IT Services Business Processes, Models and Functions

3.1
A general appreciation of financial terms for an IT Services firm (Contd.)
tem
Description
pical
range (in %)
Remarks
Cost direct labour or60-70Indirect component
performing the services.of prices
Cost of services
of labour
overheads, infrastructure
cost, management cosi
services could be nearly 15
times the direct cost I also
ncludes cosi of intellectual
property at a estimated basis
Efforts for sales, marketing
promotion, customer travel
for business development
Diffcrence betwcen e 30-40
and cost
Difference between revc
Cost of sales
Salary of sales and marketing
cam, travel
Gross margin
EBITDA
60-70
An approximate measure of
before interest nue and cost excluding
a company's operating cash
low based on data from thc
company's incomc statement.
Calculated by looking at
earnings before the deduction
of interest expenses, taxes,
depreciation and amortization
Includes headquarter
expenses, Directors fee
tax depreciation and
amortization)
depreciation, loan intcrest
taxes and amortization
General administrationAdministrative expenses
costs
6-8
not covered
marketing
sales and
Marketing and promotion | Cost for brand building |
2-3
Online marketing cost is also
included
motion, web presence
Research and develop- Cost of developing new
ment, innovation projects services, technology
development, innovation
projects
3.4 Managing Finances, Support Infrastructure,
Administration
g process the ITS firm has to plan for capital investment,
create infrastructure such as offices, administer several other activities such as
company formation,
x payments, etc. This process is a foundation process through which the rest of the
es operate. This is the reason why in the Figure3.1 this is shown at the bottom.
O this process also covers other infrastructure processes like povisioning for
ture for employees, regulatory processes such as contract management, employces
permits, travel, visa, accommodation for onsite workers, etc. Figure 3.3 shows the
input
on output from the strategic plannin
billin
organizational process
Supported by CFO
IT infras
work
activities and output of this process
truct
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