Published by:
Harvard Business Publishing
Length: 11 pages
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Abstract
Until recently, U.S. service companies have been shielded by regulation and confronted by few foreign competitors. As a result, they have allowed their white-collar payrolls to become bloated, their investment in information technology to outstrip the paybacks, and their productivity to stagnate. Now deregulation and foreign direct investment are exposing these vulnerabilities. To survive the service shakeout, companies must refrain from indiscriminate cost cutting and balance financial discipline with a comprehensive and immediate reexamination of strategy.
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Abstract
Until recently, U.S. service companies have been shielded by regulation and confronted by few foreign competitors. As a result, they have allowed their white-collar payrolls to become bloated, their investment in information technology to outstrip the paybacks, and their productivity to stagnate. Now deregulation and foreign direct investment are exposing these vulnerabilities. To survive the service shakeout, companies must refrain from indiscriminate cost cutting and balance financial discipline with a comprehensive and immediate reexamination of strategy.