Is the financial sector becoming a no-go area for contractors?

Friday 2 May 2014

Contractors have got used to being in high demand in recent years and the rates that come with this. Consequently, those sectors and businesses that can't keep up with the rest of the pack when it comes to pay are likely to become incredibly unpopular among the self-employed.

The financial industry is currently at risk of just that and questions are being asked about whether the sector is to become a no-go for contractors - particularly those in IT - after a number of large institutions announced plans to lower rates.

Chris Bryce, PCG chief executive officer, explained: "The finance industry does not operate in its own little bubble. Rates for skilled IT professionals are set by the wider market and non-targeted, blanket reductions are more likely to lead to a skills exodus than a cost saving.

"We’ve already seen this happen in other industries - such as the public sector – when clients have tried to impose changes to contracts. Those with the best experience, skills and talent simply move elsewhere."

With the UK experiencing a skills shortage, the imperative for financial institutions to attract and retain talent is even greater. Yet the industry appears to be going in the opposite direction.

Mr Bryce explained that while banks might currently think they can replenish the gap left by freelancers, they will in fact struggle to find "like-for-like replacements".

What could happen in the sector instead is a loss of experienced resources, a skills exodus and the erosion of technical abilities.

To ensure financial institutions can harness the talent they need to push forward, Mr Bryce believes a best practice approach for taking on contractors is needed. This allows the sector to get the best value from their investment.

"One of the benefits of contractors is that they are a flexible resource and can bring a huge amount of experience to the table," Mr Bryce said. "The organisations that use them best operate constant evaluation of the projects they are involved in coupled with proper analysis of the ROI they provide."

Two of the banks intending to cut rates include the Royal Bank of Scotland and Barclays.

Speaking to Contractor UK in March, the latter explained that it had downgraded the pay of freelancers in both its UK and US divisions by ten per cent. This was the third 'take it or leave it' cut in as many years.

A spokeswoman told the news provider that while Barclays were committed to paying competitively, they had to lower rates as part of a cost management program.

In sharp contrast to the current pay trends in the sector, research from the Confederation of British Industry and the PwC has shown that IT will be the top capital investment among financial institutions over the next 12 months.

This will be most noticeable among investment management firms, securities trading companies and insurance brokers. Indeed, the number of investment management firms expecting to see greater IT budgets has more than doubled, while the trend among security traders has grown at its fastest pace in four years.

By Victoria McDonnell

Get in touch

Please select your type of enquiry:

Brookson on Twitter