Fortifying Innovation Amidst Downsizing: 3 Effective Software Outsourcing Strategies

Companies are facing constant challenges and uncertainties right now. Many technology companies have been forced to downsize this year, with more than 155,000 technology workers laid off so far in 2023, according to Crunchbase News.

Downsizing can threaten product innovation and company growth. A study conducted by Harvard Business School on one Fortune 500 tech company found that after the company cut its staff by 15%, the number of new products it created fell by 24%.

One practical approach to safeguard innovation after downsizing is through strategic software outsourcing. When done correctly, tech outsourcing can advance a company’s project goals by allowing teams to focus on core services, enhancing efficiency through automation, and even performing critical tasks.

Strategy #1: Focus on Core Services

It’s essential for tech teams to focus on their core competencies after a company downsizes. Indeed, a team’s unique skills and expertise help set a company apart from its competitors.

Marko Knezovic of Kibernum says it all comes down to allocating the right resources. “Companies need to focus on core services, identifying which of them are critical to the company’s operation. By doing this, companies can use resources effectively.”

By focusing on core services, businesses can ensure that their in-house teams work on high-value tasks that directly contribute to product innovation.

Outsourcing non-core functions, such as application maintenance and software development tasks, allows companies to free up internal resources and direct their efforts toward enhancing their core product.

“Outsourcing gives companies access to a diverse talent pool which ensures that tasks are taken care of by experienced professionals,” Marko says.

Strategy #2: Invest in Automation

Automation is a powerful tool that can streamline workflows, increase productivity, and reduce operational costs. Automating specific software tasks becomes even more critical when companies cut internal teams or slash budgets.

Software outsourcing partners often have access to cutting-edge automation tools and methodologies, making them an excellent resource for companies looking to integrate automation into their operations.

Marko says outsourcing some automated software tasks can “help achieve a more flexible and adaptable mindset, encouraging innovation and creative problem-solving.”

By embracing automation and working with software outsourcing partners who leverage these technologies, companies can achieve higher productivity, faster time-to-market, and better project resource allocation.

And research shows that employees respond well to automation. A Salesforce survey found that 89% of workers were more satisfied with their jobs, and 84% were more satisfied with their company after implementing automation into their workflows.

Strategy #3: Outsource Critical Tasks

When done strategically, outsourcing critical tasks can substantially benefit companies, especially during downsizing.

For example, software outsourcing allows companies to convert fixed costs into variable costs, providing financial flexibility. Organizations can quickly scale up or down based on project demands, adding or removing services based on their immediate needs.

Companies can also avoid significant investments in hiring and training by leveraging the resources of outsourcing partners.

“Outsourcing provides companies with a cost-effective solution during difficult economic times by reducing labor costs, eliminating recruitment and training expenses, reducing overhead costs, and allowing companies to focus on core competencies,” Marko says.

Not only can organizations use outsourcing to tackle critical tasks efficiently, but it can also improve problem-solving and streamline processes.

Marko says outsourcing critical tasks “Helps bring insights from outside the company, which helps teams think out of the box, find new ways of developing processes, and encourage experimentation and prototyping. This is a very important point because companies can quickly test ideas and concepts with external partners in order to find the best solutions.”

When partnering with reputable outsourcing providers, companies can share risks and responsibilities, leading to a more balanced approach to product development and innovation.