Make your costs smart

By Maxim Stepanov

We are hearing from many sources that the world economic crisis has reached its bottom. Over the last 12 months, companies have examined each and every cost in their operation, looking for any expense to eliminate or decrease. Seven out of 10 businesses have reduced personnel head count, salaries and benefits on a limited or permanent basis, to ensure their survival as the global economy spiraled downward. Now, with economic conditions improving and wage demands on the rise again, employers are seeking solutions to keep their fixed costs in human capital at their current levels. Yet, how can this be done when improvements in demand necessitate increases in headcount, salaries and benefits?

Employers have a variety of instruments to “right-size” their labor force as demand in their business goes up and down, as economic conditions fluctuate in their industry and as the availability of skilled labor moves from surplus to shortage. One strategy to cope with these uncertainties is to engage temporary help, lease employees or transfer certain business functions to outsourcing service providers.

Accounting, payroll, clerical services, tech support, call centers and office management are classic examples of cost centers transferred to outsourcing companies by employers to keep their organizations “right-sized” as demand increases. Business process outsourcing services are available in Russia to fulfill these functions, saving time and money on the hiring, training and management of personnel.

Through outsourcing, fixed expenses become variable costs. Transforming a permanent cost into one that can be proactively managed up or down as conditions dictate enables employers to better manage time, resources, capital and cash. Outsourcing reduces clients’ personnel expenses as they outsource only the necessary amount of tasks to get the desired results.

Outsourcing has other benefits. Because service providers are experts in business processes, they have deep knowledge of the most modern management and technology techniques used to manage these functions. Such expertise ensures the continuity of their clients’ business so companies can concentrate their efforts and resources on their profit centers as new revenue opportunities open in the market. Staff leasing and temporary staff services for accounting, payroll and tax declarations are just three of the prime cost centers ripe for outsourcing in today’s market.

In one way, the crisis has taught us to identify employees who are truly critical to our long-term success. Ups and downs in staffing as normal consequences of business cycles really are detrimental to employee morale, to recruiting, attracting, motivating and retaining high achievers. Since no one is immune to the negative effects of downsizing, solutions like outsourcing stabilizes employment levels since employers can shift business functions to service providers. Because of their specializations, they are able to recruit, attract, motivate and retain the high achievers that are needed to make your business a success.

Outsourcing will see new growth as the Russian economy revives. It will become one of the most popular business tools to maintain the stability and effectiveness of the business models of international companies operating in Russia, and Russian enterprises. Outsourcing transforms fixed costs into variable costs that can be scaled up or down as business conditions demand to give companies more flexibility and control over their business.