Why Cost Reduction, Why not Cost Optimization?

Why Cost Reduction is considered to be the only way to sustain the company’s growth in bad times ?

Generally Cost Reduction happens by either Layoff or cutting down on any additional expenses.  Any Cost reduction in any form is visible to most of the employees which creates a panic situation among the employees who were spared. Most of the employees makes their own assumptions  and starts planning for the backup. Ripple effect creates a MORE drastic situation which leads to further drowning of company. Companies can measure the ill effect of the decision by simply looking into the matrix of existing employee’s resumes been uploaded to particular job portal before the decision and after the decision. I can bet, you’ll measure a radical difference  

Question is, if an Organization could have sustained or run the business without those resources or  additional expenses, then why on the first hand they are continued with those additional expenses ! This simply means the concern management is not able to OPTIMIZE the cost, which is the primary responsibility of  respective stakeholder in the organization.

Cost Optimization is  easier said than done. Majority of the CEOs or stake holders  starts focusing on Cost Reduction and creating pressure on employees and missing out on the important aspect like Revenue Leakage, Resource Utilization  etc

Recent mishandling of by some of  IT giant’s Layoff is the  live example, how the management gets panicked and what can be the repercussion of the sudden Cost Reduction.  It would have cost the companies good will  and  brand name.  Who needs to be blamed for all this chaos ! Front Line employee are offcourse not to be blamed !

Time has come when Organizations need not  wait for Bad Times  for Cost Reduction. They need to work Today for Cost Optimization. I met  founder’s and CEO of few startups and  found out that they are burning investors money more on look and feel aspects rather than the growth of the organization and revenue generation. One such company made  lavish Office with a separate room as a think tank with Recliner Chairs etc and  created ambience worth too much of cost. Does it really required  for a startup with Zero revenue ? I doubt !  Result was Investor  got panicked and within just 1+ years Company has to shut the doors.  What did we do in that think tank !

If we talk about bigger organizations also, though the examples may be different but the focus also is not towards Cost Optimization.  Bench Loss, Resource utilization and Revenue Leakage because of the delay in hiring, Just-In-Time Hiring  are few areas wherein companies can focus on and may attain some Cost Optimization and these are some of the areas wherein you won’t get much data to be analysed.

So far there is as such no standard model has been developed that can calculate the revenue contribution of hiring team  or the loss incurred because of hiring. But Hiring team will always be an easy prey for Business or stake holders for any delay in project or Project lost.

To provide solution for the mentioned concerns, OnBenchMark.com is a tool to Reduce Bench Loss, Increase Resource Utilization, Reduce revenue leakage because of delay in hiring and Just in Time Hiring.  OnBenchMark.com is a Bench resource sharing concept where in Companies having Bench Resources (Partners) can be shared with other Companies having any IT needs (Clients).

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