Bladewatch.com

Finextra

JPMorgan has written to IT contractors demanding they take a 15% pay cut by the end of the month or face termination.

JPMorgan joins a roll call of top City banks who have moved in recent months to slash IT contractor salaries. In August, Barclays instituted a ten per cent cut in IT contractor rates. It has been followed by similar cutbacks at Deutsche Bank, Merrill Lynch, Nomura and Royal Bank of Scotland.

In its letter to contractors, JPMorgan attributes the cuts to “prevailing market conditions” and warns: “In the event of a proposed refusal to agree to the reduction in charge rates either as a whole or for individual contractors, we will consider giving termination notice under the terms of the existing contractor’s task order, at our discretion.”

I suspect we’ll find this happening across the financial sector in relation to the operating conditions that we have seen. It’s an effective way of reducing your operating costs, it will be interesting to see how this affects the job market in the near future. I wonder how long this will last based on the recent mergers that have happened, the new operating systems coming online and ‘business as usual’ projects – my data center is full, I need to integrate this application, this IT infrastructure into our IT.

I wonder if this could encourage the development of more ‘mini consultancies’ rising up for the small/medium business markets? Let’s not forget in these sectors there might not be a need for a permanent on site engineer/consultant, but a guy two days a week, or brought in once a week to check systems/carry out specific tasks? I only mention this because we’ve seen the vendors increasingly looking at the small/medium business sectors, could this be the beginning of a trend?

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