It only took one bank to start the ball rolling, and now the 10% rate cut for IT contractors in investment banks looks set to become standard, with Lehman Brothers the latest to join the party.

So far Merrill Lynch leads the way with an 11% pay cut for its IT contractors, closely followed by BarCap, RBS, Deutsche Bank and Nomura International, who all imposed 10% reductions. Lehman has been comparatively kind, chopping tech contractor rates by 8%.

In an e-mail to recruiters Lehman said: “Due to the current climate Lehman Brothers is undertaking a series of firm-wide cost cutting initiatives. As such Lehman Brothers is requiring an 8% rate cut for all technology contract workers, effective 1 July 2008 – all other contract terms remain the same… We are sure you appreciate why these actions are required.”

One headhunter says there will be more cuts to follow as all banks try to save money: “I’d expect a 10% drop across the board by the end of the year.”

Another anonymous source tells us that Commerzbank has also imposed a 10% rate cut for their UK contractors.

BarCap originally cut some rates by 5%. However, last month it sent an e-mail to recruiters saying: “The planned changes will be effective as of Monday 2 June 2008. They will impact all contractors across IT globally, and will include contractors that have recently been subject to a 5% rate reduction. A further 5% reduction will be necessary to bring this group in line with this exercise. Please note, no exceptions will be granted by the business.”

Steve Pragnell, of IT recruiters PM3 Consulting, reckons the cuts are the least IT contractors have to worry about: “A more worrying trend is that contracts are either incredibly short term or just are not being renewed at all.”

Still, at least Goldman seems to be spending bullishly on IT this year, with a 19% increase in Q2 2008 over the same period last year.

But Goldman’s IT recruitment doesn’t appear to be increasing in line with its spending. “Goldman had a two-week hiring freeze about a month ago but now they’re back to usual – slow but steady hiring,” says one headhunter. “There’s not any one area it’s focused on although equity derivatives and commodities are having money poured in.”