How Your Boss Is Preparing for a Recession
As senior business and IT leaders, CIOs were told they should proactive in helping their organizations ride through economic downturns at Forrester's Jan. 31 teleconference on preparing for a recession.
"We're expecting a slight slowdown in the economy, but not a recession," said Andrew Bartels, vice president and principle analyst for Forrester.
However, the risk of an actual recession has increased, he continued, thus it is best to be prepared with a good answer when the CFO asks where expenses can be cut. The good news for IT professionals is that reductions in headcount are neither anticipated, nor recommended.
"With the exception of the two industries-housing and credit-that are being the most hammered right now, nobody is looking at making job cuts right now. What CIOs are going to try to do is shift their focus from that of six months ago-how they were going to hire people, where they would get them-and instead of going after people, going after deferrable capital purchases," Alex Cullen, vice president and research director of Forrester told eWEEK in an interview.
Making drastic reductions in headcount is ill-advised because it will make it harder for IT departments to get back on their feet once the period of negative economic growth has passed.
"The worst thing you can do is get so focused on cuts that when you get out of the recession, you don't have what you need to move the business forward," said Bartels.
However, this doesn't mean that certain IT roles are not at greater risk than others. Contract employees have long been the first places CIOs look when they need to trim excess fat, but Forrester warns against doing this without caution.
"On one hand, CIOs view contractors as a buffer. On the other hand, they'll be reluctant to make big changes. But contractors will be affected before permanent employees will, and those in more commoditized areas like help desk or application support are at greater risk," said Cullen.
Offshore outsourcing has also been what CIOs considered an easy place to save a few pennies when budget constraints came into play, but there are several factors which make it less appealing than it once was. For example, many CIOs have been burned in recent years by offshored relationships. In addition, they stand to save less money than they previously had.
"Our current economic condition is almost marked by the declining dollar, which makes offshoring less attractive. CIOs need to be very cautious before trying to save money by offshoring," said Cullen.
Right now, however, most IT professionals won't be seeing any signs of recessionary cutbacks, but those in the very top echelons of a business are currently making contingency plans. An employee might get a request to identify the projects they are working on, and how close they are to completion. CIOs are going to try to come up with ways to save money.
"The best thing to do is find a way to get on those cost-cutting projects, be as central to helping your business survive as possible," said Cullen.