10 per cent rate cut 'risks IT skills exodus for RBS'

Some of the clients of contractor accountants for IT who are reading this may have reason to be concerned about Royal Bank of Scotland's recent announcement that its freelance IT workers will be subject to a unilateral 10 per cent reduction in their pay. However, it has been reported by the Contractor UK website that the bank could face a skills "exodus" as a result of its decision.

The website stated that while public sector freelancers had widely accepted such 'take it or leave it' cuts, of the 800 or so IT contractors working for RBS, "a double-digit percentage" had rejected its reduction. Contractor UK also cited sources informing it that while acceptance had been indicated by some IT contractors so that they could keep hold of their contract, many were still looking for the first opportunity to find a new deal with another company.

A senior recruiter with expertise in financial IT contracts was quoted as saying: "Early indications are that some [IT contractors] will not take the imposed decrease and will move on elsewhere", adding that RBS's future delivery of IT programmes was likely to be compromised, given how market demand would simply allow most of those rejecting the reduction to find new roles.

This view was backed by Chris Bryce, chief executive of the independent professionals' membership body PCG. He commented: "Non-targeted, blanket reductions are more likely to lead to a skills exodus than a cost saving.

"Those with the best experience, skills and talent simply move elsewhere. Banks may feel that if freelancers decide to leave as a result of the rate cut they will be able to refill those roles but these will not be like-for-like replacements."

Mr Bryce said that mid-contract rate cuts by those providing work to freelance techies risked a deterioration in their skills base and damage to their IT capabilities. With regard to unilateral pay reductions confirmed not just by RBS but also Barclays, he added that their long-term expense negated any short-term cost saving.

RBS hopes that the 10 per cent rate cut for all of its 11,000 or so temporary personnel will account for as much as £65m of the £1bn that it would like to save by the end of 2014. An RBS spokesman told CUK:  "We continually keep costs under review, in reaching this decision we have taken into consideration market day rates and those across the banking industry."

However, there was also some reassurance for clients of contractor accountants for IT, from ReThink Recruitment director Michael Bennett. He observed: "RBS's announced reduction goes against what we are seeing in the market, as [IT contractors] demand and rates are holding up.

"Indeed, I'm not aware of any other company looking for such an across the board rate reduction; actually, many are increasing rates."

Editor’s Note: SAIL Business Solutions (http://www.sailsolutions.co.uk/) are represented by the search engine advertising and digital marketing specialists Jumping Spider Media. Email: info@jumpingspidermedia.co.uk or call: +44 (0)20 3070 1959 / +34 952 783 637.