30 July 2021

IT Cost Cutting With Style: How to Keep Expenditures Lower


One of the most important rules of business is that you can’t cut your way to growth. However, in times of crisis, it’s possible to cut your way to survival. 

Accidents happen and you must be always ready to face new challenges. As the COVID-19 pandemic has proven, it’s impossible to prepare for every contingency. Difficult times call for difficult actions and sometimes there’s no way around it. 

When facing the need for immediate cost savings, organisations must develop a strategy how to make savings in a way that is least hurtful to the short- and long- situation of the business.  

Hopefully, your company won’t ever need to cut the costs. However, just in case, I have prepared a list of rules on how to tackle immediate IT cost cutting. 

Rules for Rapid IT Cost Cutting

If you need to cut your costs immediately, make sure to check out our list of proven saving hacks. 

Focus on immediate impact 

When looking for immediate savings, you need to focus on elements that can have a quick impact on your business. There’s no point in reducing costs that can influence it in years- it may be already too late. Focus on issues that will influence your business in weeks or months, and then eliminate, reduce, or suspend these costs. 

It's a good idea to resign from expenses that are paid monthly or quarterly, rather than annually. It will help you quickly make some savings and allocate the funds to matters of urgency. 

Reduce, don’t freeze 

Usually, it’s hard to predict when the time of crisis will be over. And you can never fully predict future expenses or possible challenges in the industry. That’s why you should prioritise costs that can truly be reduced or eliminated, rather than just suspended for some time, only to resurface in the future. 

By eliminating or reducing costs you can be sure that once your company gets back on its feet, there will be no hidden, suspended costs that you’ll have to cover.   

One deep cut 

As hard as it may seem, it’s better to cut costs with just one slash. Most businesses don’t cut their costs severely enough at the first time, which results in the need to revisit costs and repeating the whole procedure. By doing so, they create a vicious cycle of uncertainty and disappointment. 

Even though it may seem extreme, it’s easier and better this way. One deep cut won’t affect productivity on a larger scale. It’s especially crucial for staff cuts, as ongoing reductions can undercut the morale of your employees. 

Be transparent  

When introducing cost-cutting measures becomes inevitable, it’s crucial to inform your employees about future changes. Even though it may be very difficult, you need to rise to the challenge. Rumours spread like wildfire and can damage your company’s reputation, discourage motivation, and drive your employees away.   

That’s why you should always be open and upfront with your employees and handle all the information honestly and sensitively, especially when it comes to manpower reductions. Always be the first to provide employees with the most accurate information. Try to explain the whole process and future strategy. Only by maintaining transparency and honesty can you prevent panic. 

Variable and fixed costs  

As you probably know, there are two main types of costs: variable and fixed, and both require different approaches. Fixed costs are expenses that remain constant, regardless of activity or volume, such as office rent, subscriptions, and payroll. If you want to save on fixed costs, you should definitely consider elimination.   

 On the other hand, with variable costs, such as telecommunication and consumables, I advise you to focus on both reduction and elimination. 

Unspent and uncommitted expenses  

If there’s no way to recover payments or get prepayments back, the best idea is to focus on unspent or uncommitted payments. I advise you to thoroughly examine your contracts and try to evaluate them for renegotiation and termination clauses. 

By applying this treatment, you can save your company some money, as well as time.  

Prioritise cash  

As I mentioned before, it may be really difficult to make the decision to severely cut the costs. That’s why many businesses try to make savings by focusing on irrelevant elements that will have no impact on the larger scale of events. 

If you really want to make a difference, I advise you to target the items that are likely to have a real impact on the profit and loss statement. Noncash items, such as depreciation or amortisation are not going to change the situation for the better. 

Discretionary and non-discretionary cost 

When it comes to rapid cost reduction, you have to be ready to make sacrifices and go all in. That’s why it is advisable to tackle both discretionary spending, also called nonessential spending (a cost that a business can survive without, if necessary), and nondiscretionary, or mandatory spending. 

If need be 

No one can see everything coming and even the most-organised companies can get into financial trouble. To minimise losses and avoid any future consequences, it’s advisable to quickly develop a strategy how to immediately cut costs and make savings. 

If the need arises, my list of rules for rapid IT cost cutting may help you deal with your problems in a way that is least hurtful to the short- and long- situation of your organisation.   

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Andrzej Senator
International Sales Director /Sweden

A successful, experienced senior manager and business professional with a track record of growing both revenues and margins. He has over 30 years of managerial experience in the fields of strategic, operational and sales in leading local and international companies operating in Sweden and Poland. Specialties: Business Development, Sales management, Start-ups.