With energy prices and inflation surging, supply chains in disarray, COVID-19 lockdowns in China, war raging in Ukraine, and the U.S. stock market in free fall, the risk of a recession grows by the day. Recently, both Walmart and Target posted a stunning drop in earnings as their operating costs spiked and consumers avoided splurging on big-ticket items. Even in an environment where labor is tight, high-flyers like Netflix are now laying off employees, signaling that other companies may soon follow suit.
In mid-May, Lloyd Blankfein, the former CEO of Goldman Sachs, stated there is a “very, very high risk” that the U.S. economy will slide into recession. At that point, the focus shifts to how bad it will be, how long, and what the best ways are to mitigate the impact on your business.
It’s clear that businesses, both public and private, must get ahead of this oncoming economic downturn. And one of the best ways to do that is to cut costs, especially as corporate spending is likely to be scrutinized like never before. Companies must focus their spending on efficient operations and look for places to save so they’ll have more money to allocate where it can have the most positive impact.
Recessions move quickly, and you can’t afford to be late when it comes to making the necessary adjustments. Here are four ways companies can stay nimble, survive the tough times, and emerge stronger on the other side.
1: Focus on your core competencies. More than ever, companies need to focus on what is core to their business—and partner with others on noncore capabilities. For example, there’s no question that customer experience (CX) is critical to success. But does it make financial sense to operate your own call center? Can you build an elite CX team and implement powerful customer engagement solutions in-house that truly move the needle in terms of brand acceleration and customer acquisition? For most businesses, the answer is no.
Now is the time to improve your CX—or risk losing customers to more nimble competitors. By investing in the quality of your customers’ journey, you reap the rewards of their loyalty. As KPMG reports, when customers are loyal to a brand, 86% will recommend the brand to friends and family, 66% are likely to write a positive online review after a good experience, and 46% will remain loyal even after a bad experience.
That’s why it makes sense for you to partner with a CX provider that has top-notch expertise working with the world’s leading brands. Look for providers that can deliver new services and technology offerings to clients that help take their business to the next level. The best providers, for example, offer a broad range of integrated services, a strong employee-first culture, tech-enabled solutions, and critical business insights and analytics to engage your customers on a more personal level.
2: Expand your hiring horizons. The labor market is now more fluid. Are your salaries matching its movements? Right now, a company in Colorado spends about $150,000 annually on a single software developer. In a place like San Francisco, it’s more like $250,000 per year. Smart companies are starting to challenge what they are doing and why they are doing it. They are asking themselves: Does this role really need to be located in Colorado or San Francisco?
The reality is that there is skilled talent spread around the world that will work for a fraction of the rate asked by workers in U.S. tech hubs. Of course, finding this global talent is easier said than done. That’s why many organizations are now partnering with staff-augmentation providers that help source the best talent and resources anywhere on the planet and do it on demand.
Staff augmentation also offers big cost savings—often at a 5–8 times savings per role—and can help your business extend its team with candidates who fit your skill requirements and brand culture. With access to highly skilled talent, your business can evolve and adapt its team in real time, allowing you to move effortlessly from project to project and attract new customers.
Especially in high-demand areas, such as IT/engineering, information/cybersecurity, supply chain and logistics, and accounting and finance, staff augmentation offers a compelling option and can have a dramatic impact on your bottom line.
3. Provide flexible staffing support. In an economic downturn, it’s common for companies to require their employees to take on many more roles and responsibilities. This can really hamper employee morale. You may burn out workers by asking them to double or triple their workloads. As your business ebbs and flows, you need to be able to match your ups and downs with the right staffing resources at the right time.
By tapping into the services of an outsourced staffing provider, you not only get access to highly skilled personnel who can provide equal and oftentimes better support during very busy periods but also can alleviate some of the pressure your existing employees are feeling and preserve morale.
4: Bolster your balance sheet. The companies that are truly adapting are looking at everything differently because they have to. Their customers and their investors, whether in the public or private markets, demand it. One way to adapt is to move labor off your balance sheet and onto the balance sheet of an outsourcing partner.
How is this done? Let’s say you have an internal call center team. There are outsourcers that will hire those employees so you can move them—and the operating costs associated with them—off your balance sheet while you retain their services. The right outsourcing partner can build and maintain a highly engaged contact center, reduce employee churn, and improve results for your business. By removing the burden of hiring, training, and retaining the best agents, you can reserve your budget and resources to hire and retain top-flight employees for other critical functions in the organization.
This also removes deployment and commitment risk. And it makes your costs more predictable. It takes the guesswork out of your budget and ensures that you always have the right resources at the right time.
The world now is an obstacle course full of challenges that can bring down an entire organization. To navigate it successfully, you must be agile and able to pivot quickly. This will be essential to surviving and thriving in today’s—and tomorrow’s—volatile economy. It is only those companies that adapt and think differently that will remain on their feet and, indeed, gain competitive advantage for years to come.
Doug Hoffschwelle, General Manager & SVP, Hypergrowth CX at ibex