What are some cost reduction techniques organizations can undertake during COVID- 19?

Freelance work cost reduction HR recruitment hybrid workforce human resources
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COVID-19 has had a massive impact on the organizations and the economy. As the pandemic continues to spread, organizations, especially HR leaders, are forced to implement cost reduction techniques to keep the company afloat. However, this must be done wisely in order to ensure the health of the business in the long term. Choosing to strategize cost reduction methods carefully is always better over an irrational emergency response. The way you plan on managing company finances when a crisis hits will later determine the organization’s ability to sustain productivity and performance during the crisis and its capability to rise higher after it passes.


When you think of implementing cost reduction techniques, a strategic approach needs to be taken where costs are going more towards critical initiatives and less towards things that are of minimal importance. In other words, initiatives that are being funded need to be those that spark company growth and innovation. But how do we ensure this happens in a crisis?

Basically, HR managers must proactively act to identify those investments that are producing short-term gains and seek to reduce immediate spends on those and others that the organization may be able to do without for the time being.. In other words, cost reduction techniques succeed when the organization prioritizes the “needs” over the “wants”. Prioritising long term development over short-term efficiency. In this way, employees' experience and productivity are protected.

In times of crisis, organizations may benefit from these techniques of cost control and cost reduction.


It is important for businesses to plan what their function used to look like pre-pandemic, what it looks like presently and what it is expected to look like in the future. Using existing statistical data and predictions, assess the impact COVID-19 is likely to have on your business in the coming days. By structuring your approach and applying reliable criteria to deduce likely scenarios, you can then streamline your response from a cost-cutting perspective accordingly.


One of the cost reduction methods that the human resource department can benefit from is using proven cost-cutting solutions such as:

1. Reassessing salary levels - Obviously cutting employees salaries is not something you as an organization would want do to, however, by reviewing salary packages of your existing employees along with the market trends, it can help in determining reasonable and company affordable raise amounts for every position.

2. Considering a flexible workforce - This is one of the cost reduction techniques that have seemed to be more popular among large organizations and rather increasing in this pandemic season. What do we mean by a flexible workforce? With the gig economy altering careers for the next generation, organizations are getting creative in the way they are structuring their workforce. Recruitment managers are choosing to replace full-time employee attritions by more short-term/contract-based employees and even choosing to outsource projects. Works as a win-win for both parties in 3 ways:

i) organizations aren’t pressured to offer a salary package for a full-time employee to a gig worker; but at the same time gig workers are receiving a higher salary package than what they would usually receive on an average with added benefits and incentives of a full-time employee;

ii) increase in productivity for the organization due to skilled/specialist input and faster turnaround. Gig workers are encashing this exposure as an opportunity to build their portfolio and referrals; and,

iii) the evolution of communication technologies in this pandemic has enabled organizations to embrace work-from-home scenarios comfortably, without affecting productivity. At the same time, gig workers are able to work for multiple organizations, multiple projects without logistical difficulty, in other words, at the leisure of their own home.

3. Eliminating unnecessary programs - Organizations are likely to benefit if they consider eliminating unnecessary programs first before implementing any other techniques of cost control and cost reduction. Programs like long-term care insurance are one that generally lie unused among employers. Therefore, eliminating that can help in drastically minimizing administrative costs. However, it is vital to assess the impact, positive and negative, of all the HR-related cost-cutting solutions on the employees and the organization. Being vigilant about identifying potentially hidden costs that can be avoided may also help in the long term.


An important aspect that makes cost reduction methods succeed in organizations is clear and effective communication across all the levels of the organizations as well as stakeholders. Building a good work culture in a remote team can sometimes seem hard during a pandemic when everyone is working from home. However, keeping everyone informed and updated about the tools and techniques of cost reduction that the organization is implementing in every season ensures transparency, builds credibility and ensures everyone is on the same page

However, if you are pressed to optimize costs and may not have had time to chart out a cost-cutting strategy. These tips can help aid your decision-making process.

1. Focus on cost optimizing solutions that have an immediate impact and get rid of or suspend aspects that take longer than a month or two to have an impact. For example, incurred expenses that are paid monthly/quarterly or on a flexible “on-the-day” basis, instead of being paid annually.

2. Reducing costs is better than suspending them for the time being. Attend only to those costs that can be minimized or completely eliminated and not just suspended for the time being only to arise again later.

3. Plan your cost-cutting in a way that it is done only once. Only a handful of companies manage to get it right the first time. Otherwise companies end up continuously revisiting their cost reduction techniques and solutions resulting in unproductive cycles of uncertainty and wasted effort. Choosing to eliminate costs strong enough the first time and maintaining it throughout the season, will benefit the organization as opposed to continuous reduction cycles which can be destructive in the long term.


In the end, the goal of implementing any cost reduction techniques needs to be focused on protecting employee experiences and productivity. The ultimate value proposition for recruiters and organizations should not be to drive talent outcomes in normal times but to effectively safeguard investments in talent during times of crisis. Hasty cost-cutting decisions can be avoided by taking time to research and understand the impact some tools and techniques of cost reduction have over others that could potentially damage significant talent outcomes in the long run.

Moonlyte aims to change the way organizations think about their workforce by providing a large collaborative platform of freelancers and businesses - a space where they can connect and work toward a common goal. If you’re an organization facing pressure to cut costs in this COVID-19 season, Moonlyte can help you re-vision your workforce structure to suit your budget in hand. Get your projects outsourced or hire on a short-term or contract basis from a large talent pool of highly-skilled freelancers. Gain insights, tips and trends through our blogs on all things related to flexible working and gig employment for businesses as well as freelancers.

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