Large firms should concentrate on making significant IT
cuts to stave off the effects of a recession, says
consultantThe Hackett
Group.
As the recession looms, said Hackett, many companies are
reacting by mandating across the board cuts in key general and
administrative (G&A) areas, such as IT, finance, HR and
procurement.
But Hackett research says firms should concentrate on making
easier savings in IT, while "minimally affecting service delivery
and the ability to provide strategic value".
According to Hackett, typical Global 1000 companies can generate
£100m to £200m per year in savings through targeted G&A cuts,
an amount that represents up to 45% of the potential decline in
pre-tax profit due to a recession.
The cost reduction opportunities are focused in two primary
areas. More than 40% of the potential savings, or up to £85.5m per
year, can come from IT alone. And more than a third, or up to
£72.5m per year can come from finance, said Hackett.
Hackett says large firms should focus on job cuts, reduced
spending on technology and the selective globalisation of business
processes in these two areas to achieve the necessary savings.
Loss-making
Citigroup
has announced £1.5bn cuts in IT over three years.
IT job cuts on cards as BP axes 5,000 >>
Ford Europe's blueprint for $75m IT cuts