New Delhi, As cost cutting becomes a top priority for Chief Information Officers or IT functional leaders amid COVID-19, a new report from global management consulting firm Boston Consulting Group (BCG) has warned that reducing IT talent may do them more harm than good in the future.

"Reducing staff across the board today could hurt your ability to deliver services tomorrow," said the report titled "Reduce IT Cost, Not Talent, At a time of Disruption".

Instead of laying off people, they should weigh other cost-cutting measures such as reconsidering sourcing options, moving some capabilities in-house, consolidating service provider footprint, and optimising delivery centre network.

"Until a permanent medical solution is available, the crisis will continue to place a great deal of stress on most companies," said the authors of the report.

"Still, it is prudent to look ahead at the advantages that will be needed in the future, and to design today's cost-cutting measures accordingly," they added.

As the report pointed out, when it comes to IT costs, the talent mix is crucial, since roughly 30-40 per cent of a company's IT spend is directly related to internal staffing costs and another 20 per cent is related to external contractors.

However, the report said that the current crisis will ultimately accelerate demand for sophisticated digital services, and thus for high-quality IT talent.

Thanks to the restrictions that came as measures to contain COVID-19, more consumers are today familiar with online purchasing and there is likely to be rapid growth in the digitisation of customer journeys.

The crisis also represents a likely inflection point for increased adoption of cloud-based services, telecommuting, and agile ways of working.

Moreover, cyber and information security will be more of a need than in the past, and artificial intelligence will be further embedded in business capabilities.

"The pandemic has led to widespread hiring freezes, but the need for tech talent is still strong, and companies are expected to begin competing for it again relatively soon," said the report.