Problem: if 6 people from your team were being billed for a customer on an hourly basis and due to an acquisition, the customer decides to cut the number of resources  by half.  What additional information would you need for deciding your next course of action and what will be your suggestion to yourself/your team for the future?

Data available for decision making:

• The profit margin has been 40% per People billed.
• Product Development has an opportunity for 2 people (for a 2 month period).
• In house Product is in production and can be sold.
• There is no project in the sales pipeline as of today.
• YoY Revenue growth has been flat for the past 2 years.
• Per Employee expense on an average is around 1750 USD (including Salary and Overhead expense) per month
• Per Person Billing is around 20 USD per person per hour

Possible Résponses:

1. Understand the risk of flat growth and proactively  invest in Potential Sales (creating Sales Pipeline). To be specific, we need to set goals to have a revenue growth of at least 5 to 10% YoY and if the goals is unachievable, invest in Sales pipeline to get additional customers.
2. Understand the loss
   1. If the profit margin has been 40% per person billed, losing half the people's billing, will result in the following
      1. Expense remains the same i.e 6* 1750 = 10,500
      2. Revenue before reduction in number of billable resources = 6*15*160 = 14,400
      3. Revenue After reduction  = 3*15*160 = 7,200

Net Effect in Goal Setting would be :

1. Achieve YoY Revenue growth of at least 5 to 10 %. [The numbers can be revised periodically]
2. Identify 2 opportunities per quarter to help improve business process and convert to Revenue opportunity. For eg: Identification of the root cause of Globus Servers to go down and converting that to a proposal is a new revenue opportunity and if accepted, businesses can run continuously without potential downtime resulting in increased efficiency for business.
3. Add at least one new customer every 2 years. [Irrespective of Revenue Growth, adding new customers is always positive and reduces risk]
4. Invest in Product Development (atleast 160 person hours of Product Development) )which has potential for future growth when people are not directly deployed in Billable Project.
5. Identify at least one lead per year which potentially can become a customer and help build Sales pipeline For eg; Dharma passed on a lead about uVida which was converted to a customer.
6. Contribute to selling of the product by deploying the product for customer's benefit (with permission) by demonstrating the product or product features at least twice per quarter. [For eg: Pick to Ship Automation using ACRA was used to run multiple iterations of test adding value to the development process. In SFTP Integration, automated test results were shown to showcase Documentation Capability of ACRA ]