Reducing Labor Costs: A Proactive Approach to Workforce Rebalancing & Restructuring
In an increasingly competitive business environment, organizations are constantly on the lookout for strategies to cut costs. When a large Software as a Service (SaaS) client purchased by a private equity firm needed to optimize their labor expenditure swiftly without compromising their strategic product roadmaps, they turned to Purple Koru. This article outlines how we used a data-driven approach to achieve remarkable outcomes.
The project had three main objectives:
Aligning goals and actions with strategic investment priorities
Implementing immediate tactical spend reduction to ensure in-year savings
Adjusting the organization and onshore-offshore mix to ensure longer-term goals are met
Purple Koru achieved these by focusing on three key areas:
Job eliminations and contractor reductions
Offshore and Outsourcing Strategy
Organizational redesign involved simplifying accountabilities, reducing layers, and instigating an automated realignment of all current resource plans, budgets, and goals. This approach was instrumental in facilitating the reorganization of the company.
Job Eliminations and Contractor Reductions
In an effort to immediately cut costs, we focused on job eliminations and contractor reductions. While this might seem harsh, it was a necessary step in the process of reducing labor expenditure.
Offshore and Outsourcing Strategy
We also developed an offshore and outsourcing strategy. This entailed defining which roles should remain in a captive offshore center versus those that should be outsourced to a strategic partner.
Outcomes of the Restructuring Strategy
The strategic restructuring and rebalancing of the workforce led to substantial savings. Within the first six months, Purple Koru had helped the company save over $30M in annual labor costs.
Additionally, a new, simplified organizational model was implemented. This model promoted aggressive outsourcing of non-strategic work, allowing the company to cut costs further.
The company also achieved outsourcing plans from request for proposal (RFP) to onboarding in just six months. This included detailed slates and transition plans.
Implementation Strategy: The How
In executing the restructuring strategy, we engaged in strategic goal shaping, workforce slate orchestration, and offshore and outsourcing planning.
Strategic Goal Shaping
Purple Koru compiled an exhaustive view of all expenses and resources by function and product. This provided a segmented view of their functions, applications, and products into strategic 'investment zones.' These zones were divided into four categories:
Grow: Areas with significant planned revenue growth. These areas were not reduced or outsourced.
Modernize: Areas requiring strategic investments. These were not outsourced.
Sustain: Areas where discretionary spending was reduced aggressively. These were key targets for outsourcing.
Retire: Areas where all possible spend was eliminated.
Workforce Slate Orchestration
Job eliminations and contractor terminations require speed, accuracy, and privacy. Purple Koru built a specialized tool that allowed each leader to determine their actions, calculate exact savings against targeted goals, and automate ongoing consolidation for HR governance and execution.
Offshore and Outsourcing Planning
Detailed offshore and outsourcing slates were built based on our expense management solution and the investment zones. These drove detailed RFP requirements, sizing, and transition plans.
New Org Design and Pivot
In parallel with these actions, a new organizational structure was defined for the entire Product and IT organization. The entire expense management planner, budgets, goals, and slating actions were seamlessly transitioned to the new organizational structure within a week.
Results of the Restructuring Strategy
The company now has detailed action plans, including names, timing, and savings for hundreds of actions. These actions include job elimination, offshore migration, and outsourcing. The process was managed with accuracy, privacy, and speed, ensuring proper HR and legal governance, coordinated notifications, accurate migration plans, and precise outsourcing RFP data and transition plans.
The restructuring strategy was integrated with the foundational expense management solution. This integration enabled automatic tracking and reporting of results, deviations from plans, and actual savings.
The changes were coordinated across multiple teams and central functions. This enabled a well-planned and orchestrated series of change waves, minimizing organizational disruption.
The technical solution was constructed in less than four weeks by Purple Koru. Our experienced leadership managed the process, the update cadence, the quality reviews, and solution adjustments as required.
In conclusion, with a strategic approach to workforce rebalancing and restructuring, companies can effectively optimize labor and significantly cut costs. As demonstrated by the case of the SaaS client and Purple Koru, a data-driven approach combined with a focus on strategic investment priorities, immediate tactical spend reduction, and adjusting the organization and onshore-offshore mix can yield significant results.