7 Effective Ways to Reduce Resourcing Costs in an Organization

Market volatilities and uncertainties are the results of today’s fast-paced nature of modern business. To thrive in this competitive landscape and ensure profitability, organizations need to constantly ensure that the skills and competencies of their workforce remain relevant.

At the same time, resources are the most significant expense for most businesses. As a result, when the resourcing costs increase drastically, it affects the revenue and profit margin. Therefore, it is imperative to control the expenditure incurred on resources to sustain the business and maintain profitability in this competitive environment.

This post emphasizes various ways to reduce resourcing costs and improve operational efficiency.

Before we delve into details, let us understand the need to keep tabs on resourcing costs.

Why is it important to control resourcing costs in a project?

According to McKinsey, 45% of projects go over budget, jeopardizing the whole organization.

This can be attributed to market uncertainties, poor project planning, ineffective utilization of resources, hiring/allocating high-cost resources, and more.

Companies spend a large portion of their revenue recruiting the right types of people, building their skill level, and paying them ongoing salaries. Therefore, managing resourcing costs is vital for business profitability.

Here are some vital reasons to reduce resourcing costs –

  • Prevents budget overruns
  • Generates higher ROI
  • Gains a competitive advantage
  • Minimizes unnecessary hiring/firing cycles
  • Improves business performance and profitability

Now that the significance of reducing resourcing costs is clear, let us go through some ways to keep it under control.

Effective strategies to reduce resourcing costs

Here is a rundown of ways to minimize the resourcing cost and maximize profits.

Minimize last-minute & expensive hiring/firing activities

Skilled and competent resources are essential for successful project completion and delivery. But often, project managers send resources requests at the eleventh hour to the resource manager. As a result, managers have to hire high-cost resources at the last minute, thereby increasing the costs. To avoid this, project managers should predict skill demand in advance.

This will give resource managers enough lead time to find the best-fit resource for the project. Moreover, in case of resource shortfall, the lead time will help managers adopt resourcing measures such as organizing training/upskilling programs or implementing planned hiring of a permanent/contingent workforce. Thus, it eliminates the last-minute hiring and resultant cost escalations.

Avoid allocating over/under skilled resources to control budget

Allocating the right resources for the right project is crucial for a project’s completion within the estimated budget. For instance, allocating under-skilled resources may hamper the quality of the project. Similarly, assigning overqualified resources may increase the project’s cost and reduce the profit margins.

Therefore, managers should identify and allocate resources based on their skills, qualifications, availability, cost, location, and other criteria. Instead of the “first-available- first-fit approach, managers should follow “best-visible-best-fit” practices to ensure the right resources are allocated at the right cost.

Leverage cost-effective global resources judiciously

One of the effective methods to reduce resourcing costs is identifying and allocating a global workforce from low-cost locations. It helps maintain project profitability, reducing overall project costs without compromising the quality.

Managers can also replace expensive highly-skilled resources and utilize similar skilled junior resources from cost-effective regions. This helps maintain the project’s financial health and reduces project costs.

Optimize profitable utilization of every resource

Resource under/overutilization can affect employee productivity and engagement, resulting in project delays and budget overruns. Therefore, it is necessary to track and maximize employee utilization levels regularly.

Managers can check if the resources are spending too much time on non-billable activities. This will enable them to mobilize the resources from non-billable tasks to billable or high-priority projects. It helps them maximize resources’ efficiency and improve their productivity.

Build an on-demand workforce for short-term assignments

According to the Oxford Economy’s Workforce survey, 83% of executives worldwide use a contingent workforce. This is a testimony that various companies worldwide maintain a blend of contingent and permanent resources for their projects.

Managers can analyze the requirement and identify if the requirement is one-time or recurring. Accordingly, they can hire a contingent workforce that includes freelancers and contract employees for short-term assignments. Unlike regular employees, organizations don’t need to manage and bear the overhead costs. This will enable them to release the resources as soon as the project is completed. Thereby reducing unnecessary resourcing costs.

Encourage multiskilling to increase billability

In many businesses, the excess capacity of employees either goes unnoticed, or they spend most of their time on non-billable activities. This leads to job dissatisfaction and disengagement. Also, when a company has to handle multiple projects with overlapping critical skill demands, assigning resources across projects becomes challenging. Therefore, the resource manager should identify the current and pipeline projects’ needs and determine skill gaps.

Accordingly, they can initiate upskilling/reskilling programs or provide hands-on experience to employees through job rotation, shadowing, and cross-departmental opportunities. This will help under-allocated employees hone secondary/tertiary skills and ensure billability.

Prevent skills obsolescence with training and development

Technological advancements and digital transformations have created the need for advancing skillsets. Therefore, instead of resorting to bulk-firing when workforce skills become obsolete, companies must organize training and development programs as per Individual Development Plans (IDP). This will enable employees to update their existing competencies and diversify their portfolios.

For example, if a pipeline project requires niche skills and the resources are scarce (particular niche) in the talent pool. In this case, managers often resort to hiring a new resource – which can add to the resourcing cost. To avoid this, they can implement learning and development (L & D) to prevent skill obsolescence and make them future-ready.

Now, let’s see how resource management software will help minimize costs.

How can advanced resource management software help?

Saviom’s enterprise-grade resource management software provides 360-degree visibility of the resource pool. This enables managers to view the critical attributes such as skill sets, competencies, cost rate, etc., and identify best-fit resources with a relatively lower cost rate.

In addition, the advanced filtering feature of the tool also allows managers to identify skilled resources from cost-effective global locations and significantly reduce resourcing costs.

The tool’s forecasting capabilities help managers analyze the project requirements if it is a recurring or one-time demand. Accordingly, they can form the most profitable and balanced pool of permanent and on-demand resources. Thereby reducing overhead costs on a project.

Using configurable resource management software, managers can schedule the training slots and manage training courses effectively. This will eliminate the need for last-minute hiring of a high-cost resource or reduce the chances of firing due to skill obsolescence.

All these features of the resource management tool collectively help reduce resourcing costs proactively.


Resourcing costs significantly impact project budget, and if organizations still use legacy tools and spreadsheets to manage their resources, it’s time to replace them.  A modern resource management solution paired with the above-mentioned strategies will help you reduce resource costs and complete the delivery satisfactorily.


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