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Banks told to think again before cutting rates
by Susie Hughes at 10:59 25/04/14 (News on Business)
Reports that a number of large financial institutions are planning to slash rates could turn the finance sector into a no-go area for contractors.
The warning comes from freelancer group the PCG, who advises institutions to think again and use the flexible resource of freelancers to their benefit rather than introduce blanket cuts.

PCG's CEO, Chris Bryce, said: “The finance industry does not operate in its own little bubble. Rates for skilled IT professionals are set by the wider market and non-targeted, blanket reductions are more likely to lead to a skills exodus than a cost saving. We’ve already seen this happen in other industries - such as the public sector – when clients have tried to impose changes to contracts. Those with the best experience, skills and talent simply move elsewhere.

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“Banks may feel that if freelancers decide to leave as a result of the rate cut they will be able to refill those roles but these will not be like-for-like replacements. They will lose experienced resources, see an erosion of their skills base and technological capabilities will inevitably suffer as a result. The phrase ‘you get what you pay for’ is never truer than when it comes to experience.

“One of the benefits of contractors is that they are a flexible resource and can bring a huge amount of experience to the table. The organisations that use them best operate constant evaluation of the projects they are involved in coupled with proper analysis of the ROI they provide.

“That is the right way to ensure any project-based resource is delivering value. A blanket rate cut simply risks turning the financial sector into a no-go zone for contract change, compliance and governance experts. These rate cuts, which have the appearance of being coordinated across a number of banks, simply don’t make good business sense.

“Time and time again we have seen that the best way to deliver efficient, cost-effective IT systems in the long term is to invest. Inflicting a ten per cent rate cut on a couple of thousand contractors may look like it will save a few pounds now, but in reality it will end up costing a lot more in the future.”

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Susie Hughes © Shout99 2014

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