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Home | Blog | Outsourcing as Business Strategy During Recession

Outsourcing as Business Strategy During Recession

By Janselle M.

Updated on June 3, 2024

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How can a business thrive during a recession?

During times of economic uncertainty, businesses are constantly seeking innovative strategies to weather the storm. One such strategy that has gained prominence is selective outsourcing during recession.

Just as natural disasters prompt communities to adapt and innovate, a recession can push business owners to reevaluate their operations and seek new opportunities for growth and resilience. In this context, selective outsourcing emerges as a compelling solution, enabling businesses to streamline their expenses, refocus their resources, and prepare for the challenges that lie ahead.


What is a Recession?

A recession is a period in the business cycle when economic activity significantly declines.

A nation is in recess when the economy is experiencing: 

  • Rising levels of unemployment 
  • Harmful gross domestic product (GDP)
  • Multiple business failures
  • Declining measures of income
  • Crashing stock markets 

Nevertheless, a recession is considered normal in the economy and business cycle. 


Why are Outsourcing and Recession Related?

Before the COVID-19 Global Pandemic, the world experienced the Global Recession between 2007 and 2009. Some iconic brands like IBM, Apple, and Cisco were impacted, but many startup tech companies closed down. In fact, according to reports, 1.8 million small businesses went under, and about 8.7 million jobs were lost.

With COVID-19’s continuous devastation of firms’ resources and financials, we can safely say that it has impacted more or less 90% of businesses worldwide. Despite all this, business leaders think the future is still bright. 

A recession may be terrible, but in the big picture, it gives entrepreneurs opportunities to innovate. Outsourcing is one in-demand innovation that businesses of all sizes are embracing.

To further emphasize the benefits of outsourcing, let’s dive right into case studies of how outsourcing services can help organizations amid a recession:

industry giant who survived during the 2008 financial crisis


Google is continuously scaling effectively, and this is surprising. Although it has encountered various recessions, it is still one of the best companies in the digital age. 

Some of Google’s success can be credited to its talented team. Google has been outsourcing Information Technology (IT) services for a long time. In 2018, the number of contract workers outweighed the number of direct employees. These outsourced talents help maintain business stability and profitability. 



While it is well known that Apple Inc. outsources manufacturing from China, some people are unaware that one out of every three Apple engineers is outsourced. Apple is still outsourcing to date. 

According to Tim Cook, Apple’s former Chief Operating Officer (COO) and current Chief Executive Officer (CEO), the company became more resilient during past economic downturns and believed in investing during downturns. Besides, the demand for technology is not going away anytime soon, and they will still support it in the long term. 



If the founders of Skype had not outsourced with Estonian app developers to handle the back-end development of the application, Skype would not have been a part of our lives right now. 

The business initially outsourced the developers on board as partners. Skype arguably would not be what it is now if the company had been unwilling to outsource work to suitable engineers in Estonia. 



During the 2008 Global Recession, Cisco managed to stay afloat during the economic downturn by downsizing through outsourcing. 

Cisco has effectively utilized partnership and outsourcing strategies to establish market leadership and expand into new markets.



Microsoft’s massive workforce is composed of outsourced employees. Michael Simms, Microsoft’s Chief Procurement Officer, noted that these workers are experts in providing their services to the company. 



Despite the crisis, Netflix capitalized on its creativity and innovation to establish itself as a pioneer in streaming on-demand consumer video. 

Outsourcing was critical to their success– it increased the company’s agility, and they could focus on boosting their competitive advantage in the marketplace.



IBM has had the most significant long-term impact on the tech industry. The business offers outsourcing for various tasks but outsources its needs from other countries and partnerships. During the 2008 Global Recession, IBM signed several outsourcing contracts. 

13 Proven Business Strategies to Help Businesses Stay Afloat During an Economic Recession

13 proven strategies during recession

In economic recessions, consumers prioritize their finances and reduce their spending. Businesses often lower prices, cut costs, and postpone new investments as sales decline. Cost-cutting for marketing is repeatedly slashed, and this is where companies make mistakes. 

Businesses that focus on their customers’ demands, handle their marketing budgets well and swiftly alter their strategy, methods, and product offerings in response to the changing market are more likely to prosper than others both during and after an economic recession. 

Do not panic. There are business strategies that you can adapt to dance with the waves of an economic recession. So now let us give you some ways to respond in times of economic downfall.


Focus on core competencies and current customers.

Businesses must concentrate on products and services they know will sell the best. It would be best to focus most of their attention on marketing those best products and services to past and existing customers and potential prospects. 


Understand your customer’s current needs.

Listening to your customer’s needs is crucial at this moment. It’s also crucial to empathize with their struggles because you’re not the only one affected by an economic recession. 


Don’t stop marketing.

Businesses that continue investing in marketing during downturns bounce back faster. This is the best time to focus on branding and marketing strategies, such as search engine optimization (SEO) and product and service promotion. 

You could send emails to your current customers, follow up with other prospects that did not respond to you, check in on past customers hoping to win them back, post ads that can draw customers in, and post on your social media accounts. 

Task prioritization and delegation  

Leaders should maximize their time as it is one of the business’s most valuable resources during a recession. It would be best to be assured that the little time you have saved for tasks will significantly benefit your business.

Keep in touch with your employees.

You must also check in on your employees, as they are also feeling stressed and uncertain about the future. It is also problematic for them to think they might lose their jobs. 

Don’t give up. 

A recession isn’t the end for everyone’s business, but making the right decisions and being strategic to succeed in the downturn is essential. This is the chance for entrepreneurs to be more flexible and agile in adapting to changes arising. 

Rethink your product and audience.

Now is the time to realign your products or services with your customers’ needs. You should rethink your selling and marketing strategies and who you are targeting. 

You might need to change how you manage your operations before and focus on outcome-based selling, prioritizing customers’ desired outcomes. 

Know your business’ finances.

You need to know your business’s financial status. Preparing in advance for measures to protect your cash flow is crucial. This is when you should monitor your business’s financial reports and operations. 

Diversify your revenue streams. 

You can increase the chances of your company’s financial survival if you create new means of generating income. 

The goal is to develop new income streams for your company so that you have backups in case the Recession destroys one of your revenue streams. It’s a common tactic to reduce risk, and you should consider several options.

Make smart cuts

Businesses tend to cut costs on sales or marketing budgets, worsening their financial situations. Making the right cuts is essential to staying afloat. 

Embrace the constant change. 

We know that the only constant in life is change. The key to surviving an economic recession is being agile and flexible. This includes restructuring your system, realigning your employees, evaluating your products and services, and reviewing your targets and goals. 

Beat the competition

It would be best to use this to win more customers from others as your competition becomes more unstable during a recession. 

You must stand out from your competitors by providing better-quality products, offering discounts, delivering excellent customer service, and other such measures. 


Make long-term plans

Entrepreneurs tend to focus on short-term plans during economic hardships. But it is also essential to make long-term plans to help you build a runway for yourself so that even the direst financial troubles may be overcome. 


4 Benefits of Outsourcing in an Economic Recession

4 benefits of outsourcing

Outsourcing during an economic downturn can be a skeptical move for some. However, it could help the company be more prepared for economic recessions. Recession requires the company to implement change within the business. 

Outsourcing allows you to gain flexibility and efficiency, and you will not have to shoulder the burden of hiring talents ever since more companies have been using outsourcing services.

Let’s take a look at the benefits of outsourcing


Less stress for current employees

During a recession, layoffs typically result in more work for the remaining staff. Outsourcing is a great strategy to reduce additional stress and work. 

Lower costs

You can save money by outsourcing tasks that do not require a full-time team. Due to the lowered costs, you can staff who are crucial to your company’s ongoing operations.


Economic Efficiency

Higher-level employees may waste time on low-value tasks when work responsibilities get shifted among a pool of employees that has decreased due to a recession. This dilemma can be resolved through outsourcing before it affects small-to-medium-sized businesses. 


Better benefits for current employees 

Benefits for employees may be lost due to cost-cutting measures during a recession. However, if you outsource specific departments such as Human Resources, Accounting, IT, or Marketing, you will not have to worry about paying their benefits. As a result, you can continue offering benefits to your current workers. 

To sum it up, it is difficult, but not impossible, to help your company survive a recession. So, the next time the economy falters, equip yourself with the correct principles! Devise several backup strategies, and be prepared for the future based on the changing landscape that may arise. 


Magellan Solutions Can Help Your Business Survive the Effects of Recession

Now is the best time to make the most significant investment for your company! 

Get a trustworthy and reasonably priced outsourcing provider to help you achieve your business objectives.

At Magellan Solutions, we take pride in being one of the best business service providers. With more than 18 years in the industry, we are an ISO-certified and HIPAA-compliant outsourcing provider. We offer various outsourced business solutions, from customer service to lead generation. 

Contact us and let us assist you with your business needs.

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      Outsourcing as Business Strategy During Recession

      Janselle M.

      As a content writer at Magellan Solutions Outsourcing Inc, Janselle creates captivating stories that connect with SMEs. With a passion for storytelling and a sharp eye for detail, she focuses on crafting engaging content to boost their digital marketing. She is driven by excellence, aiming to deliver messages that make their brand stand out.

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