Interview Question for Strategic HRBP role - CTO of the company wants 50 more employees not in budget

Dear Members, One of my colleagues was asked during an interview where he applied for Strategic HRBP role
You are the VP HR of the company. There are 200 employees, the salary cost comes 5 crore annually. CTO of the company wants 50 more employees to add. You cant go beyond 5 crore budget as it would impact the business and cant go back to CTO saying No for adding 50 more employees.
What would you suggest in this case.

Dear Nutan,
If the employee expenses for 200 employees are Rs 5 Cr per annum then let us assume that for 50 more employees these would be Rs 1.25 Cr per annum.
There are only one option is to reduce the salary of those 200 employees by 1.25 Cr. While on paper it sounds good, practically it is impossible as there could be a big backlash from the existing employees. Because of the salary reduction, if they quit the company then cost would go up by more than Rs 5 Cr!
The second option is to outsource the work to the third party. For the finished product the they can charge some amount. This way, the manpower expenses will remain same but the project cost will go up. This is also a costly solution as the company will be paying profit share and GST to the outsourced agency. But then this suffices the CTO's requirement.
Thanks,
Dinesh Divekar

Dear Dinesh,
Thanks for your response. I feel second option could have helped him clearing the interview. :)
His answers were-
Option 1. He will check if the existing set of resources can perform the same task
Option 2. He will try to find out if at lower skills set and cost new employees can be hired. e.g. Freshers can be hired. He will present a plan to CTO for hiring at very low cost.
Regards,
NM