IR35 Blanket Ban Bank HSBC Cut 35,000 Jobs – Contractors Dump HSBC

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IR35 Blanket Ban Bank HSBC and Contractors
IR35 Blanket Ban Bank HSBC and Contractors

IR35 Blanket Ban Bank HSBC

IR35 blanket ban bank HSBC announced today that they will be cutting 35,000 of their employees. They are also expected to sell off a whole load of assets too. This is their third go at cutting employees in recent years.

Profits are down badly by 33%. They have given all sorts of reasons for this.

They will take their headcount down from 235,000 to 200,000 worldwide and they will sell £77bn of assets.

Contractor Question on IR35 Blanket Ban Bank HSBC

  1. Will this downsizing work for HSBC?
  2. What are the costs of downsizing?
  3. Why the IR35 blanket ban bank downsizing may not work
  4. How HSBC will lose value (and profits) by cutting employees?
  5. Why contractors are dumping the IR35 blanket ban bank
  6. Will IR35 be the next excuse HSBC have for downsizing?
  7. Are Contractors taking their business / systems knowledge of HSBC to rivals abroad?

Will this downsizing work for HSBC

HSBC reckon that this will mean that they are leaner and fitter. However, companies that do this tend to find that it seldom seems to work and they have to go back and have several goes at making themselves ‘leaner and fitter’. HSBC have already had two goes at this in the past decade and they still find the need to make themselves ‘leaner and fitter’.

The main reason why continuous downsizing never seems to work is that it is easily to calculate what an employee costs a company. It is much more difficult to calculate what value an employee adds to a company. That’s more of an intangible.

What are the costs of downsizing

The savings kick in immediately but it usually takes a year or two before the damage done by getting rid of an employee kicks in.

Let me give you an example.

In my local store the sales of local newspapers were as follows:-

220 – Derry Journal (Friday)

180 – Derry Journal (Tuesday)

150 – Inish Times

120 – Inishowen Indpependent

The Derry Journal is owned by Johnson Press who are regular downsizers.

Why the IR35 blanket ban bank downsizing may not work

A few years ago they decided to get rid of the guy who was responsible for the news in the Inishowen edition of the Derry Journal. Inishowen is the north east part of Donegal and borders Derry.

I asked in the store recently what the figures are now:-

180 – Inish Times

160 – Inishowen Independent

30 – Derry Journal (Friday)

15 -Derry Journal (Tuesday)

How HSBC will lose value (and profits) by cutting employees

The savings from sacking this guy were immediate. However, it took a few years for the the overall sales just in that one shop of the Derry Journal to fall from 400 to just 45. It is likely that this will be the same all across Inishowen. Those in the Derry office don’t know what is happening in Inishowen and people in Inishowen who bought the Derry Journal gradually saw that there was no local news in it any more.

The Finance Director at HSBC, who is likely to be running this cutback, will not have a clue what value those 35,000 are adding to the bank.

But the bank will find out in subsequent years – and then they’ll need another downsize as profits are hit by the value lost in the current cutbacks.

Why contractors are dumping the IR35 blanket ban bank

However, contractors won’t be waiting for any announcement. There will be no need for IR35 blanket ban bank HSBC to look at cutting their numbers.

HSBC were the first major bank to announce that they are going to ban the use of personal services companies. As the banks tend to follow each other all the major banks announced they would do the same.

In a recent survey more than half of contractors said that they would quit their client companies rather than take the PAYE jobs offered. You can see the results of our own poll of contractors on what they will do at the top right of this page (desktop mode for mobiles).

Will IR35 be the next excuse HSBC have for downsizing

Here are the excuses that HSBC have come up with for lower profits:-

  1. lower interest rates since the crash of 2008
  2. slow growth in its main markets
  3. the coronavirus
  4. anti-government protests in Hong Kong
  5. the UK’s exit from the EU

Perhaps in their next downsizing, which is sure to come, the effects of IR35 on the IR35 blanket ban bank will be to the fore.

Are Contractors taking their business / systems knowledge of HSBC to rivals abroad

Many contractors at the IR35 blanket ban bank are taking the decision out of HSBC’s hands. They are telling them that they will not be moving from operating via personal services companies to PAYE.

They will take their skills and experience with them as well as the business and systems knowledge, which they have gained at the bank, with them.

As 11% of contractors in an IPSE survey said that they intended to find contracts abroad to escape IR35 there is every chance that foreign rival banks of IR35 blanket ban bank HSBC will inherit the business and systems knowledge that those contractors gained at HSBC.

This will happen at other UK companies too.

And this IR35 train crash grows closer by the day.

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