Market volatility is the harsh reality of today’s business environment. It happens for numerous reasons, such as rapid technological advancements, data breaches, natural disasters, or new business regulations. While no organization is immune to these uncertainties, the best they can do is prepare ahead to protect their business interests and minimize disruptions.
In most instances, companies adapt to rapidly shifting market conditions with reactive measures such as mass layoffs, hiring freezes, halting pipeline initiatives, and drastic cost-cutting. Then, when the market stabilizes, companies resort to aggressive hiring to fill job vacancies. Unfortunately, this creates a perpetual hiring and firing cycle that becomes a significant cost for organizations.
Adopting a proactive approach is the best way to beat market volatility and ensure business sustainability. Effective resource capacity planning is one such method that can help organizations overcome the adverse effects of market volatility.
This blog will demonstrate how SAVIOM’s capacity planning solutions help organizations beat market volatility.
Let’s begin with the basics.
Table of Contents
1. How can market volatility affect an organization?
The global market is constantly experiencing peaks and troughs, making it difficult to predict what will happen next. Moreover, cost pressure, skills shortages, business uncertainties, etc., have intensified global competition. As a result, companies are striving to remain profitable and sustainable amid the pertinent challenges of the 2020s.
The inability to proactively address market volatility can have a catastrophic impact on business growth. It can lead to downsizing, unplanned attrition, loss of market opportunities, or projects coming to an abrupt halt. In times of extreme market uncertainty, organizations often cannot resume normal operations for an extended period, sometimes for years.
Since a significant portion of a firm’s investment goes into acquiring and maintaining a skilled resource pool, developing a comprehensive resource management solution is imperative to resolving various market challenges.
Let’s take a deeper look into how resource capacity planning can help businesses combat the challenges of market volatility.
2. How does resource capacity planning help companies beat market volatility?
Resource capacity planning can help businesses stay ahead of the curve by providing early warning signs about various parameters such as resource excess/shortage, utilization, project vacancies, bench, etc. Below is a list of ways capacity planning helps companies overcome the effects of market volatility.
2.1. Reduce resourcing costs significantly
Globalization has forced companies to expand their operational boundaries to combat increasing cost pressures. In other words, organizations must offer their customers the same quality and value proposition but at a lesser cost. Therefore, they must utilize cost-effective global resources to remain profitable and minimize labor costs.
Resource capacity planning enables organizations to identify excess/shortage of resources ahead of time and facilitate course corrective actions before it becomes a bottleneck. Additionally, proper capacity planning can help firms avoid last-minute firefighting and minimize wastage due to large bench sizes.
2.2. Helps forecast & bridge the demand gap proactively
The inability to forecast future project demands can negatively impact an organization’s workflow. This is because it often prevents management from identifying excess capacity or shortfalls. An excess of resources adds to the bottom line; meanwhile, a resource shortage means critical projects cannot take off on time.
Resource capacity planning enables organizations with foresight into the capacity vs. demand gap. It helps managers take corrective resourcing measures ahead of time to bridge the gap efficiently. For example, in case of shortages, managers can use resourcing treatments like retraining existing employees, using out rotation and backfill strategy, or hiring contingent resources to meet demand. For excess capacity, they can bring future work forward, use benched resources for project vacancies, or aggressively sell excess capacity at a discounted rate.
2.3. Build the right mix of permanent and on-demand workforce
Most organizations go into a reactive mode in times of crisis. They resort to abrupt layoffs and downsizing to beat market volatility and protect their profit margins. However, one of the ways organizations can combat a volatile market is to create a flexible workforce that includes a balanced combination of local, global, and contingent employees.
With efficient capacity planning, businesses can build a mix of a permanent and contingent workforce to meet demand volatilities. They can hire contractors, freelancers, casual earners, and part-timers to meet seasonal demand. A contingent workforce can help the company with temporary spikes in demand without incurring permanent overhead costs.
2.4. Maximize billable resource utilization
Sup-optimal resource utilization can be a real challenge for companies as it restricts the billability of resources. In most cases, resources are over/underutilized, resulting in compromised quality of deliverables and unplanned attrition. Additionally, many resources spend significant time on non-billable activities such as BAU, internal meetings, admin work, support, etc. This, in turn, can hamper overall profitability.
Effective resource capacity planning can help managers view utilization levels across the enterprise’s entire resource pool. As a result, they can mobilize resources working on low-priority, non-billable work to high-priority, strategic, and billable work. Therefore, managers can easily improve the billable utilization of the resources and avoid under/over utilization.
2.5 Facilitates multi-skill building of resources
An efficient and skilled workforce is imperative to maintain sustainable growth in a dynamic business environment. In addition, organizations need to proactively anticipate and build skills and competencies for future business needs. Therefore, establishing a multi-skill building policy is the need of the hour.
With resource capacity planning, organizations can identify existing skill gaps and use appropriate training development programs to upskill their workforce. Additionally, by facilitating multi-skill building, companies can prepare their workers for future skill requirements of pipeline projects. This ensures that highly skilled employees can always take on new initiatives.
Now that we understand how resource capacity planning helps beat market volatility let’s look into the role of robust resource management software in overcoming market uncertainties.
3. How can futuristic resource management software help beat market uncertainties?
Resource capacity planning is a vital component of efficient resource management. It helps organizations identify the variance between supply and demand, which allows them to take necessary measures to bridge the gap. Saviom’s futuristic resource capacity planning software enables organizations to futureproof their business against volatility and uncertainties.
The tool helps forward-plan pipeline projects when it reaches a certain probability of closure. It consolidates vital information such as current and future projects, resource allocation/demand, vacations, and other non-project activities, enabling faster decision-making. Moreover, 360-degree visibility can help managers ensure that the resource pool is optimally skilled, balanced, and readily available for new undertakings.
The software provides multidimensional forecasting of capacity vs. demand, which helps take corrective resourcing treatment ahead of time. The tool also offers real-time business intelligence dashboards, analytics, and reports such as resource utilization, forecast vs. actual, bench reports, and people on the bench to gain in-depth insights into crucial employee metrics. Therefore, the tool can help organizations take proactive measures to futureproof their business against market volatility.
Market volatility is unavoidable; however, organizations can forward plans and minimize the risk to business profitability. They can prepare their workforce for a rapidly evolving business landscape by implementing effective resource capacity planning. It helps them manage sudden changes in resource demand and reduce its overall impact on profitability.