HSBC cuts hundreds of IT contractors

A cost-cutting plan by HSBC to layoff 1,100 staff in its global investment banking operation will put hundreds of UK IT contractors out of work.

Europe’s biggest bank by market value says 650 employees and 450 temporary workers, including contractors, face redundancy from the division’s business and IT support roles. About 500 jobs will go in the UK where HSBC said it had briefed affected parties of the cuts, which were necessary due to today’s tough “business and economic environments.” A spokesman for HSBC denied claims that certain IT workers, including contractors, in front, middle or back-office roles had been singled out for not adding enough value. “Within the IT contractor redundancies, HSBC has worked closely with the agencies and contractors to manage this as sensitively as possible,” the spokesman told CUK. “Some contractors who were very close to the end of their contract were a starting point and absorbed the focus, rather than those with a long period still ahead of them.” The cuts, which represent 4% of the unit, were described as “sensible steps” to take in response to today’s economic pressures and formed part of HSBC’s “cautious outlook for 2009.”

In August, HSBC global banking and markets reported pre-tax profits down 35% in the first half-year to $2.1bn, a 37% improvement from the second half of 2007. Overall, the bank posted a 28% fall in first-half pre-tax profits to $10.2bn, thanks to a $14bn hit from asset writedowns and bad debts in the US home loan market. For IT contractors, the bank said it would “continually review market rates and practices” to ensure HSBC was “competitive”, without saying if cuts had hit the departing contractors. Some banks, like HSBC rival HBOS, initially cut contractors’ pay at the first sign of financial woes, but evidently failed to yield enough savings and followed up by trimming their numbers. From now until Christmas, financers are expected to shed 12,000 jobs directly as a result of the credit crunch, swelling the number of staff they made jobless on last year by one third. The prediction, from the CBI, adds to the more than 80,000 job cuts across the banking sector in the past 18 months, which continue unabated as the borrowing and lending droughts intensify. This week, Britain’s biggest employers’ group said the ongoing drive to cut costs and a “readjust for lower demand” would see most financers drop their levels of IT investment. Its member survey found trading volumes were at their weakest since 1989 and profitability in financial services fell at a record rate, which was set to last for the next three months. Job losses were set to rise sharply over the next quarter, the group also warned, and 99 per cent of firms said it would take more than six months for “normal” market conditions to return.

Last night, the administrators for Lehman Brothers said a restructuring of the 105-year-old business would see 750 staff, mainly in London, made redundant from today. Tony Lomas, of PricewaterhouseCoopers, said it was “extremely disappointing” that the jobs at the bank’s European operation could not be saved “despite exhausting all avenues”.

* - Article from www.contractoruk.com