Outsource, Hire or Discard?

Group 07
Abtahiur Robb Ohee (202-63-037)
Mohammad Nazib Intesar (202-62-006)
Nabila Hossain (202-63-056)
Shopnil Paul (201-63-022)
Tanzila Mahmud (201-63-094)
 Case Overview
MCC is a reputable IT company in Bangladesh that provides a range of technology and information
technology services, including mobile and web application development, E-services, digitalization,
multimedia content creation, project management and consultancy services, capacity building, and AI and
IoT-enabled services.

The management of MCC is facing a dilemma regarding whether or not to take up the new projects
requested by their existing and new clients. The company has a strong presence in the mobile application
development industry and they have been receiving specialized requests with low profit margins.
 Case Overview

IT Company with Considering whether to Evaluating its options

only 55 employees but accept requests from using financial and
delivered 350+ projects & clients that are divergent economic factors
services. from their modus operandi
(Agile Strategy)
 IT Industry Overview in Bangladesh
• The IT sector in Bangladesh has experienced significant growth in recent years, with an average
yearly growth rate of over 40%.

• As of 2017, there were over 4,500 registered software and ITES companies in Bangladesh, employing
around 300,000 local IT professionals.

• Domestic demand for IT-ITES services is expected to continue to increase, driven by both public and
private sector investment.

• The Bangladeshi government has implemented a number of initiatives to promote the growth of the IT
industry, including tax exemptions, investment in infrastructure, and initiatives to enhance IT-ITES
talents.

• Bangladesh offers a large entry-level workforce, augmented with a blooming technology services
freelancing community, and the ability to operate at a significant lower cost (about 20-30% lower than
neighbor India).
 TRIPLE TRIANGLE FRAMEWORK

Capabilities
ENTERPRISE • Offered services: Application development and maintenance,
Interative content development, Digital and AI services, Enterprise
solution, Tech research, Capacity building, Mobile VAS
• Enormous potential for growth- value of domestic IT firm expected
to grow x5 by 2025
Capital
• Pioneer in mobile app industry with strongest presence
• Vibrant pool of 55 employees: project managers, tech experts,
designers, analysts, etc.
• CMMI level 3 appraised company since 2019
Culture
• Agile management looking forward to challenging projects
• Friendly work environment- flexible hours and mutual cooperation
• Steady growth due to focus on quality
 TRIPLE TRIANGLE FRAMEWORK

INDUSTRY
Competitor
• Increasing activity from domestic and regional players
• Price war due to high competition and cut-throat attitude

Collaborator
• Location leverage through delivery center set-ups from global firms
such as IBM, Wipro, NTT data, etc.

Customers
• Domestic demand dominated by public sector- ICT division, Minitry
of power, energy and mineral resources, RAB, Coast guard, etc.
• Private sector- banking, telecom, manufacturing industries:
Grameenphone, bKash, Unilever Bangladesh
• Demand for traditional as well as digital solutions
 TRIPLE TRIANGLE FRAMEWORK

MACRO Country
• Large scale automation projects in BD- expected increase in
demand for software and ITES industries
• Competitive advantage- lower cost, entry level workforce,
blooming freelancing community
• Government incentives to support export, such as tax incentives
and focused investments
Creative
• New management practices- increase standard of quality for
offered services other than mobile app development
• Different type of app modification as a potential business type-
increase revenues
Cross- Border
• Annual growth x3 than that of global competitor, India
• Increased cut-throat competition from regional players
• Joint ventures from global firms such as IBM, Wipro, TCS, NTT
Data
 Decision Alternatives
Alternative 1 – Outsourcing to 3rd Party

Benefits Challenges

• Well-known network of experienced 3rd • Extend contracts in case of recurring projects

parties
• Shift lower margin projects
• Able to maintain short term contracts in
case of non-recurring projects
• Avoid the efforts needed for hiring new
recruits
• Added 10-15% extra cost on top of projected
direct recruitment cost (BDT 2.2 million
excluding overhead cost)
• Possibility of earning even lower profit
 Decision Alternatives
Alternative 2 – Permanent Hiring

Benefits Challenges

• Existing pool of talented human capital
• Utilize new hires to reduce burden of new
projects
• Maintain client satisfaction by taking up
new low margin projects from existing
clients
• Focus on entire organizational growth and
development
• Incur cost of BDT 1.7 million (excluding
overhead cost)
• Uncertainty of unsustainable recruitment
• Added cost and effort of training and
onboarding new recruits
• Compete with Indian startups
 Decision Alternatives
Alternative 3 – Contractual Hiring

Benefits Challenges

• Existing pool of experienced freelancers • Extend contracts in case of recurring projects

• Share the burden of new low margin projects • Possibility of high employee turnover in case
• Maintain good rapport with clients of recurring projects
• Achieve cost efficiency • Possibility of conflict of interest
 Decision Alternatives
Alternative 4 – Reject the Projects

Benefits Challenges

• Maintain current status with focus on • Possibility of losing out existing loyal clients
financially viable projects to competitors
• No binding for provision of • Negative ripple effect
additional/further service • Possibility of losing out market share
• Redirect effort on developing other viable
business segments with high profit potential
• Focus on the welfare and development of
existing human capital
Evaluating the Decision Alternatives
 Evaluation of Decision Alternatives

Permanent Contractual Rejecting the

Weight Outsourcing
Factors Hiring Hiring Offers
Business Growth 30% 6.0 9.0 7.0 0.0

Readiness for Future Scale 25% 2.0 9.0 4.0 0.0

Control over Quality 20% 5.0 8.0 7.0 10.0

Client Retention 15% 7.0 10.0 8.0 2.0

Financial Risk 10% 8.0 2.0 5.0 10.0

Total 100% 5.15 8.25 6.20 3.30

PROPOSED WAY FORWARD FOR MCC

PERMANENT HIRING OF EMPLOYEES

Will benefit the firm in the long term as more projects will land
increasing the scalability and reducing % of operational
expenditure
 SWOT Analysis
Strength
• Higher ability to cater to greater
number of projects
• Increased number of skillsets will
diversify the growth of individuals
• More control over project pace and
standard as opposed to other ways
• Long-term higher scalability and profit
Weakness
• Higher overhead-cost
• Short-term lower profit margin
• Increase number of variables
• Cultural vulnerability for people from
diverse perspectives
Opportunities
• New lead from more influential clients
• More scope to tap into more
specialized areas other than mobile
applications
• Higher scope of growth and learning
from more divers workforce
Threats
• Highly competitive tech industry
• Lower price segmentation by bigger
resourced organizations