Gartner Survey Shows CFOs Double Down on People Cuts Due to Ongoing COVID-19 Disruption

A Gartner Inc. survey of 161 finance executives revealed that in May and June the number of companies furloughing staff, as well as cutting salaries and workforce will have more than doubled since the end of March. Eleven percent of respondents reduced staff in March, and 25% plan to reduce staff in May and June(see Figure 1).

“CFOs are unsure what reopening will look like and have little visibility into when revenue will start to normalize. This is driving CFOs to look for the next round of structural cost cuts to preserve cash for the coming months,” said Alexander Bant, practice vice president, research, for the Gartner Finance Practice. “Companies are conducting robust analysis about which of their business lines and products sets they will rescale, reinvest, return, reduce, and retire. As they do this, they are determining which sets of staff they need to succeed in the short-and-long-term.”

“CFOs want to optimize costs but still be able to come out fighting when restrictions are loosened,” said Mr. Bant. “Companies are being deliberate about rapidly reducing headcount in areas of the company they do not believe will return to normalized revenues anytime soon. They are protecting roles in parts of the organization that will be necessary to meet a return of demand across the coming two quarters.”

Spend will increase in RPA, Cloud, and Advanced Analytics
An interesting anomaly to this picture of broad-based cuts was around specific technologies which CFOs believed may drive cost optimization. The Gartner survey showed that 24% of finance executives anticipate more spending on robotic process automation (RPA), 20% anticipate more spending on cloud-based ERP technologies, and 19% anticipate more spending on advanced analytics.

“COVID-19 shifted the way work is done by most organizations overnight. Companies are now operating in remote environments, with less staff to run key processes, and under immense cost pressure. This has resulted in companies moving more quickly to the cloud, applying more robotics to their processes, and exposing the need for advanced analytic technologies to plan effectively in this environment,” said Mr. Bant.“ Gartner research has shown well-implemented RPA, cloud ERP and data analytics have driven extensive cost benefits.”

Cost reintroduction
Of the areas that had been cut back the most there were three clear favorites among CFOs to reintroduce once revenues return. Open hiring (49%) T&E (46%) and capex investments (41%) were the most common costs that CFOs indicated they intend to reintroduce.

 “Conversely, we see several areas that CFOs tell us they will not bring back spend right away. Notably, real estate spend, sales reward trips, social media marketing and service provider contracts do not look like they will be making a rapid return to previous expenditure levels.” Mr. Bant said.

Gartner clients can read more in CFO Actions in Response to COVID-19: Week of May 3, 2020.

Non clients can read more here and find a selection of coronavirus-related resources here.

*About Gartner CFO Cohorts
In response to urgent CFO demand, Gartner Finance is holding weekly CFO cohorts as a forum for CFOs to discuss emerging COVID-19-related areas of concern and what actions they are taking or not taking. 

About the Gartner Finance Practice
The Gartner Finance practice helps senior finance executives meet their top priorities. Gartner offers a unique breadth and depth of content to support clients’ individual success and deliver on key initiatives that cut across finance functions to drive business impact. Learn more at https://www.gartner.com/en/finance/finance-leaders.

Gartner, Inc. (NYSE: IT) is the world’s leading research and advisory company and a member of the S&P 500. We equip business leaders with indispensable insights, advice and tools to achieve their mission-critical priorities today and build the successful organizations of tomorrow.

Our unmatched combination of expert-led, practitioner-sourced and data-driven research steers clients toward the right decisions on the issues that matter most. We are a trusted advisor and an objective resource for more than 15,000 enterprises in more than 100 countries — across all major functions, in every industry and enterprise size.

To learn more about how we help decision makers fuel the future of business, visit gartner.com.