Morgan Stanley has cut pay for IT contractors at both its global and UK operations.
The New York-headquartered bank told affected IT contractors to lower their rates by 10 per cent or leave.
It represents the first ‘take it or leave’ rate cut of 2019, following a spate of similar ultimatums to IT contractors in previous years, most notably in 2016.
Then, a slew of Financial Services (FS) clients -- including Morgan Stanley -- reduced the pay of IT contractors, telling them to accept a lower rate or lose their contracts.
“Morgan Stanley (MS) has just repeated the same trick,” a contractor affected by the current reduction disclosed last week, having also been at the bank at the time of the last cut.
Like MS’s current cut, the 2016 cut was introduced in the first quarter. And ominously for other FS contractors today, it triggered rival banks to follow suit with their own 10% shavings.
Another similarity between then and now is the contract IT labour market’s conditions, given that the REC yesterday showed February’s demand to be at levels last seen at 2016.
“Market downturn is the reason expressed to me,” a Morgan Stanley contractor told ContractorUK. “It follows contractor hire freezes [here] in December, non-renewals, and enforced furlough.”
For the IT contractor in question, the rate cut also follows “months” of creating, designing and honing a bespoke IT solution for Morgan Stanley which nobody understands better than him.
“[For others] to [take my] position will take time,” he added. “Existing staff are busy on their own book of work and new hires are on hold. So most likely, the [bank's] investment is totally lost.”
Lee Biggins, founder and chief executive of CV-Library, indicated last night that Morgan Stanley’s decision co cut rates were mystifying, especially as rates are generally rising, not falling.
“It's no secret that there's a mass skills shortage across the UK, with organisations being increasingly reliant on the expert knowledge of contractors to fill these gaps.
“What's more, our data reveals that average pay jumped by 3.1% across the UK last month, a direct result of the war for talent,” he said. “With this in mind, it's concerning to hear the news that contractors have been asked to lower their rates.”
'Who's calling the shots?'
It also appears to defy business-logic, according to niche financial services recruitment firm Bowers Partnership, which specialises in placing contractors in the investment management sector.
“The Morgan Stanley rate cut begs the question ‘Who is calling the shots at the bank to let this decision come about?’,” says the firm’s co-founder Natalie Bowers.
“Maybe it’s the finance department, because what this rate cut seems to overlook is that contractors are real, live people who constantly absorb more and more about the client-outfit
“In banking terms, we’re talking about an ‘active, valuable, appreciating asset’-- that is arguably worth much more than it was when it first walked through the door. So it’s really hard to see how the business-logic is working”.
One MS contractor said that despite being offered sweeteners at the 11th hour to rethink their decision to refuse the cut and quit the bank, it was ‘too little, too late.’ And it was “frustrating.”
“It's no wonder that this [Morgan Stanley’s rate cut] has been met with disdain”, CV-Library said.
“Professionals know their worth and aren't afraid to vote with their feet, particularly if they can get a better rate elsewhere. At the same time, businesses can't afford to lose out on key workers, especially when the economy is in turmoil because of Brexit.”
A spokesman for Morgan Stanley declined to comment.
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