Crystal Umbrella

It is bad news for IT contractors working for Lloyds TSB as they have announced that they will be cutting 1000 It contract roles in their UK divisions. The banking giant will be cutting 4000 jobs overall as it aims to reduce its technology division to 60% of its current size. They have defended these cuts as necessary due to the creation of their streamlined IT division in partnership with HBOS.

Although contractors will be losing jobs, permanent staff will be on the receiving end of many more job losses. It is expected that the majority of cuts will fall on HBOS staff with 1700 redundancies in IT and the HBOS LBG Operations.

With regards to temporary staff, the axe will fall on Lloyds IT contracts here in the UK and abroad with 1150 and 1750 job losses respectively.

One contractor currently working in LBG operations spoke to Contractor UK. He said that LBG is “in a major integration programme due to end next year, hence the reduction of contractors…they will lose some legacy systems in 2011, hence the staff reductions. The rest of the staff that support legacy [work will follow.] It’s a simple as that – such an exercise has been done before and will no doubt be done again in the future.”

Speaking on behalf of the Lloyds TSB Group Union (LTU), general secretary Steve Tatlow, commented on the effect these cuts will have on the individuals who lose their jobs: “The IT jobs sector in the UK is going to be flooded with highly skilled professionals over the next 18 months. [As] over 3,200 LBG staff and contractors begin to seek work outside of the bank, there can be little doubt that areas such as Edinburgh, Halifax, Leeds and Chester will be unable to easily absorb such large numbers”.

Just last week figures emerged which signalled an upturn in IT contract opportunities within the financial sector. However, it has just emerged that Lloyds Banking Group have cut 370 contract roles with the majority of jobs going in IT support.

These new job cuts will be on top of the 400 contract job losses already announced by Lloyds Banking Group. In total, since the merger of HBOS and Lloyds, 8,200 jobs have been cut including 800 contractor positions. A Lloyds spokesperson could not confirm how many of the fresh job cuts would affect freelance staff.

They released a statement which said, “The group’s policy is to use natural turnover and to redeploy people wherever possible to retain their expertise and knowledge gap within the group. Where it is necessary for colleagues to leave the company, it will look to achieve this by making less use of contractors and agency colleagues.”

IT contractors working for the Group have already had their pay rates cut by a total of 20% over the last year.

The bank has been criticised for retaining its workforce abroad despite the high level of job cuts in the UK. Speaking about his issue, the Lloyds TSB Group Union (LTU) said, “Even though both the Bank’s IT and Collections and recoveries operations are directly supported by well over a thousand staff based in India – and the bank are flying into the UK many more IT staff from India who are paid low salaries – the axe has fallen entirely on the jobs of UK staff.”

They continued, “So, for instance, whilst Collections and Recoveries intends to reduce from 8 to 6 the number of sites in the UK that it intends to operate from – existing sites in Andover and Southend – it is insisting upon leaving the three operations in India untouched.”

Lloyds TSB Group Union (LGU) has criticised the company for importing cheaper workers from abroad while shedding nearly 6000 UK jobs in the past three months. They also announced that another 15,000 jobs are likely to be cut in the months to come.

Lloyds have recently cut their pay rate for IT freelancers by 15%. The LGU has attributed this to the importing of cheaper IT workers from India on the quiet. They said that the importing of workers from the subcontinent was to “undercut the pay and replace the jobs” of IT freelancers from the UK.

IT contractor wages have been cut across the sector and many jobs have been lost. However, LGU have branded Lloyds Group actions as “wholly unacceptable” due to their counter action of importing workers to fill their job cuts. They added, “Replacing existing UK-based staff with lower paid staff from India raises very important issues and concerns.”

Questions have also been raised over the role of the government in Lloyds TSB Group practices. LGU commented, “The government has important questions to answer over why, when it owns 43.4% of Lloyds Banking Group after bailing the bank out early this year, it should not be using its influence to force Lloyds into investing in – and protecting – the jobs of UK-based staff?”

“Furthermore, why is it providing work visas to overseas workers, who would otherwise have no legal right to work in the UK, when it could instead force the bank to invest in the jobs of existing workers in the UK?”

Contractors at Lloyds have had their pay rates cut by up to 15 per cent. Contractors who do not agree to the wage cuts will face termination of employment. The recession continues to affect employment as agents report that clients are continuing to interview for positions but failing to actually recruit.

The Centre for Economics and Business Research (CEBR) said that 38,000 IT jobs will be removed from the IT sector by next year. This research shows that IT contractors continue to take risks and can inevitably find themselves in a weak position, even if they have been working on the same project for years. The CEBR stated that between 2008 and 2013 the IT market would suffer a reduction in jobs by around 334,000. It is likely that the IT jobs market will take years to recover to the buoyant levels of 2008 and earlier.

The controversial IR35 rule continues to cause problems for contractors but even with the opportunity of a new government next year there is no clarity on where the Conservative Party stands on this issue. They issued a letter to contractors saying, “Conservatives are concerned about the intentions behind IR35, but we must think carefully about how to resolve this complicated issue. It is not as simple as just abolishing the provisions altogether.”

This seems to suggest that the Conservative Party will spend years discussing and tweaking the IR35 rule only to eventually repeal it anyway. Contractors must wait and see what a change in our country’s leadership may mean for them in the long term.

Redundancies have been announced by five of the largest employers in financial services. This contradicts predictions that the financial services industry is on the brink of recovery.

Powerchex, a technology staffing business, commented, “We have not seen the end of this recession yet, and the repercussions to the opportunities [for IT staff] may end up being much more severe than what we see now”. They are predicting that contracted IT workers will soon see a reduction in their pay, alongside a reduction in the work which is available to them. Managing Director of Parity resources, Alan Rommel commented, “Rates are being cut everywhere. This is especially true in financial services.” A top financial institution said that IT contractors had been asked to take a 10% pay cut which was not met with any opposition prompting them to wish they had suggested 20%. The marketplace is also now saturated with IT contractors looking for work with far fewer contracts to fill.

ABN Amro is merging with Fortis, and as a result of this 6,500 staff are to be made redundant as a cost cutting exercise. Credit card company, American Express have announced job cuts of 4,000 due to the “economic outlook”. Part-nationalised banking group Lloyds is planning to create 300 jobs to reduce their job cuts to 325 posts but this has not satisfied unions. They are accused of making decisions in the short term without taking account of future business needs. This is also the case with insurance company Legal & General who are cutting 560 jobs across their three processing centres. At Barclays 350 full-time IT workers are being made redundant.

According to Powerchex, the resulting effect on the market is that, “companies are looking to the market for better quality candidates to replace permanent senior IT posts. The reality is that [financial] firms are only taking on new people if they have a new project, and at the same time, they are [looking at] keeping their existing contractors [for] longer.”