Cost cutting is the benefit most often associated with outsourcing. Subsequently, business leaders looking to reduce expenses may jump at the opportunity to move costly functions to third-party vendors without regard to the numerous ways that outsourcing can be advantageous to other areas of the company. However, it is important to recognize that while cost savings may occur, this is not the only benefit of business outsourcing. In fact, cost cutting may not even be the biggest benefit.
A guest post from our colleagues at CFO Selections:
When adversity hits, the knee jerk reaction is to swiftly cut spending across the entire organization, but that response is a mistake.
Strategic cost cutting can keep a business going through tough times, but it must be approached with long-term value in mind. Reducing costs should abide by three essential principals:
Evaluate your spending and determine where you can cut costs to weather tough times while still protecting critical functions, minimizing long-term expenses, spending where it could end up costing more not to do so, and looking for opportunities to reduce waste.
Are consultants simply someone who “borrows your watch to tell you the time?”
“Veteran journalist Duff McDonald makes a point in his book “The Firm” that McKinsey might be the single greatest legitimizer of mass layoffs in history —although that would be pretty much impossible to measure. Companies do need to lay off workers in tough times, that’s a simple fact. But the whole idea of corporate powerhouses laying off thousands of people during good times simply to juice profits—and, naturally, executive compensation—is something that McKinsey has definitely had a hand in as well. ...That sounds like a vote for evil, to me.”
Source – Time.com
Experts sharing tips about business, money, bookkeeping and accounting...
to support your mission and improve profits.