BP snips IT contractor rates
Take the cut, or take a hike
BP is telling its 900 IT contractors to take a ten per cent pay cut or find themselves new jobs outside the company.
The oil company, which racked up £6bn in profits for the last quarter, said that it was writing to all its IT contractors asking them to accept the cut.
A spokesman for BP said: "We're extremely keen to see the benefits of deflation and we're looking at contracts throughout the supply chain - not just in IT. For instance the price of steel has falling sharply - we'd like to see the benefit of that."
An email sent via contractors' agencies made clear there might be more cutbacks in future. The email, seen by The Register, said: "Given the impact of the deflationary economic environment BP is taking the first step to align IT contractor charge rates with the current market conditions. Effective March 1st a 10% rate reduction will be implemented for your contract personnel identified on the attached spreadsheet. Moving forward further benchmarking will be performed to determine if additional action is required."
The mail was sent out on Monday and contractors have just two days to respond.
The contractor who contacted us said he was not surprised by the move, and accepted that rates generally have fallen. But he did object to having a gun put to his head - the email said: "All change orders not accepted by the deadline will be escalated with the intention to source replacements."
Cutting contractor rates is a common way to cut labour costs instead of making people redundant. It runs the risk of irritating all your staff rather than just upsetting the people you lay off. ®
The bit I like is...
"Enjoying the benefits of deflation", any and every economist will tell you that labour rate deflation is an economic disaster as it reduces the buying power of the consumer without reducing their debt, even if they are highly paid temps, who drive big cars that use lots of expensive BP fuel, that they won't buy any more and so on.
I'd have to say that that statement has to be the most stupid thing I have heard from any spokesman in years and shows BP to be more out of touch with reality than any Politician.
It's simple, the economy works because people want to buy stuff, if you cut their income they can't buy stuff, so you sell less, and have to cut more staff, and so on. You know basic supply and demand.
As an ex-bp contractor, I can tell you that they were making it very clear that contractors were unwelcome for well over a year now (in the business unit I worked for).
Those of us they didn't drive off by cutting all the benefits (for example free lunches, equipment provision, and even expenses in some cases) and shorter contract renewals (what the hell can you plan if you only get a 4 week contract?) are now hit with less money.
Well, that's the nature of the game for contractors, but I'd heartily recommend staying well away from BP IT jobs, contractor or permanent, for the foreseeable future. Unless you can put up with incompetent and top heavy management (I had 4 managers as I left, all overseeing my single role. No one else was in the team), overblown process (60 man-hours work just to get a person from turning up on their first day to a desk, let alone access to the systems and software they need), and a horrible habit of picking the worst software you can find to do a job. FFS, who in their right mind uses Clearcase nowadays? The whole place was riddled with hidden Subversion servers, just so all three developers could actually do the work that their 15 managers were asking for!
So glad I got out. Even though I jumped to a bank!
time to start colluding and fixing prices for contract work/
Lets see how they'd like it if every single contractor in the country laid down a decree that their rates are now 10% higher - they can take it or go through the expense of hiring permies.
One rule for you, one rule for me
Companies do this, because they can. But contractors who do the same get short shrift.
At my last contract, a change in roll led two contractors to demand a rate rise (or they would leave) mid-contract. They were both sacked on the spot and marched off-site.
re: Contract Termination
"Every contract in existence has a termination clause. By definition they have to. Otherwise the arrangement would go on forever, well at least until the individual dies!"
No, every contract will have a defined period or expiration date/conditions. That's not a termination clause.
"Most termination clauses will be of the form "the service provider or company can terminate this contract by giving the other X weeks notice"."
Correct, that's a termination clause. Most contracts might have one, and you can ask for it to be removed. If it's removed the contract is binding on both sides until the termination date. I either get it removed, or stack the rate to justify the extra risk that type of clause implies.
"Morally it might not be right, but they can do it."
Only if you've signed a contract that allows it. I presume you're not a contractor, or at least not a very well informed one. This is very basic contract stuff.