As inflation hits a 40-year high and stock market valuations decline, many economists agree that a recession is looming in the U.S. While the timing or extent of a recession cannot be predicted, it is important to be prepared and to proactively manage business costs.
The following offers some suggestions for managing technology costs in preparation for a recession.
Strategic outsourcing can help focus management bandwidth on core revenue-producing functions and reduce costs by leveraging economies of scale, transforming processes, implementing automation and accessing personnel in lower-cost geographies. As a result, strategic outsourcing can be a great option for refocusing management and reducing costs in preparation for and during an economic decline.
Strategic outsourcing can afford a company the opportunity to leverage the best practices and economies of scale available through an outsourced service provider that performs the outsourced function for multiple clients, which inherently offers a lower cost per unit of service than any individual company can achieve.
In addition, strategic outsourcing can allow a company to:
In addition to the opportunity to re-focus management bandwidth on core revenue producing functions and to reduce costs over time, strategic outsourcing can also provide certain immediate benefits. For example, strategic outsourcing can offer companies the opportunity to:
For companies that already utilize multiple outsourced service providers, consider the use of a multi-supplier integrator (MSI) to manage and coordinate delivery among the existing outsourced service providers and further reduce costs by eliminating duplicative management costs priced into each service provider’s solution. With the market shift in outsourcing strategy from large multi-tower arrangements with a single preferred provider to a best-in-class approach with multiple service providers, many customers are struggling to achieve cost savings due in part to redundant management layers provided by each service provider and services that are fragmented and lack coordination among service providers. This has resulted in the emergence of MSIs that take responsibility for management of the outsourced service providers, eliminate redundant services provided by the outsourced service providers and ensure coordinated service delivery among service providers.
In addition to the cost saving opportunities presented by strategic outsourcing, it is likely that companies can achieve significant cost savings by rationalizing their use of on-premises software and software as a service (SaaS) solutions. When looking to cut costs associated with such software solutions, consider the following:
If you have questions about managing costs in the event of a recession, particularly expenses related to software and information technology (IT) infrastructure, please contact the authors.
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