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IBM cuts contract staff pay

IBM Global Services, which provides outsourced IT services for some of the UK's biggest businesses, has become the latest company...

IBM Global Services, which provides outsourced IT services for some of the UK's biggest businesses, has become the latest company to cut costs by seeking to lower its bill for contract staff.

IBM contractors, many of whom have transferred to the supplier from the IT departments of large firms, say recruitment agencies have given them an ultimatum - accept a 10% pay cut or risk losing your job.

The move by IBM, one of the largest employers of IT contractors in the UK, illustrates the depth of the downturn in both IT spending and the IT jobs market. It comes hot on the heels of similar cut-backs by financial firms in the City of London.

IBM is understood to be targeting the pay cuts at specialist IT contractors earning more than £25 an hour, following similar cut-backs by rival firms. But the cuts have raised fears that some IBM customers could be left without adequate support if contractors choose not to accept the new terms.

About 12 specialist staff at pharmaceuticals company Astra Zeneca are understood to have chosen to leave, rather than accept the pay cut. One contractor, who asked not to be named, said this could leave the company's Windows NT infrastructure under-supported.

IBM Global Services refused to comment, saying it was an internal matter for IBM. Recruitment companies and Astra Zeneca were not available for comment.

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