By CA Ujwal Landge
In the dynamic landscape of Information Technology (IT) projects, effective cost management strategies are crucial for success. Companies are continually exploring innovative approaches to optimise expenses while maintaining a high level of productivity. In this article, we delve into seven strategies that not only reduce costs but also foster innovation and efficiency.
- Consultants Hiring: Balancing Tradition with Caution
The traditional practice of hiring consultants remains a viable option for cost reduction and accessing specialised expertise. Despite concerns about moonlighting, engaging individual consultants fosters entrepreneurship and brings experienced skill sets to the table. Striking a balance between traditional hiring and addressing ethical concerns is the key to maximising the benefits of this approach.
- Harnessing the Potential of Low-Cost Startups
Embracing the entrepreneurial spirit, companies can leverage the capabilities of low-cost startups or incubation centers. Collaborating with startups not only reduces costs but also injects fresh ideas into projects. This symbiotic relationship allows startups to secure funds for their endeavors while providing companies with cost-effective solutions.
- Building a Library of Functions: Standardisation for Efficiency
To expedite development and enhance standardisation, companies are creating libraries of reusable programs and application subroutines. This approach minimises repetitive programming efforts across teams, reducing development time and ensuring uniformity. Establishing clear guidelines for the design and development of utility programs is crucial for maximising the benefits of this strategy.
- Tapping Talent in Smaller Cities
Companies are increasingly establishing development centers in B and C grade cities to tap into the pool of engineers produced by local colleges. While this strategy offers cost advantages, it requires careful supervision to align the talent with project objectives. Effectively managing and mentoring talent from smaller cities can result in a valuable resource pool for IT projects.
- Infrastructure Optimisation: Shifting Gears for Efficiency
Optimising infrastructure costs involves innovative practices such as working in shifts and embracing remote work. Shifting to a two-shift model not only doubles work capacity but also opens avenues for overseas business. The widespread adoption of remote work, accelerated by the COVID-19 pandemic, reduces the need for physical office space, contributing to significant cost savings.
- Cross-Selling through Subject Matter Practice
Encouraging subject matter units to cross-sell their services within the organisation enhances resource utilisation and cost-effectiveness. For instance, a data analytics unit can offer its services to other units at predefined rates. This approach facilitates a structured budgeting process, enabling effective monitoring of development time and costs while maintaining individual profit and loss statements.
- Licensing and Leasing: Paying for What You Use
The licensing and leasing model, prevalent in the software industry, is evolving further with flexible payment structures. Introducing concepts like ‘pay as you use’ or ‘pay based on data consumption’ allows companies to tailor their expenses according to actual utilisation. This adaptable approach aligns costs with usage, promoting financial efficiency.
In conclusion, the landscape of cost management in IT projects is evolving, and companies must explore a mix of traditional and innovative strategies to stay competitive. By embracing these approaches, organisations can strike a balance between cost reduction and fostering a culture of innovation in their IT endeavors.
(The author is CA Ujwal Landge, Partner at E A Patil and Associates, and the views expressed in this article are his own)
