Be an Opportunist! Outsource To Beat the Consequences of Recession

Summary: While businesses are concerned about how to thrive through Recession 2023, we are here to tell you about the most effective trick to keep your operations rolling. Outsourcing during recession could be your cheat code to finding opportunities within disruption.

Amidst raving speculations about an impending economic downturn, a recent insight from JP Morgan has predicted ‘a mild recession’ in 2023, which may well drag into 2024. Businesses around the world are highly apprehensive about the impact of recession, and most have resorted to mass layoffs as means to stabilizing their operational expenses.

While cost cutting is the most common resort to thrive during economic instability, you must keep the ball rolling! Most CTOs are asking themselves an unavoidable question now:

What could be the consequences of a recession in 2023?

How to survive a recession without breaking the bank?

And,

How to make money during recession?

What if I told you that software development outsourcing can help your business during recession!

It’s very likely that you are mentally disagreeing with this statement. So, let’s get straight to the point and explore how outsourcing during recession can save you some money.

The most disturbing fact about the consequences of recession is that it reduces economic activity. In this cyclic effect, consumers tighten their pockets, capitals become expensive, businesses stagnate and ultimately incur unsurmountable losses.

And the worst part? No financial expert can exactly predict the length till which a recession may last. It may

If you have been thinking how long the recession 2023 may last, there’s no definite answer to it. However, there are ways that outsourcing can be an answer on how to benefit from recession.

Talking about the effects of outsourcing, American investor, author and podcaster, Tim Ferris once said, “There are people I have outsourced to in India who now outsource portions of their work to the Philippines. It’s the efficient use of capital, and if you want the rewards of a free market, if you want to enjoy the rewards of the capitalist system, these are the rules by which you play.”

Recession In Business – How It Works?

The University of Michigan’s Survey Research Center recently measured consumer sentiments. The survey revealed that, “High prices continue to weigh on consumers despite the recent moderation in inflation, and sentiment remains more than 22% below its historical average since 1978. Combined with concerns over rising unemployment on the horizon, consumers are poised to exercise greater caution with their spending in the months ahead.”

While SMBs are already experiencing a sharp decline in the spending habits of consumers, large-scale companies aren’t really far from witnessing spending cuts in spite of their financial cushions.

Let us first understand how recessions happens – there are majorly five cycles to an economic downturn:

• Peak — High inflation and skyrocketing prices of essentials
• Recession — Lower sales figures, job losses, less employment and meagre income
• Trough — The lowest point of the recession
• Recovery — The rate for essentials begin to stabilize and cost of living starts becoming affordable
• Expansion — Availability of resources at competent rates allow businesses to sustain and make a mark in the new economy

Now, let us get insights on how recessions affects your business.

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Effects of Economic Recession on Business

Mass spending checks from the consumer often puts entrepreneurs in a tough spot. And in order to save the business from incurring severe losses, business owners often are often required to make certain unpopular choices:

• The first strike of the axe often comes down on marketing expenses. From reducing marketing activities to closing off all marketing activities, which results in lower visibility to a dwindling consumer base.
• Layoffs in mass numbers to reduce operational costs are also one of the primary strategies adopted by many businesses. This increases pressure on existing employees, along with low or no financial growth.
• Hiking up product prices, to reducing size or compromising with the service quality and benefits to marginalize operating budgets in case of sharply decreasing revenue.

While going by these traditional cost cutting measures might look like the easiest of options, there are businesses that have proved that considering the downturn as a fresh opportunity, businesses can reap the benefits of a recession.

Let’s explore!

How to benefit from A Recession?

Anup Srivastava, professor and Canada research chair, Haskayne School of Business, University of Calgary recently mentioned, “Visionary organizations treat this kind of moments as an opportunity”. He adds, “Some things are available at much lower prices. Assets are available, companies are available.”

Shift in Consumer Behavior

Economic downturn makes people mindful of their expenses. When consumers cut down on spending, they generally look at investing in products or services that offer more value. So, if you have been constantly scaling up your products and services to meet the demands of the market and offering higher value than your competitors, you are at a better place that a lot more businesses.

Headcount Optimization

Only a recession in business gives pushes you to the edge and consider which part of your business functions are actually bringing you results. It becomes easy to filter out departments that need more of your focused attention and the parts you can delegate to outsourced services at reasonable costs.

Less Competition in Talent Market

While fighting over IT talent is an everyday thing. Economic recession slows down the market because most businesses are after saving themselves from major losses. If you are an opportunist, you can come across some of the best talents who have been victims of job loss.

Less Competitors: With a downturn in place, most businesses that are out of money will move towards shrinking themselves. This means it could be the right time to grab larger market share for your business with fewer competitors.

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Outsourcing During Recession – Can It Solve Your Woes?

There’s an eternal history of talent gaps in the market and budget pressures during recession makes it even more difficult to fill in for crucial roles. However, a lot of businesses stay away from software development outsourcing due to some age-old myths.

Let’s break them for you!

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Mark Campbell, CIO, EVOTEK Labs, recommends ‘expert-as-a-service’, which essentially is outsourcing dedicated professionals at flexible on-demand collaboration models to ‘plug in outsiders with right skills into right roles’. He comments, “I don’t have to go through recruiting and a bidding war.”

A business of any size and scale can benefit from this approach when operating with budget constraints and experts-as-a-service can bridge the gap, he adds.

Here are some brilliant reasons why might developed economies want to outsource during recession:

Reducing Burnouts on Existing Employees

To stabilize your operational costs, you might have had to let go of some resources. This however, is a short-term strategy. But in the longer run, it means additional load on your existing employees, which eventually will cause burnouts. Recruiting outsourced resources and offshore services for some business functions will keep your roll out at the same scale, albeit at lower cost.

Flexibility in Resourcing

Having an in-house team means having to incur a considerable infrastructural cost. Besides you are bound by labor laws when it comes to reducing your workforce. With outsourcing from a trusted software partner, you can have access to an expert talent pool which you can increase or decrease at your convenience.

New Labor Markets

The concept of outsourcing might look counterproductive to you when trying to cut down on operational costs. But if you take a closer look, the cost of hiring offshore developers through outsourcing will be a cheaper alternative than operating with an in-house team in a high-cost city.

Established Processes

A ‘right’ software development outsourcing partner like Radixweb that has been acclaimed by several global platforms, always works with a result-driven approach. Offshore firms with a broad strategic vision, do not just come with the best-fit resources but have deep expertise in advanced trends and technologies. This gives you the flexibility to delegate your development concerns to your software partner and focus on the most essential core functions of your business.

Increase in-house Team Capabilities

What if I told you that some software partners take an outsourcing approach with which you can even upskill and build more capabilities with your in-house teams? With team augmentation services from offshore partners, outsourced experts can work as another arm of your business, seamlessly merging with your in-house teams.

Now that you are considering outsourcing as an approach to thrive through recession, let’s discuss some effective ways to up your outsourcing game.

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How Should You Outsource During Recession 2023?

Software Development Outsourcing is no longer just a business strategy, but a necessity to thrive economic disruption for digitally aligned businesses. But there are some tried and tested strategies which you must keep in mind:

Define the Scope of Work Clearly

You need map correctly the functions that can be delegated to trusted software partners. It can be a set of tasks or entire departments – it all depends on what you see value in and what you can afford. This will help with cost estimations for your overall operational expenses.

Cost Estimation

Speak to multiple vendors for the same range of services and analyze the costs of the services they are willing to offer. Once you have a price comparison, you have better insights into your affordability.

Check Market Reviews

This is the most crucial stage for comparative analysis where you check out third party reviews, client testimonials, the kind of projects they have handled and the level of innovation they have brought in.

Choose the Right Engagement Model

Most software service providers have a wide variety of collaboration models for outsourced services. Choose the best-fit collaboration model from your Offshore Development Center (ODC) that suits your project type and offers maximum flexibility.

Sign an NDA

The right software partner will not hesitate signing a no-question-asked NDA and will have a transparent contract. Define the scope of work, deliverables, timelines and cost budgets in your contract to secure your deal.

Radixweb Can Help You Thrive Recession 2023The right software partner will match your pro-growth business and build you recession-proof solutions. Radixweb is a highly acclaimed software outsourcing firm that has helped over 3000+ businesses pivot their digital journeys towards digital growth.With over two decades of experience, we have worked with businesses across 25 nations and surpassed their expectations as a software development outsourcing firm.During the 2020 economic disruption, we helped our clients remain operable throughout the turbulence with our dedicated support. Through constant upskilling and best industry practices for software development, we have ensured both horizontal and vertical growth for all our stakeholders.Are you asking yourself, “Will outsourcing work for me?” Get in touch with us for a quick strategy to beat this economic volatility.Let’s make your business recession proof!