My 5 cost-cutting learnings from 9/11

I lived through 9/11 at a very early stage in my career. Our company, was called EBProvider (!!) at the time, later renamed to Induslogic and then to GlobalLogic. On 9/11, while the planes were hitting, we were literally in a management meeting, not too far from the Pentagon, and unaware of how the world was changing around us. The story ends well, as we survived this and ultimately thrived.

Our company, while HQ-ed in the US, had only a handful of people in the US. Most of the headcount was in Delhi, India at our office in Shriniwaspuri, next to the Okhla Subzi Mandi (a large grocery distribution point in Delhi) – many of us constantly cracked joked on how it was easy to do grocery while coming to work! I was heading the Indian office and we had painstakingly assembled a team of awesome engineers over 18 months or so. Many of these engineers have since started other startups, many have become senior management at other companies. I have been often told by many of them, that this was one of the best engineering environment they worked in – intellectually and culturally.

As 9/11 happened, our company faced a survival threat and I was given a task to cut costs in India. We had to cut costs by over 50% - most of our costs were employee salaries and other fixed costs such as office space and related costs.

We lived through this and subsequently over the following 19 years, I have been party to multiple cost cutting exercises across the startups I have been involved with. There are some learnings from these that I want to share:

1.     Survival is the key: Letting employees go for no fault of theirs is a difficult thing. (It’s hard enough to let go for performance reasons!). There are questions that come up about being kind, offering greater severance and so on. A startup usually has very limited resources and the survival of the company has to be put on the very top. If the company does not survive, then everybody will anyway lose their jobs and the company will not be able to honour its commitments. Hence, a company has to do what it has to do.

2.     Salary cuts is a real option: In India, cost of living can be very low. In a macro environment where its not easy to get jobs, it’s okay to make significant salary cuts. Many people prefer that vs losing jobs. Some of them will still find other jobs and leave, but many will stay.

3.     Genuine empathy needs to be visible: Over the last few years, the principal of radical candor has been talked about. It’s about a very direct and truthful communication combined with genuine empathy. In simple terms – “I care about you, but I have to let you go”. It’s a job that needs to be done. Some companies express this empathy by offering greater health insurance, or family days, or increase ESOP allocation during such times. 

4.     Don’t let it linger: When such a thing happens, all employees start worrying. Are we going be let gone? Will the company survive? In the ideal scenario, the company should do 1, thought-through deep enough cost cutting in 1 go, swiftly. Get it done, so that people know where they stand and then assure the ones remaining that more is not coming.

5.     Be conservative: Startup entrepreneurs are optimistic by nature. They feel things will get better. They also worry about teams they have assembled and how it will be re-assembled. Remember that most teams have only been built in the recent past and can be re-built again. Make sure there is enough conservatism built in your cost-cutting. You don’t want to be on a path where evey 2 weeks, you have to cut again.

GlobalLogic today employs nearly 10,000 people. Directly / indirectly, this supports over 50,000 people. The role of corporations in the world is important. They need to flourish and people flourish around them. If they die in macro environments like this, a whole possibility dies with them. 

If any of you have specific questions around your situation, please do not hesitate to private message me.