-15% during the current conditions the contractors are somewhat fortunate that they are being asked merely for a rate reduction instead of being replaced by benched internal resources.
Everyone is having to suck a lemon of some sort or another right now, and contractors are no different. However given that Aspire is an HMRC project it's safe to assume the billable weeks will over-run budget by 30% by the end of it so it's not all bad news I suppose :)
always been my philosophy. i've been lucky I've always had local contracts so the expenses incurred have been low. what people have to realise is that if your working away from home your hotel/travelling costs are not going to drop so this is coming out of your profit.
so much for the govt helping small businesses then. btw the cotractors "union" is a group called the PCG. Always very helpful.
I guess the only thing I would get annoyed about is having a contract changed - if its a renewal - fair enough that is the time to negotiate a change in rate etc.
Seen it all before, had a company try this and only offer short renewals at the existing rate (or a long renewal at a substantial cut) whilst they sought replacement staff.
Short sighted as it took them an age to recruit replacements and in the mean time all contractors were on short contracts so could look around for better jobs and leave in a reasonable time frame without breeching their contracts.
Needless to say it caused problems as there was a regular loss of experienced contractors who had been on the project a long time to be replaced by less experienced cheaper staff who took time to get up to speed whilst everyone with knowledge of the project left.
In my experience, contractors tend to be more highly-skilled than permanent employees. They also tend to be better motivated, more mobile, more employable and have bags of cash sitting around.
Getting rid of them would cut costs, but then you'd be left with, well, the leftovers.
Icon: troll-bait
Been through this already last year at HBoS (now LBG) = 10%
And yes, no-one likes to get a pay cut, but I imagine the majority of the contractors will take the hit, but won't be impressed, and this will sour the relationships between then and the client somewhat, and 'productivity' won't exactly improve! A smaller number will walk, and that will cost CG in replacing skilled/experienced members of teams. But as both sides are fully aware of, being flexible - sometimes getting a good wedge, and sometimes getting shafted - are part of the contractor way. It's our choice.
How many permies would be squealing to their union reps if the same thing was thrown their way? In theory the same logic applies: "if you don't like the terms and conditions of your current job, please feel free to look for another".
Surely in this market it's all about supply and demand.
If they're trying to pay below market level rates, they'll find a lot of contractors leave.
But if it is actually the market that's changing, and rates are lowering as there's less work around, then they have a good right to lower what they pay.
In times when there's a lack of IT professionals, contractor rates go up... and in times when there's a lack of jobs, contractor rates will go down.
As a former aspire contractor (hence AC) I suggested a cost saving by reducing 5 systems that do the same thing to just one. CG permies shot down the idea immediately.
Since part of the aspire contract is to provide year-on-year savings this announcement can also read 'Capgemini realise they've f****d up and can't deliver what they promised'
It was common knowledge when they took over from EDS that they (capgemini and fujitsu) had under bid for the contract.
Joke 'cos that's the aspire deal.
Problem with rate cuts (and I've seen this happen a few times) - many of the contractors who can find work elsewhere will do so. The most employable ones tend to be the ones who are good at what they do.
So, the net effect of a rate cut - the cream of your contractors is skimmed off, leaving you with the more ordinary ones. This might work in some circumstances, but in a lot of places, losing the best people puts a massive dent in your productivity.
I've just had been 'offered' a 15% reduction in rates on my contract renewal (with one week of the current to run!); I'm not whining. I'm definately making much less noise about it than the permies I work with who saw their bonuses slashed this year.
I've always been a contractor and I've always accepted that my income in driven by the market. I had to take a 10% during the dotcom bust, and I'll probably see rates cut again before the end of this current economic cock-up.
Having said that, Edwin is a total cock! Why is he surprised that contractors complain when their rates drop? It's a totally understandable and natural reaction to someone taking something away from you. It's definately going to cause me to revisit my budget for the coming year.
A company I have dealings with has already cut rates by the same percentage point, I am aware of at least two other that have gone for 10-15% cuts, take it or leave. Sadly at the end of the day, one of the big reasons for hiring contractors is for this very reason, you get great skills but you get the ability to hire or fire at will.
Most companies are using it as a way to shore-up against what might happen to the economy this year, UK supposedly being one of those hit hardest. We shall see...
Choose?? Nope - choose the only job you could find after being made redundant you eejits. At least, that's why I was a contractor back in 2003.
Higher income is a complete myth once you add in sickness and holidays in my experience
assuming you were already in a reasonably senior post. Plus pension, permanent health insurance IR35 and so on. If your under 35 you're probably OK because your sickness will still be relatively low, soon as bits start falling off it becomes much harder.
If you are a junior bod trying to up your income then fine, but you'll probably find it hard in the current market.
As a paid up member of the Crap Gemini survivors club, I can tell you that it isn't just contractors who they treat in a less than straightforward manner.
In the office I worked in; basic management incompetance lead them to taking a contract at an unprofitable rate; just to screw over a competitor. Longer hours without compensation, blatent favouritism demonstrated at review time, and when 1/2 the office were invited to the Boss's party, and a deliberate policy of bullying certain staff members; all tactics employed to reduce the number of staff in the office by over 30% in a year (without having to pay out any refundancy, loyal staff leaving without so much as a handshake or "good luck"), resulting in stress, long term illness and a good dose of "get the hell out of here".
Take a guess what it did for customer satisfaction on the contracts being worked on, especially with base level (14k/yr) staff being put on site! An end of year meeting, a vomit inducing video presentation, backslapping and congratulations for the middle managers who'd fucked up the contract in the first place.
Some great prison camp commaradery, but I would advise against working in the northern offices of CG UK in the strongest terms possible.
Cap do this every so often, in the same way they have 1-2 rounds of redundancies amongst permanent staff a year (rarely voluntary). Still, now that most the non-ASPIRE/Met Police staff have been off-shored (right-shored in Crap speak), there's only really the contractors left to pick on.
I remember seeing an Employer of the Year award in the offices I worked out of, but I could never work out how they managed to get it (probably off eBay).
In this climate most will want to stay because they know they will have a job.
Problem being I bet most will simply work 15% less for a 15% cut in wage. If this place treats contractors at all badly I bet this will bite them in the ass big time when overnight the business starts slowing by xx percent.
Some IT contractors get £100k for doing the same as a £40k permie, it's a tempting route to go down, but;
1. You have to be reasonable at your job (useless contractors just end up with lots of gaps and short-term contracts)
2. You won't have any career progression (catch-22 experience)
3. Unless you're lucky you have to train yourself (you must keep skills up to date)
4. You have to plan more carefully for times without income (pensions, redundancy etc.)
5. You can't afford to piss your employer or colleagues off (bye bye renewal)
Play the game right and you can earn enough to retire in 20 years, play it wrong and you have a tough worrying time with no future.
Contractors are nothing special skill wise, you rarely see low skill contractors, but you do see them, successful contactors are made by their attitude and planning not by the skill the sell, I've only ever been permie, I've turned down £100k contracts as I'd rather have an easy, hassle free life and half the money, besides once you add in pension, sick pay, ability to swing the lead once in a while, being able to build up long term friendships with work mates, being paid every month is very attractive.
So yes contractors have my sympathy, the only thing they have better than me is their pay, and that is being indirectly cut, and don't forget without the contractors the permies would have to take the first cut (no bonus, 3 day weeks, redundancies etc. etc.), they suffer so we don't have to.
Quote = "Although rates have undoubtably fallen in recent months, a 15 per cent cut seems like a big jump to us."
So will the 15% come off the amount the client is paying the agency, or will it be 15% off the amount the agency passes on to the contractor?
I know this might seems a bit cynical, but providing the agency is originally on less than 33% margin, then CG will still get a saving of over 10% which seems a more realistic target.
The agency is unlikely to want to risk having their contractors replaced so this might be a good time to ask to see the contract addendum which specifies what CG is paying the agency (so the contractor can make his/her best offer, naturally).
A few years ago we had a contractor here and one afternoon we all happened to be sat in the pub and the conversation turned to contracting vs. permanent work.
This contractor went on and on about what a hard life it was, what with IR35, pensions, training, job insecurity, blah blah blah.
So our then boss offered to walk back to the office with him and write him out a permanent contract on the spot. He shut up like a Bank Holiday Monday.
In a recession, you would have thought HMG would have spent their cash on UK based staff, rather than allowing outsource agencies to send all the money to china india, eastern europe etc.
If they are paying 2.5bn to car makers that pollute the planet , so the cars can sit around and rust... you might think that they could pay some decent staff (ie. not _lowest possible_ cost) to get some decent IT.
any other really large business, a business perhaps dominant in its field. Sure contractors can charge, or should be able to charge a higher rate. The problem is that each of these contractors is a single, small unit. While there are only a few contract firms big enough to bid on large projects. This, obviously, makes it easy to make those contractors who won't take a pay cut for non-re-higher-ment.
the imaginary overcoat, please. Yes, it matches my made up words nicely. Thanks
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