How recruitment process outsourcing helps businesses thrive during a recession
In the event of a looming recession, the key to staying afloat is preparation. Learn how recruitment process outsourcing (RPO) pulls on a strategic capability to fulfill and meet demands for businesses during periods of economic stress.
What is a recession?
A recession is a significant decline in economic activity which lasts for months or even years. It happens when a nation’s economy experiences negative gross domestic product (GDP), increasing levels of unemployment, falling retail sales, and industrial production for an extended period of time.
What are the indicators of recession?
While there’s no way to predict the future, certain signs can forecast an approaching economic ‘hurricane’. Learning these signs could be an advantage as it helps you build flexibility and strategy for your business and prepare for what lies ahead.
- Global economic decline
- Increasing number of unemployment
- Slow-down of small businesses
- Contracting measures of income
- Stock market crash
Layoffs, hiring freezes
With the cost of capital starting to rise, tech and other sectors are pulling back on growth—prompting companies to enact layoffs, force hiring freezes, and rescind job offers.
Since May, tech startups have laid off about 27,000 employees. Tesla CEO Elon Musk, who said that he had a “super bad feeling” about the economy, announced the company’s intent to cut about 10% of its workforce.
In other news, Microsoft said in May that it would slow hiring in its software group. Meta also announced in the same month a ‘hiring freeze’ for some of its teams.
Ridesharing app company, Uber, also decided to pump the brakes for hiring due to a ‘seismic shift’ in the market.
Last month, the cryptocurrency platform, Coinbase, announced its decision to extend the hiring pause for both new and backfill roles and rescind a number of accepted offers due to the current market conditions and ongoing business prioritization efforts—letting go of around 18% of its workforce.
Likewise, Fintech revealed the company’s plan to lay off a certain percentage of its global workforce.
Among firms that have also announced cuts and layoffs were Robinhood, Netflix, Peloton, Cameo, Noom, On Deck, and Workers.
Companies that survived 2008 recession through outsourcing
In 2008, as the economy worsened, internal teams were laid off. In turn, the option of using outsourcing partners as opposed to making new hires became the most in-demand, practical solution for businesses and organizations.
Here’s a look at some of the industry giants that have turned to outsourcing when the declining economy was forcing them to lose money.
- Apple Inc. – while Apple has been known to outsource manufacturing from China, some are still unaware of the fact that one in every three engineers of Apple is outsourced. The company continued this practice during the Great Recession. In fact, today, Apple still practices IT and manufacturing outsourcing.
- IBM – one of the big players in the tech world that have created a huge impact in the industry. While the company itself offers outsourcing for a variety of purposes, it also outsources its needs from foreign countries and partnerships. During the 2008 recession, IBM signed a number of outsourcing contracts.
- Cisco – during the economic downturn turmoil, Cisco managed to thrive by downsizing through outsourcing. Cisco has effectively utilized partnership and outsourcing strategies to establish market leadership and expand into new markets.
What makes outsourcing a great solution to stay afloat during a recession
Outsourcing during a recession can help you and your employees survive the economic downturn.
Here’s a look at the benefits of outsourcing during a recession:
- Lower costs – outsourcing allows you to reduce costs on duties that do not necessarily require a full-time team. Because of the lowered costs, you are able to keep the people who are crucial to the business and the ongoing operations of your company.
- Less stress for employees – during a recession, it’s common for layoffs to result in additional work for the existing employees. Outsourcing is a great way to prevent further stress related to work overload.
- Better benefits – cutting costs during an economic decline can lead to loss of benefits for many employees. If you outsource functions of your team such as accounting, marketing, or IT, you won’t have to worry about paying their benefits. Thus, you can keep providing benefits to your remaining staff.
- Improved economic efficiency – when work duties get shifted among a pool of staff that has dropped due to a recession, higher-level employees may end up wasting valuable time on low-value tasks. Outsourcing helps prevent this dilemma before it even affects small and medium-sized businesses.
Tahche can help your business survive this recession
The 2008 global recession proves that outsourcing could be a great solution to remain resilient and thrive during periods of economic stress.
The key is finding an outsourcing partner who could provide you with the best solution and help you achieve your business goals.
At Tahche, we help small and medium-sized companies in the US build their offshore team and support their business process through our offshore staffing solutions. We help companies get the right people for their business and handle the intangibles of their offshore office so they can focus more on growing their core business.
With over a decade of experience and an in-depth understanding of the US market and our clients’ needs, we deliver tangible results that are sure to bring guaranteed success for our clients and their business.
Call us today and we’ll take care of everything else to help make your business recession-proof!
