Following an alarming trend within big companies, Electronic Data Systems has confirmed that IT contractors within their workforce will have their pay reduced by 10% – a figure not subject to negotiation.

The pay cut announced earlier this month to the freelance IT suppliers at EDS is the latest measure in an ongoing economic plan designed in September last year. Already 3,000 people have been made redundant within the company workforce and contractors who do not agree with the pay cut will face termination upon renewal.

Part of the blame has been placed upon Hewlett Packard and their decision after the takeover of EDS to reduce its combined workforce by 24,600 as part of their three-year restructuring plan, predicted to save the IT giant £1.8bn a year. Union estimates at the time of the acquisition saw one in five EDS contractors losing their jobs, and now it appears the prediction has become reality.

In addition to the pay cut, further measures to reduce company costs include an invitation from EDS to its staff and contractors for a week off without pay. Staff salaries and pensions are also affected.

This is one of the latest examples of how large companies’ plans for cost reductions result in reduced pay and unemployment for IT contractors. BT announced earlier this month that they would be reducing IT contractor pay by up to 30%, and Toshiba said it would eliminate 3,000 temporary roles by March 2010.


EDS does not have a direct relationship with its contractors around pay and contracts. Rather, it works with a group of suppliers and it is these suppliers who determine the pay rates and contracts for their employees. Therefore the assertion that EDS has enforced a blanket 10% pay cut for its IT contractors is misleading.

It is standard business practice in EDS and HP to continually evaluate the competitiveness of all of our suppliers and we are in constant dialogue with them. We do this to ensure a world-class cost structure, which allows us to deliver a best value, high quality service to our clients.

As the recession intensifies, like many companies, we are looking at our costs and are intensifying our efforts to get the best possible value from our suppliers. As a consequence, our suppliers are willing and able to offer greater flexibility and more competitive rates.

Recommended Posts

Leave a Comment