Clients who reduce IT contractor rates with the take it or leave it mindset could find themselves in trouble if contractors take them at their word and look for opportunities elsewhere.
A recent survey of 160 contractors found that the majority of them use the pay reduction ultimatum as a trigger to leave, even if they inform the HR department that they will accept a rate cut. Only 8% of contractors would settle for a sudden cut in their rate. 29% said they would reject the reduction by looking for a new opportunity straight away and 54% said they would accept the cut but look to get out at the first available opportunity.
Companies still need to prioritise cost control and scrimping on temporary workers rates is not going to work. In fact, it could have the opposite effect. If disgruntled contractors leave the company, productivity will decrease and so will profits.
If companies are intent on reducing rates, they must avoid doing it mid-contract and only implement the change when taking on new contractors.
The banks started the rate reduction trend towards the end of last year. Now, to add insult to injury, it transpires that our financial institutions intend to offshore a lot of contractor roles to India. RBS is offshoring around 300 jobs to the Asian country and the Lloyds Banking Group says 513 IT jobs, including 205 contract roles, will be offshored to India.
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