Idea of Cost Saving Instead of Cost Cutting

Recession – we know this word so well, so let’s move forward, and talk about cost cutting first. There is no doubt that companies are earning lesser than what they used to do couple of years ago, despite the increase in customers’ base. Hence, businesses are bearing the cost both ways, lesser revenues and more operating expenses (due to increased customers).

We have seen some instances of layoffs in Pakistani market, which is of course not at all in parallel ratio when seen in global perspective, but one can sense the lack of job security in Pakistani employees’ mind due to prolonged recession.

Moreover, we have seen some companies (such as Warid) using different tactics to cut their cost, but that comes with a compromise, such as with the performance, fewer workforce, and/or lowering benefits for the employees. All these things actually result into damaging your business model. One way or another, ultimately someone has to suffer due to such cost cutting techniques.

In such a scenario, prior to adopting cost cutting techniques, businesses should embrace cost saving practices.

For the purpose of understanding the difference between Cost Cutting and Cost Saving, here is the defination

Cost savings is defined as spending less without changing the quality and performance of the business. In businesses, this means the company’s cycle remains the same, but a less expensive way has to be figured out to achieve the budget sheets. Cost cutting is defined as spending less for business or service while changing the business cycle, either by layoffs or cutting the services/products.

We know that companies in Pakistan are well aware of term called “Cost Saving”, but having a specialized department in every company for cost saving is still missing. Same happens when it comes to consultancy firms, specialized in cost saving, there are not many – or i doubt if there is any.

It has been observed that adopting simple cost saving rules, such as, ensuring proper use of stationary, electricity – for example, to put the ACs down when no one is around, fuel, mess and many others, saves tons of cost.

For example, if there was a department to save cost, it could have questioned Mobilink guys before purchasing 130 inches Wide Screen Plasma for their office. This cost saving department can bridge between accounts and execution – to ensure that money is being spent the way it should.

Tech reporter with over 10 years of experience, founder of ProPakistani.PK