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Telecoms contractors and operations staff are bearing the brunt of the slowdown, with hourly rates shrinking by up to 50%.
The latest rate cuts, which dwarf plans by London financial firms to cut their contractor rates by 10%, are the most draconian so far.
Although the cutbacks are patchy, they reflect a deepening slowdown in demand for freelance IT staff.
Contractors are increasingly prepared to accept lower salaries rather than run the risk of being turned down for work, recruitment specialists said.
"We have heard of rates going down by 50% in the telecommunications arena. People are just keen to be in employment," said Jon Tyler, managing director of telecoms company Volt Europe.
Support roles are also being hit, with some overseas contractors offering to work on support desks for £15 an hour, rather than the usual £30, said recruitment agency RHI.
Research by the JobStats Web site suggests that hourly contractor rates have fallen by as much as 25% since reaching a peak last September.
Deutsche Bank, Citigroup, and JP Morgan are among the City organisations to have cut contractor rates by 10%, according to the Professional Contractors Group. Hewlett-Packard and Ericsson have also made cutbacks.
Anne Swain, chief executive of the Association of Technology Staffing Companies, said demand for contractors is unlikely to pick up until the second or third quarter of next year at the earliest.