Draw the issue tree for this question

An Indian IT Service and product company has an employee base of 5000+ resources all over the globe. Around 73% of the resources are based out of India (Mumbai, Pune, Hyderabad and Ahmedabad). Total employee strength includes 690 contractors out of which 60% are in India, 5% in Australia and 7% in Asia Pacific centres. These contractors are on an average 1.4 times costlier than permanent employees.

Its customers are across 35 countries mainly in the US (32%), Middle-east (27%) and Europe (20%).

Its main business is providing IT solutions and Annual Maintenance Services. Though they provide IT solutions in all the domains, 46% of their revenue comes from BFSI sector, 21% is from the Healthcare sector and the rest from other sectors like Retail, Public sector, Manufacturing, Travel, Entertainment etc. Its product-based business is providing pre-made softwares and applications for companies. The three products they offer are DevOps bundle, cybersecurity and digital marketing. 90% of revenue comes from the digital marketing product.

It enjoys a good margin from BFSI (42%) and Retail (39%) sectors and also from business in the US (48%) and Europe (44%) region. The margin is very low in business in India (9%) and other Asia Pacific countries (14%).

It is finding it difficult to be at par with its competitors on a year-on-year margin improvement rate which is 11% v/s 26% by other comparable IT companies in India. To address this, it is thinking of acquiring smaller organisations which specialise in niche technologies and having a larger customer base which will help them in increasing its employee base and expand the business with cross-sell opportunities.

Will the acquisition help in the improvement of margins? If yes, then why? If not, then what alternate strategy should the company follow?

Instruction Set

1. Identify the root problem and use the MECE (mutually exclusive, comprehensively exhaustive) principle, discussed already in the module videos, to break down the problem.

2. Using the profitability tree down structure, divide it in two parts Revenue and Cost.

3. Further branching can be done according to your logic but do keep in mind that those parameters shouldnt overlap. Eg. Revenue and profit are overlapping parameters.

4. For revenue, 60% of it comes from IT solutions and maintenance, and rest comes from its products.

5. The company is looking forward to investing in India, US and Europe. See the potential growth for different sectors in these geographical locations.

6. In the US and Europe, the healthcare sector seems promising and the same for India with the BFSI sector. Explore other options and see what could be done differently.

7. Finally, provide recommendations for where the company should invest and what kind of acquisitions it should do.

1) Buckets which will include

a) Expenditure of the companies

b) Sectors in which the companies thrive

c) Employement rate of the companies

d) Margin of the companies

e) Product produced by these companies per year

2) Flaws in the problem statements like in 4th paragraph it is written that the company has three products out of which most value or revenue is being generated by digital marketing and therefore figure out whats the reason other products are not being that valuable maybe the reason is rate of the product is very high,less demand of the product or quality is not good.

3) Give your own ideas regarding the process or ways that the companies can develop in order to increase their margin like acquantation of small organistations having large customer