How outsourcing helped companies survive the 2008 recession?

Sudeep Srivastava September 9, 2022
Outsourcing during recession

If you have been avidly following the news, you are probably aware of the havoc created by the COVID-19 outbreak over the last two years. The world economy, which was quite stable and growing at the beginning of this year, has, unfortunately, hit rock bottom on the top of the stock-market swoon.

We are again standing on the edge of the cliff where a looming recession has come to push us into  an economic downfall, mirroring the situations that occurred in the economic downturn 2008. 

But before discussing any further,  we should first clear the air around the “recession” itself.

What accounts for a recession period?

It is a period in the business cycle that comes at a time when economic activities are in a receding phase. The typical recession examples are the increased unemployment rate, declining average income coupled with consumer spending, peaking business failures, and  crashing stock markets. Nevertheless, recessions are an anticipated occurrence in the modern economy.

Speaking on the business front in detail, outsourcing is one of the things that businesses become more skeptical about during recessionary times. So, we are here to change this perspective and open your mind to the various possibilities you can avail of by outsourcing your IT-based needs during the recession, which also includes hiring a software development outsourcing company.

Companies that survived the 2008 recession through outsourcing

Companies that survived 2008 recession through outsourcing

The skepticism around outsourcing during the recession is quite understandable for many reasons. However, it is also an acknowledged fact that people tend to follow few industry giants’ footsteps.  

So, let’s have a look at some renowned organizations who took  into account the advantages of outsourcing when the  effects of recession were forcing them to lose money.

Apple Inc. has been known to outsource manufacturing from China; however, some are not aware of the fact that one in every three Apple engineers is outsourced. And the company continued its practice while the global crisis of 2008 was going on. In fact, till date, Apple still practices manufacturing and IT outsourcing.

Another company that  has created a lasting impact in the tech world, is IBM. While the company itself  knows the importance of outsourcing for many purposes, it also outsources its needs from other countries and partnerships. In 2008, IBM signed various outsourcing contracts – a fact that can put many minds at ease.

Another company in the list to do IT outsourcing is Cisco Systems. The company sailed successfully by downsizing and outsourcing during economic downturn. 

What makes outsourcing a time-tested solution during recession?

What makes outsourcing a time-tested solution during recession?

There are several economic benefits of outsourcing that makes it one of the best solutions during recession. 

Can be cost-effective

As opposed to the in-house team, outsourcing in  recession times allow businesses to reduce costs for activities and duties that do not need a full-time team. And since you are outsourcing your part-time needs, you will be able to retain the employees who are more valuable to the company. 

This is something which is also true for mobile app development since the hourly rates for developing mobile applications and digital products, in general, are way cheaper in the East as compared to the West. Plus, you only need to create an app once, so hiring an in-house team makes less sense.

Can  provide necessary benefits to employees

One thing that’s a concern for employees besides getting fired is the loss of benefits, which, to be fair, doesn’t play to the advantage of the business either. So, if you outsource departments such as accounting, HR, IT, and marketing, you can save  the money since you do not have to pay them the benefits and offer them to your personnel instead.

Can improve efficiency in terms of productivity

When a business fires low-level employees (an impact of the global recession), the pool of resources obviously shrinks to the minimum. In  this case, all the low-value tasks, wantingly or not, fall on the shoulder of the higher-level employees, hampering their productivity at best. To avoid such losses, outsourcing benefits in recession will come in handy and pose as a perfect solution, especially for startups or mid-sized organizations.

Helps eliminate over-work for employees

If employees expect one thing after the mass firing due to the downturn, it is the over-workload. It is obvious that responsibilities pile up on their desk with no time to manage things. 

Such situations are catalytic for work stress, which obviously diminishes the potential of a perfectly capable employee. Hence, outsourcing is your ultimate weapon against stress, unproductivity, and all things alike disturbing the smooth workflow of companies.

Get service assistance

Now that we know the outsourcing benefits, let’s look at getting started with it.

Recession or no recession – How to get started with outsourcing?

outsourcing approach

After everything is said and done there comes the question of “Hhow to get started with outsourcing?”.

Especially for those entrepreneurs who are new to this concept, it can be comparatively challenging. So, let’s discuss how you can outsource with effective measures.

Start with research

An obvious one, though, is that you can start your outsourcing process by doing your homework. When you are looking to hire remote developers, browse on the internet and search, read reviews, and last but not the least, ask local businesses for referrals. You can also refer to some esteemed renowned platforms like Clutch for the most reliable choices.

[Also read: Clutch Names Appinventiv a Top Mobile Development Agency for Startups]

Shortlist and interview several companies 

Once you have prepared the list of most viable companies, you can start interviewing them by scheduling a call with each company. If it’s an off-shore software development outsourcing company, then video conferencing is an ideal way to go. It is important at this stage that you state your priorities, vision, and important elements to the companies to get an idea of whether they are fit to be your technology partner or not.

Portfolio is a crucial 

It goes without saying how important it is for every entrepreneur to demand a portfolio from the selected company. The portfolio provides insights into what kind of potential a company holds and whether or not it can fulfill your business needs.

Cross-check through client reviews

It is imperative for you to ask for client reviews since they can help you in comparing the difference between the promises/claims vs reality. Keep this in mind that the best IT outsourcing and mobile app development companies would be more than willing and able to provide reviews. Once these conditions are met, you can seal the deal.

Drop us a line

Now that we have looked into   ways to get started with outsourcing, let’s take a look at a few strategies that could help businesses during a recession. So. without further ado let’s get started.

Strategies to help businesses stay afloat during a recession

Below-listed strategies can help businesses succeed during the financial crisis/recession:

Diversify your products and services

Offering a variety of products and services is a great way to insulate your business from the effects of a recession. When customers have fewer discretionary dollars to spend, they may be more likely to stick with the brands and businesses they know and trust. If you can offer something new that meets their needs, you’ll be in a better position to weather the storm.

Cut costs and increase efficiency

One of the best ways to stay afloat in recession times is to cut costs wherever possible. This may mean downsizing your office space, eliminating non-essential employees, or streamlining your operations. Any savings you can realize will help to offset the decrease in revenue that is typical during a recession.

Build up your cash reserves

Another key to weathering a recession is to have a strong cash reserve. This will give you the flexibility to make necessary investments or take advantage of opportunities that arise during difficult economic times.

Focus on your core customers

During a recession, it’s important to focus on your most loyal and profitable customers. These are the people who are most likely to continue doing business with you even when times are tough. By providing them with excellent service and value, you’ll increase the chances that they’ll stick with you when the economy improves.

Invest in marketing

Many businesses cut back on marketing during a recession, but this can be a mistake. Marketing is essential for keeping your business top-of-mind with customers and attracting new business. If you can find creative ways to market your business on a tight budget, you’ll be in a better position to weather the storm.

Strategies to help businesses stay afloat during a recession

By following these tips, you can give your business the best chance of success during a recession. While there’s no guarantee that your business will thrive during tough economic times, taking proactive steps now can help you weather the storm and come out stronger on the other side.

How has modern-day outsourcing evolved since the economic recession 2008? 

Almost fifteen years have gone by, so naturally, many trends have emerged in the outsourcing from  great recession.

To start with, ‘recession-proofing’ future outsourcing contracts are a thing now. Meaning, contracts that are created now are more flexible keeping the point of the looming recession in focus. Back then, the contracts were drafted restrictively that exploited the imbalance of bargaining power.

Robotic Process Automation technology is yet an incredible change that is capable of transforming the outsourcing potential benefits by bringing the costs down to a particular extent. Since, on the mobile app development front, a pretty high amount of data is exchanged between the company and the clients regarding designs, prototypes, MVPs, and whatnot of the product. However, this data can be easily managed now with the advent of RPA and AI technology.

How can Appinventiv help you?

Appinventiv is a leading digital product development company with a distributed agile team of professionals. Our team functions across multiple locations instead of one office space, eliminating the risk of getting affected by economic situations. 

Recession or not, we never compromise on the quality of our services and products, posing as an ultimate choice for your outsourcing needs. Contact us for all your outsourcing needs and build the business of your dreams. 

Frequently Asked Questions

Q.  What is outsourcing in business?

A. Outsourcing is a process where organizations hire other service providers for certain business tasks and purposes.

Q. Why is outsourcing a good business strategy during recession?

A. Many small businesses face tough choices during a recession. One way to cut costs and remain competitive is to outsource certain business functions. Outsourcing can help businesses save money on labor, and other costs associated with running a business. In addition, outsourcing can help businesses tap into new markets and gain access to new customers. Also, outsourcing can help businesses improve their quality of service and take advantage of new technology. When done right, benefits of outsourcing for small businesses and big tech giants can do wonders in the tech world to survive recession.

Q.What businesses do well during recession?

A. One of the biggest beneficiaries of recession is the outsourcing industry. Companies are looking to cut costs, and one of the easiest ways to do that is to outsourcing non-essential functions. This can include anything from customer service to manufacturing. As a result, demand for outsourcing services typically increases during recessions. 

Another industry that does well during tough economic times is the discount retail sector. Consumers are looking for ways to save money, and businesses like Dollar General and Walmart are able to provide low-cost alternatives to more expensive retailers. 

Finally, another business that tends to do well during recessions is the home improvement industry. Homeowners are often reluctant to sell during economic downturns, and instead focus on making improvements that will increase the value of their homes. Consequently, businesses that provide home improvement products and services often see an uptick in business during tough economic times.

Sudeep Srivastava
Co-Founder and Director
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