Hunker down or flourish - The choice of today's service groups

Lots of free advice for service firms in a tough economy

Recently, I completed a PowerPoint deck on a subject that I’ve lived through a couple of times in my career: how should a services firm navigate a tough economy. I presented that material in a webinar that OpenAir has graciously offered to replay.

After preparing that material, I ran across a Microsoft article and a Wachovia report that also contained some good pointers. I’ll try to recap several points from all three sources below.

But first, the key question any service leader must answer is this: Do I just want to hunker down and ride out the recession or do I want to emerge from the recession with a bigger, better and more competitive service group? That one answer will dictate a lot of future policy and operational decisions. It will also go a long way to explain the morale of your team during recession, too.

Why? Service firms are people businesses. People have careers and needs that go beyond immediate monetary payments. They want a ‘career’, ‘advancement’, ‘to feel wanted/special’ and ‘to be part of a growing, exciting entity’ to name a few. Let’s face it, it’s no fun being in a firm that’s contracting, letting people go in dribs and drabs. That environment is depressing, de-motivating and just plain sad. Who wants to die a death of a thousand cuts?

Even if you have to hunker down for a period of time, don’t miss the opportunity to speak with your team about the post-recession future. Discuss, frankly, the plans for the group. Give people hope and a reason for continuing to work with your firm. If you don’t, the best and brightest will leave for greener pastures. And, once they go, what will your service group be without people?

In my materials, I covered a multitude of revenue, cost and morale points. One of the more important revenue items was to encourage service groups to reassess their solution set. Is it still relevant in this economy? I’ve been to two service firms this week alone that have sold the same solutions, the same way with the same messages for many years now. In both cases, their offerings are out of step with today’s new market realities. I’ll be working with one or both firms soon to fix this issue but the frequency with which this occurring is jarring.

The folks at Wachovia Capital Markets LLC indirectly offered up a number of tips in their coverage of several service firms. What I saw in their recent IT/BPO Services Weekly Monitor included these tips:

- ask each employee to save $10 in corporate spending - encourage employees to take (unpaid or partially paid) sabbaticals - reduce capital expenditures (or as I recommend, defer some of those laptop replacements) - increase involuntary turnover (I’m particularly attuned to this as many marginal employees will try to stay indefinitely. Watch this carefully!) - extend the work week (Several large offshore firms are making the work week to be 48 hours from 40 hours. This one may be a morale disaster in the making, though).

Redmond Channel Partner had a recent piece (Endangered, not Extinct, December 2008) that outlined several tips for service groups. In particular, I thought the advice “Follow the Boy Scout Motto” to be particularly solid. The Boy Scouts believe in ‘be prepared’. Don’t go into sales or client meetings unprepared. Clients are going to demand that their service providers need to be nothing short of perfection. Service providers must absolutely prove they know their subject matter, the client’s business, the vertical the client operates in, the technology they use and more.

If you're pondering how you'll run your service firm for 2009, check out these tips and the underlying pieces with each.

Let’s all strive to emerge better and stronger at the end of 2009.