Cost optimization is the order of the day for any company, given the global uncertainties. Internal staffing costs constitute 30-40% of a tech firm’s project costs while external contractors constitute around 20%. With growing digitalization, the demand for sophisticated high-quality tech workers is also rising.
Thus, minimizing project costs is not so easy. You need to achieve a fine balance between cost and quality. Compromising quality for reducing costs may not work. Some efficient tech hiring tips are listed below.
Tips for efficient tech hiring for cost reduction
1. Hire tech talent based out of low-cost geographies.
Recruitment costs and remunerations are largely determined by geography. The employment cost of a candidate based out of a low-cost location may be just one third that of an equally talented candidate based out of a high-cost location. Except your core play activities (crucial business functions), all your value and external play activities can be shifted to low-cost geographies.
Value play activities provide support to the firm’s critical functions at lower costs because they can be shifted to low-cost regions. External play activities are activities performed by external contractors.
Setting up captive subsidiaries in low-cost countries and hiring high quality local tech talent therein will help firms provide high quality services at low costs.
2. Optimize external contractor costs
Usually, firms outsource non-strategic functions to external vendors with a small internal team overseeing them. This helps in reducing expensive internal resources.
You can reduce external vendor costs by renegotiating prices with them. Cutting the length and scope of external vendor contracts will result in significant cost-savings for your firm.
Hiring few but high-quality external IT vendors is more profitable for firms than working with a large number of small contractors. Thus, you can consolidate or bundle your external contracts with a handful of vendors.
You can shift your existing external staff to low-cost locations for greater cost savings. You can replace your expensive external vendors with lower-cost full-time hires. Besides, you can insource talent instead of high-price staff augmentation.
3. Minimize flex play activities
Flex play is one of the tech talent archetypes that involves hiring external contractors offering specialized services during a crisis. Flex play resources are exorbitant. Hence, flex play activities should be minimal.
Infact, an ideal tech hiring pattern will comprise more value and external play activities. Only a small portion of the core play activities should be outsourced to expensive external vendors and flex play activities must be as low as possible.
However, there is no ‘one-size-fits-all’ formula. Each firm’s project has a different cost-structure. Budgets also vary. The business functions and infrastructure differ too. Many macroeconomic factors too have a bearing on a firm’s hiring patterns. All these factors need to be considered while deciding the right talent mix for a firm.
Stonebridge Technologies is a leader in providing tech staffing services. It has expertise in a wide array of technologies in areas like cloud engineering, mobile network solutions, and product engineering and can take care of helping your team offer the best solution to your clients.
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