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Capgemini tells contractors to bite 15 per cent cut

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Capgemini has told contractors working on its Aspire contract to accept a 15 per cent cut or leave.

Blaming the recession, Capgemini asks contractors to work with their agencies to cut rates. Aspire is CapGemini's outsourcing deal with Her Majesty's Revenue and Customs - it cut 600 jobs on the contract back in late 2007.

The email, sent to Aspire contractors, said:

The current economic climate means that the market rates for contract resources has dropped due to the reduced demand for contractors... Capgemini have instructed [your agency] to seek your assistance in achieving their business objective and request a reduction in your daily / hourly rate to that which reflects current market conditions. We would expect this to be up to 15 per cent.

The mail said the slashed rates will come into force 2 March 2009. Contractors must present their new offers by this Friday, 30 January.

The mail adds:

Capgemini and Elan will consider positively the flexibility you will demonstrate through accepting this change, in conjunction with the business requirements for the role at the time of your next contract renewal.

The source who sent us the mail said that the majority of contractors were unhappy with the change, but had been warned by agencies that Capgemini would look for cheaper people to fill their jobs if they refused.

Our source said: "Talk about taking advantage of the recession... a lot of people are in fear for their jobs."

Capgemini sent us the following:

"Capgemini operates in a highly competitive market and must prudently manage our cost base at all times. The current economic climate means that the market rates for contract resources has dropped. Capgemini has a strategy to continue to use external resource and wants to ensure that this strategy remains realistic in the present climate. Following consultation with our resourcing partner, we would expect the reduction in contractor pay to be up to 15%."

The work employs about 200 people.

Although rates have undoubtably fallen in recent months, a 15 per cent cut seems like a big jump to us.

Several firms including Barclays Capital and Goldman Sachs have both used rate cuts alongside normal redundancies. ®

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