Having survived (and not survived) close to 15 “reorganizations” with a resulting reduction in force, I believe they were initiated with good intentions for the company.  The road to hell and all of that aside, several of these were nothing more than exercises in creative accounting.  This year’s ledger will show a reduction in costs while still seeing the same revenue.  They did not take into consideration next year’s financials or growth.  Many were quickly followed by hiring sprees.  I was once told that it was more expensive to find a position for someone in a different group/role rather than RIF’g them and giving them an “opportunity” to find a position within 60 days.

They only see short term benefits of reducing headcount, but do not change overall business goals.  Inevitably, staff needs to be ramped up to meet demand, thus raising the cost once again.

Reduced team sizes are still expected to perform the same duties of a larger organization.  This results in a direct impact on delivery/quality.  People are stretched too thin, mistakes are made, morale decreases.

Depending on the business/IT plan, outsourcing/contracting savings sound good, but generally do not include the total cost of ownership (TCO) required to create NEW products/features.  You still need to invest in training product domain knowledge, rampup… Without strong internal knowledge, you invest the technical direction to a 3rd party whose pay increases proportionately to the amount of work they do.  So there must be budget for a core group of subject matter experts (SME) who can interpret business direction, define a compatible IT direction and direct the vendor.  In order to achieve long-term benefits, you must invest in automation (code reviews/standards enforcement, testing) and agile processes… These will reduce volume of resources required, but it does increase the short-term need for higher quality individuals both with the vendor and internal staff.

True long term cost reduction is obtained via quicker time to market and increased quality of production level code.  Reducing the staff to do this should be done with a well thought out plan with these goals in mind.  It may require changing out your staff to achieve this, if they are not willing to help achieve these goals.

Outsourcing isn’t bad.  Many of these companies perform IT at a level most companies do not have the time or finances to evolve their internal organizations to.  They invest in reusable assets, automated tools for all facets of product development and testing.  Additionally, their labor in offshore, onsite/offshore models are incredible competitive.  Further, they are incredible solutions for lifting/reducing cost of maintenance of legacy or repetitive processes/jobs, allowing a companies staff to focus on new/extending applications.  Companies should focus on strategic resourcing model and not quick gains to make shareholders happy. 

it’s a marathon, not a sprint

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