Don’t Say Goodbye To El Dorado in IT - Prevent Layoffs With These 5 Tips

200 valued employees were let go in a leading IT company. A well-known IT organization made 20% of their staff redundant overnight. A leader in the industry was forced to reduce employment last month. 

These are just a few layoffs that made the headlines in the last few months. 

The culprit? According to many experts, the crisis is to blame. Still, for our experts, it only acts as a scapegoat. 

What Happened to the Golden Era of the IT Industry?

Prior to the COVID, IT companies were flooded with new projects.  The need for digitization became even more pressing during the pandemic, which boosted software services even further. Unfortunately, this sudden rise in demand simply couldn’t last. 

As the pandemic faded into the past, so did the digital transformation. Unfortunately, it took the overflow of new projects with it, leaving IT services companies with growing benches and emptied schedules. 

But could that be the only reason for layoffs? 

Need For Layoffs Or Need For Changes?

As proven repeatedly by the first European Profitability and Utilization Report, there is as much as a 33% difference in profit margin between low-developed companies and their more advanced counterparts. As a result, they are less likely to be surprised by changing demand, experience financial problems, and, consequently, layoffs.

But what is the key to the stability of those businesses?

The answer to this question is simple: the most advanced companies are not surprised by the changes as they are able to predict any shifts in their business. To do so, they achieved operational excellence in processes such as: 

• Measuring and Monitoring 
• Prognozowanie
• Reporting and Scalability. 

As a result, they can avoid layoffs (and other operational problems) before they start affecting the company. 

Here’s how they can achieve that level of accuracy. 

Measure Your Data To Avoid Measuring Losses

How can you tell whether you have too many employees if you do not measure their time use? 

The answer to this question was apparent for most IT companies—to use time tracking. However, this process is only the start and the end of their measuring journey, leaving them with limited information to work with. 

To improve the understanding of the meaning of time, managers also need to consider: 

1. Tracking utilization and its KPIs to monitor the bench and optimize productivity. 
2. Tracking billable and non-billable hours to understand which tasks or projects generate profits and which are responsible for the expenses. 
3. Monitoring profitability KPIs to quickly assess whether a particular project, task, or person contributes to or reduces the profitability of the entire organization. 

Forecast Your Future to Ensure Your Company Has One 

Having the data is one thing; using it as a guide for future business endeavors is another, much more elusive undertaking - so much so that many companies never get to do it. And wrongfully so. 

In times of crisis, forecasting can help professional services companies test out different scenarios for allocations, projects, and profits, helping them navigate through market obstacles while achieving highest possible returns. 

While this might sound promising, just drawing conclusions from historical data obtained through monitoring is not enough to make the right decision in an uncertain environment. To do that successfully, companies need to: 

1. Adapt the long-term planning approach to predict utilization for different scenarios, such as the acquisition of a new project or the next phase of the existing ones. 
2. Manage the bench proactively to avoid rising costs of idle employees. 
3. Create soft bookings to test different scenarios and choose the best ones for the entire organization. 
4. Forecast profitability as well as workload to prevent projects from becoming unprofitable due to overheads, additional work or external circumstances. 

The results? 

Report And Scale To Make Your Mark On The Industry

Reality can sometimes surprise even the most experienced managers. Reporting can spare them unpleasant surprises resulting in dramatic headlines announcing massive layoffs. 

Still, not all reports are created equal. While simple spreadsheets might be able to accommodate data from small companies, they certainly lack the ability to combine workload with finances, plans, and expenses while noting every single change in data. 

This ability is crucial for managers to remain accurate in their decisions. Still, it can only be guaranteed by the combination of: 

1. Translating every working and idle hour into expenses and incomes to monitor the real value of every project—or lack thereof. 
2. Real-time updates guaranteeing instant information flow between managers and employees. 

Regular use of reports ensuring that the problems will be solved right away.

Are You Ready To Make That Change and Avoid Crisis? 

You don’t have to do it on your own - our experts are here to help. 

First, get your Maturity Score Index to see the flaws of your processes. 

Then, book a free consultation with our experts and let us prepare a

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