Outsourcing does not always bring costs down. At times, it could increase your costs in the long run. In our case, we did not change any outsourcing agreements. Instead, we moved from an onsite model to an offsite support model wherever possible. SearchCIO.in: What is your opinion about downsizing to reduce manpower costs?
Our entire group (including HyperCITY and Shoppers Stop) does not believe in cutting costs through employee retrenchment. We did not follow this even in the toughest of times. You can explore different ways of resource optimization. SearchCIO.in: How can CIOs meet business needs considering the stringent IT budget restraints?
Look at avenues within your business where automation is feasible, and automate them one at a time. It is also a good time to revisit and reassess some of your key business processes. During this process, you might face surprises in terms of additional checks that have crept in over the period. Most often, these are unnecessary processes which add additional overheads and costs. Eliminate such processes.
We took only one major measure to counter recession. We re-negotiated the existing rates with our vendors. The business environment was equally bad for our vendors, so most of them were willing to reduce prices. Whenever the strategy did not work, we tried to cut costs by rationalizing resource usage. Most of the vendors supported us and we gained considerable savings.
I would advise the CIO to prioritize IT investments keeping the business in mind. He should be careful not to cut costs in areas that impact business outcomes. This can be achieved only by keeping a close watch on utilization.
On one hand, the CIO should look at reducing IT costs. At the same time, he should be able to maintain infrastructure and also keep his team active. If you decide not to take up projects as a measure of reducing expenses, there will not be any projects for the IT team. This can be demoralizing for the entire team. So it's essential to look for automation opportunities and try to tweak processes to optimize them.
In HyperCITY, processes and applications which impact the customer were given top priority while planning the IT budget. All the future projects that directly or indirectly affect customer services had to be top priority. In terms of infrastructure investments, we were particular about the fact that 'we will not compromise'.