The imperative to do more with less in a down economy is prompting businesses to reduce spending. How should you deal with the challenge of budget cuts?
As with any business problem, you have to start with data and be both strategic and transparent about your actions. It’s possible to not just survive but even thrive in a down market by embracing new ways of working that increase efficiency– like fractional hiring.
Be data-driven
When it comes to making cuts, it’s essential that decisions are made on the basis of objective facts. Managers should be transparent with the organization and be able to point to the numbers that prove they’re not playing favorites when making decisions about what or whom to let go.
Transparency is essential to reinforce trust, argued a recent Harvard Business Review article:
The less people trust your process or motives, the more they will assume the worst and want revenge. But allowing people a reasonable line of sight into how and what you chose to cut helps them see the difficulties behind those choices, even if they don’t like the outcome.
Tech ROI check
It’s essential to look at whether investments in projects and technology are delivering the return that was anticipated. This, especially, applies to IT services that are not always as visible as other services businesses pay for.
One area of technology spending that businesses should be monitoring is their SaaS subscriptions. Businesses often end up paying for more licenses than they need. When it comes time to renew, these businesses should make a point at looking at the actual usage and decide how many licenses are really needed before paying for everyone again.
Now businesses are also discovering that they need to reassess their use of cloud, according to a recent Wall Street Journal article. It reports that at the end of 2022, the quarterly increase in cloud spending has dropped from an average of 31% to 27% in the United States.
The Journal attributes this drop to CIOs having to reassess a move that ended up costing them far more than they had anticipated. As the pressure mounts for cut costs, finding solutions for containing cloud costs will be on the agenda for most businesses this year.
When reviewing your tech usage, you can not just see what can be cut but find new options to take on to streamline operations and reduce costs. That entails putting together the optimal combination of technological tools that will deliver a a positive ROI for your business and the people with the skills to extract that value from them.
Consider fractional hiring
Opting for fractional hiring for tech talent empowers businesses to weather economic downturns while building up a competitive advantage. By leveraging the benefits of fractional hiring for tech, businesses gain access to the specialized expertise they need while enjoying cost-saving and the flexibility that will allow them to scale their workforce up or down as needed.
1. Fractional hiring gives businesses access to a larger talent pool and specialized expertise.
When businesses are open to fractional hiring for technology talent, they gain access to a larger pool of skilled professionals than they would have if it limited its hires to those within commuting distance of their office. The fractional hiring approach empowers businesses to bring on the best talent for their specific needs, regardless of location or time zone.
That also means that it can more easily bring in the specialized expertise it may need for specific business goals. This can be particularly useful in areas such as Salesforce administration, software development, data analysis, and cybersecurity. Outsourced talent can also bring a fresh perspective and new ideas to a project, which can help businesses innovate and stay ahead of their competition.
2. Fractional hiring reduces the administrative burden associated with in-house hires, which saves businesses both time and money.
Businesses don’t have to manage payroll taxes or benefits and insurances for the fractional hires. Those responsibilities fall on the worker or their contracting agency, simplifying the administrative process and cost for the business.
Hiring full-time employees entails a significant investment of both time and resources on posting job openings, interviewing candidates, vetting them, and negotiating employment terms, which can be especially burdensome for businesses with limited HR resources.
In contrast, fractional hires coming through a consultancy come pre-vetted and qualified. They join the team with the specific skills the business needs for specific projects or tasks with clearly defined terms of employment.
3. Fractional hiring gives businesses the advantage of flexibility, allowing them to scale up or down as needed.
Fractional hiring allows businesses to hire workers for specific projects or tasks and adjust their staffing levels as needed. With the ability to adapt to changing market conditions and customer needs quickly, the business can accelerate its time to market.
The fractional hiring model removes the friction of onboarding and offboarding, allowing for smooth transitions as different people are introduced or removed from projects and tasks. Businesses can take on additional staff or switch out people according to the skill sets needed at the time.
If a business needs additional resources for a project, it can quickly hire additional talent to complete the project without having to go through the extensive onboarding and commitment associated with a full-time hire. Once a project is completed, the business can modify its contract to scale down the additional talent.
At the end of the contract, there’s no need for the official notice and severance associated with layoffs for full-time employees. This can be particularly useful during times of uncertainty as we’re currently experiencing and serve as one of the strategies businesses adopt when facing budget cuts.
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