Friday, January 23, 2009

Cost cutting !!!


I have started to apply for internships for the summer and I am trying to contact as many people as possible to inquire about the possible opportunities available in their company. Many of them have got back to me saying that there is a hiring freeze and some companies are also in the process of laying-off employees.
Companies are taking some drastic steps to cut immediate costs in order to survive this bad patch. How can they cut costs? Here are some things they can do:


1. Hire Interns - I am not saying this because I am searching for one. I understand that companies have to lay-off some non-performing resources to cut costs. Hiring interns would be the best option to get the work done at low cost.
Interns(esp. college graduates) would be looking to impress the company and work hard to get the job done. They would also want to add some valuable experience in their resume as they have started to understand how competitive the job market is. By hiring them, an organization need not worry about extra compnsation, health insurance etc and the risk of liability is very less as compared to permanent employees.


2. Go Open Source - One of the best ways now to reduce significant IT cists is to go open source. I cant believe how much licensing costs IT can save by moving to open source products. Although it sounds easy, it is very difficult to implement throughout the organization. Employees who are used to the products will not like the sudden change and they also should be trained to use the open source products. Training costs is much less compared to what a company can save licensing costs.


3. Save on Real Estate - Do you know how much it costs to buy an office at a prime location (say Manhattan or Boston downtown..)???? I dont know, but i bet an acre in manhattan would cost around 100million(just a wild guess). Can companies ask their employees to work from home? Sure they can. People already "work from home" during snow or bad weather conditions. Technology available these days that can help this transition. There is internet, videoconferencing etc to help with this.
A mid-sized company can easily save a huge sum by asking most of the employees to work from home. In cases like client visits, important meetings, they can surely rent an office space on the 40th floor of a nice building for one day and impress their clients.


4. Go Green - Recycle and reuse is one of the best options to save money and this also helps the environment. Its like hitting two bullseye with one arrow.:)


5. Negotiate and Re-negotiate - Everyone wants to sell their products and they will sell it even if it is at a very less profit. So make sure that you negotiate effectively. Shop around to find a better deal.


There are many more ways to cut small costs like reducing magazine/newspaper subscriptions etc. Reviewing your financials will also help you come up with many more things to do, TO CUT COSTS !!!

7 comments:

Sum Raj said...

Hey prash...nice way to start ur blog as a side..acccording to me this IT and Sports are out of my knowledge..hope u know hehehe...but i appreciate ur topic which is soo important at this current period....

Prashant said...

Hi sumakka,
thanks for leaving a comment. Just writing about two things I am passionate about.

-Prashant

Digvijay said...

Hey Prashant,
A common friend gave me the link of your blog. Interesting one. Considering I am an intern , your blog appealed more. Just to simulate some dying grey cells of my brain, wud share some commenst with you based on personal experience as an Intern.
a) Hire intern: well but how many, as you wont hire interns as salaried people. so all training wud be wasted. Worse, they know how you do the business.
b) Softwares are customized ones, especially made for an industry or company. I am with Volkswagen France, we (my service) are forced to use a software as thts the only one, closed or open.
c) you need a presence in these big cities at times. ours is close to Paris but yet in a very small town or big village. still very expensive property.cnt do much about it. proximity to Paris, railway Track , Germany etc etc.
4) a group of 4 of us are forcing to recycle printing papers, but just for environmental reasons.
5) Big players are not negotiating and small players are no more to negotiate.

Though some of us interns have tried to find ways to cut costs; best one was to circulate the same envelope for internal use, eliminating paper use in many reportings, but again it was more for environmental causes.

Prashant said...

Hey Digvijay,

a) How many? It depends on how many they want. Yes I agree that they would not want to hire them as full time employees. Hire Interns with some little prior experience so that they need not be trained separately. On the job training sounds good. OR 1 week training for a 3 month internship is worth it, don't you think?

b)This is a problem when some companies do not have a big enough IT department to develop their own softwares. However, this is a long term solution.
Aren't there any alternate software products available? That seems scary.

c) company culture would be a big issue in implementing this. Although I am sure, only 5% of managers in India would allow something like this to happen.

d) that's great! Its better we start such initiatives now and promote them if they already exist.

-Prashant

sneha ..lazy cat said...

Nice one , and i think very apt for current market conditions .
I absolutely agree with the suggestion to hire interns (for selfish reasons ) .
But seriously when they do take experienced ppl on board as interns ,, it is a net gain for the company as they get these interns cheap as against a full time employee.
MR.Digvijay here mentioned abt interns not understanding the business ,The company could surely identify key positions which involve a lot of decision making and restrict interns to moderately demanding positions and simultaneously chk for potential.
This way the company benefits by reducing resource cost and training costs.

Some companies do believe in hirng freshers as interns as they provide fresh perspectives and there are rigorous selection procedures for the same which pretty much guarantee that OJT clubbed with minimal training like prashant suggested
leads to excellent returns.
Sneha

Prashant said...

@Sneha,

Yes they sure can do that. I did not think of that. Good that the HR person is thinking about it.. ;)

btw, what is OJT?

-Prashant

sneha ..lazy cat said...

On the job training