Developing a cost-reduction strategy that maximises efficiency without compromising growth potential is a tricky proposition. You have to resist pressure to make indiscriminate cuts or slash headcount across the board. Your job is to trim the fat - not cut into the bone. You need to identify core competencies where efficiency can be improved, trim and consolidate non-core functions, and reinvest the savings in critical business assets. And even before you start, you need buy-in from your company employees.
Outsourcing might seem to be an easy answer. In many industries, contracting out non-core business functions such as human resources, billing, or payroll to third-party providers is gaining acceptance. Some companies have even outsourced parts of their operating processes. But once a company decides to outsource, it also exposes itself to new forms of risk. For example, an inferior supplier of outsourced services can, overnight, inflict lasting damage on a company's relationship with its suppliers and customers.
So whatever route you take, you must proceed with caution - and expert counsel.
How PwC can help you
At PwC, we have considerable experience in planning, implementing and evaluating cost reduction and cost containment programs. We can render formal opinions on business and asset values for tax and accounting purposes, business transactions, and joint ventures. And we can provide expert advice on:
- Capital structuring and cost of capital
- Downsizings and carve outs
- Employee benefits and compensation programs
- Financial function and IT effectiveness
- Location planning
- Offshoring and global supply chain
- Outsourcing
- Taxes
