The cut in rates marks the second bitter pill IT contractors in the UK pharmaceutical industry have had to swallow in the last fortnight. Shout99.com first broke the news last week that GlaxoSmithKline (GSK) had chopped 475 of its suppliers at an auction, with rates cuts for contractors estimated to lie between 15- 20 per cent.
Contractors at Pfizer have been given one week to decide whether they will continue providing work to the company or try their luck elsewhere in an increasingly difficult field.
A letter to procurement staff and suppliers from Tony MacConald, Executive Director of Informatics at Pfizer, said: 'In line with other significant users of Contingent Contractors, Pfizer Global Research and Development Informatics (Pfizer) is continually seeking to address its cost base and therefore make cost savings. Pfizer has conducted an analysis of the rates being paid, benchmarked against other large users in the marketplace using selection criteria to identify relevant Contingent Contractors. As a result of this analysis and the need to continually improve the efficiencies of its departments and after careful considerations of all options available, Pfizer have decided to implement a rate reduction of 12.5 per cent for the Contingent Contractors attached.
'... this initiative must be communicated to all relevant parties by week ending Friday 31 May 2002 at the latest. All Associate Suppliers must respond by e-mail to ProcureStaff by close of business on Monday 10 June 2002 with acceptance of the 12.5 per cent decrease of the Contingent Contractor's rate. The new rates will apply from Monday 8 July 2002; however, if this could be implemented prior to this date this will be viewed favourably by Pfizer and will help Pfizer achieve its goals earlier. Pfizer does not envisage any further rate decreases, but this cannot be ruled out.'
Rates for IT contractors began to descend last July when Credit Suisse First Boston (CSFB) announced it was introducing a cut of 10 per cent. Before the end of the year BT, IBM, Deutsche Bank, JP Morgan, Ericsson, CitiGroup and Hewlett Packard had all announced similar cuts.
So far this year rates cuts have entered a second phase, with CSFB, Barclays, GlaxoSmithKline and now Pfizer working on a 10-20 per cent cuts basis.
Pfizer sent the following statement to Shout99.com: "Pfizer conducted a review of IT resource provision within the company's Research and Development site in Kent. The company concluded that with recent changes in the market, many IT contractors were employed at Pfizer's European R&D headquarters at rates well above the current UK market average. As a result, Pfizer is proposing to reduce these rates to reflect recent changes in the market."
Richard Powell, © Shout99.com 2002