22 October 2009 | Allie Anderson
Companies across the globe are accelerating cost-cutting measures to help recover from the downturn, a study by Ernst & Young has found.
The consultancy questioned senior executives at more than 500 companies worldwide on how they are preparing to emerge from the financial crisis.
Almost three-quarters said they have sped up cost-cutting programmes across their business, while a further 18 per cent said they were looking to accelerate efficiency projects.
Savings efforts include renegotiating contracts with suppliers and fostering stronger relationships to improve vendor performance. Other measures include drawing up flexible contracts to mitigate the risk of volatile prices and boosting staff productivity.
Some 55 per cent of firms have outsourced business functions or moved departments into shared service centres to cut costs, while nearly a third are considering doing so in future.
In addition, companies are paying more attention to supplier financial stability, with 75 per cent broadening the scope of risk assessment to encompass third parties.
Steve Varley, head of UK and Ireland markets at Ernst & Young, said: "The world has changed in the past year and so have traditional business models. Cost reduction may be the short-term goal but increased flexibility is the long-term objective for companies. The time for knee-jerk reactions is over."