Why cut?

Lauren Whitehouse of Enterprise Strategy Group in Milford, Mass., said companies have to do what they have to do to get by today. By cutting or renegotiating maintenance pacts, companies trim costs so that they can perhaps avoid or reduce layoffs or still have money to spend on innovative new projects that will help grow the business when the economy does rebound, Whitehouse said. “Hypothetically, 70% of your budget is for keeping the lights on and 30% is for moving the business forward” strategically in the future, she said. “So you look at the 70% to see what you can squeeze out there so you can keep the strategic stuff going.” For many clients, servicelevel cuts are “the last straw”, Keane’s Milde said. “We’ve seen clients go at rate reductions or cutting baseline support, but it’s always with the caveat that they want to keep the trains running.” One IT staffer, a software engineer for a $ 1,5 billion Midwestern sporting goods manufacturer, said maintenance cuts came to his company after lots of other paring was done, including layoffs of about 20% of the IT staff.

Internet: <www.computerworld.com> (adapted).

Judge the following item according to the text above.

Aside from cutting or renegotiating maintenance pacts, companies trim costs in order to avoid or reduce layoffs.