The cuts are happening again

The Register has reported that some UK banks are forcing their contractors to take a 10% pay cut or take a hike. It is usual for contractors to take the hit first as they are an easy target compared to terminating permanent staff and to be fair, as a contractor/consultant myself, if the chop comes then so be it, it's part of the nature of the business.

However, the downside is that the most able contractors are likely and will surely leave first. Many of those who remain will have a lethargic attitude to work and overall, the company suffers.

In addition, Barclays are offshoring more jobs, presumably to further save costs. In my experience, moving jobs offshore doesn't work. It simply moves skills away from the business and causes the customers to lose control over their IT operations. This isn't necessarily a reflection on poor quality of work from the outsourcing suppliers; far from it, I'm sure most are equally as competent or skilled as their UK counterparts. The issue is more to do with operating remotely from the customer; not understanding the "local" issues; not understanding local culture and not being part of the team who see and chat with each other every day. As someone who currently works with multiple clients for 1-2 days a week, I experience this problem even though I know my customers well. Imagine if you've never met most of the people you are providing complex services for.

One final note; Barclays claim they worked out they were paying "over the market rate". That's a phrase I've never understood. It assumes all contractor's skills are equally good (or bad) and so they can be paid, or have their pay cut to the same degree. It also assumes that all contractors were taken on and overpaid by an equal amount. I wonder if they did the same market comparision for permanent staff and considered cutting their salaries by an equivalent amount? Somehow I think not...