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A field service guide to cost-cutting in the COVID era

October 23, 2020


Virtually all companies in the field service industry have been affected by the COVID-19 pandemic. The uncertainty has forced many businesses to make difficult decisions in order to cut costs. 

For most companies, there is no “silver bullet” or single idea that will radically change your cost structure — without serious disruption to your business. Instead, focus on implementing a combination of smaller measures that can add up to make a big impact. 


1. Understand your expense structure

Before you consider where to reduce costs, make sure you have a comprehensive view of your spending. You probably already have a good pulse on your overall expenses. But a detailed understanding can help you make the most informed decisions about where you might be able to cut. 

Start by conducting a thorough expense audit to identify areas of spending such as technology costs, labor costs, and other related field service delivery costs (such as inventory and travel). These are areas where many field service companies can find savings.

Whether you need to make some short-term reductions or find new ways to cut costs long-term, here are some tactics to consider.

2. Cut back on non-essential expenses

Now is the time to cut back on the expenses that may be in the “miscellaneous” line of your budget. Many businesses have monthly fees or subscriptions that they don’t even realize they pay. Other nonessential expenses may include unused or rarely used leased equipment. Use your savings to reallocate spend to areas with the most impact on your business.

3. Reduce hours or reduce pay

According to Korn Ferry, 17 percent of companies implemented a pay cut as a result of the pandemic. Some company leaders set an example by cutting pay for executives and managers first. Others are asking employees to accept temporary wage reductions. Though not ideal, most employees agree reducing pay or extending an existing pay cut is a preferable alternative to layoffs.

4. Rethink office space needs

Working from home has been the reality for over 100 million Americans during the pandemic, according to a Gallup survey. Many businesses will opt to allow remote work even after the pandemic recedes. As a result, you may find yourself with more office space than you need. Given the shrinking demand for commercial real estate, now is an ideal time to negotiate more favorable terms on a new or existing lease

5. Revisit your field service tech stack

The right field services technology can help you gain efficiencies and reduce costs. Yet 52 percent of businesses still use mostly manual methods for field services management. 

Field service companies that previously invested in technology may find themselves with a technology stack that is outdated or obsolete. According to a recent study, 77 percent of field service organizations use on-premise field service software. What’s more, many companies use multiple, disparate systems that don’t integrate with one another.

Using a modern, field service management system can optimize field operations, including inventory management, dispatch management, vehicle tracking, scheduling, and more. Here are a few areas of potential savings: 

  • Decrease technician downtime by automating inventory replenishment to ensure technicians have what they need on hand for each job.
  • Maximize use of assets such as vehicles, machinery, or inventory by tracking and optimizing their use.
  • Reduce paperwork by eliminating the need to fill out paper-based work orders, checklists, and timecards. 
  • Increase automation with templates, bulk actions, and other time-saving tools. This will cut down on time-consuming and costly data entry.
  • Get paid faster with integration between your field service management system and your accounting solution.

6. Improve your inventory management practices

Labor and spare parts represent 77 percent of total field service costs, based on research by TSIA. That’s why it’s critical to manage parts and inventory stock information, and integrate that data with your other business systems. This will help you:

  • Eliminate time-consuming tasks associated with searching for parts or having technicians travel to a warehouse for missing inventory
  • Cut inventory costs and reduce the need for safety stock with better inventory visibility
  • Improve first-time fix rates and customer satisfaction by dispatching the right technician with the right parts

7. Optimize your labor costs

Many companies use a blend of full-time workers, hourly workers, contingent labor, vendors, and service companies to meet their labor needs. Evaluating your labor mix can help you balance fixed and variable costs, and set your company up for growth.

Maximize utilization of employees

Empower your company to use salaried employees more efficiently by finding contract workers where and when needed. This way, your full-time staff can focus on the highest value work, without losing focus by handling one-off projects.

Consider the total cost of hourly employees

When determining the true cost of an hourly employee, be sure to look at the “fully loaded” cost, not just the hourly rate. Use this calculator to factor in overhead costs and taxes so you can determine the true cost. Then, multiply the hourly rate by the number of hours worked per year to compare the cost of an hourly employee to a salaried employee.

Augment your workforce with contingent labor

Contingent labor can complement your internal staff by adding expertise, geographic reach, and capacity — without the overhead costs. For example, Upwork and Fiverr are contingent labor platforms for accessing marketing, administrative, and customer service talent. 

Contingent labor platforms for field services also offer insurance options, claims management, screenings, and certifications to mitigate field service risks and inefficiencies. Plus, they enable you to reduce expenses related to recruiting, training, and onboarding.

This calculator can help you estimate potential savings from using contingent labor.

Tap into on-demand pricing data

Market variability and volatility make it difficult to set the right hourly pay rates. Many service companies are surprised to find how much labor rates for field service work vary by month and metro area. Using contingent labor platforms, you can gain insight into market rates by geography and project type, so you can adjust rates based on market demand.

With real-time pricing data at your fingertips, you can avoid overpaying for labor (and leaving valuable revenue on the table). 

Consolidate your vendors and service companies

Managing a long list of vendor firms makes it hard to get a clear picture of your field service operations. Because you are working through a “middleman” rather than directly with technicians, you lose transparency into your actual labor costs, efficiency, and contractor performance.

Do you manage multiple vendor relationships to gain geographic coverage? With a contingent labor platform, you can find qualified technicians quickly to complete jobs in less time. You’ll become more agile with quick turnaround work, especially once you’ve established a pool of trusted technicians in your main operating regions.

You can also reduce the costs associated with managing multiple vendors. This will help you streamline technician selection, improve communication, and cut out unnecessary overhead. For example, Bullseye Telecom consolidated its field service vendors from 13 to one, reducing spend and improving quality at the same time.

8. Re-evaluate travel expenses

A significant portion of service your delivery costs is likely associated with travel. This may include fuel costs, vehicle maintenance, airfare, hotels, meals, and more. 

Chances are, you’ve already reduced your travel costs during the pandemic. Now is a good time to consider if these savings can be maintained long term. Many businesses have realized just how much field services work can be done remotely.

What’s more, a field service management platform can further reduce travel spend by helping you source highly qualified technicians across the country. Gone are the days when you need to have a presence in Omaha or Toronto to complete a work order for a valued client. By using a field service management platform, you help your team find the right technician, in the right place, at the right time to fulfill the work order. This saves you time and effort when you decide to say “yes” to new opportunities — while cutting down on travel expenses.

Now is the time to rein in your costs

Running a profitable field service organization is difficult under any circumstance, but the COVID-19 pandemic makes it more challenging than ever. The cost-saving measures in this guide can help you make incremental reductions and weather the current uncertainty. By doing so, you’ll emerge even stronger once the economy recovers. 

Contact the Field Nation team if you’d like assistance with evaluating and reducing your field service costs.


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