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Hard Profitability

Consulting Impact Consulting

#Consulting #Technology
ProHub Comment

This is a classic profitability case focused on cost structure and operational efficiency in a professional services firm. The case requires candidates to analyze billability metrics, workforce composition, and cost-reduction opportunities through both headcount optimization and geographic arbitrage. The quantitative components demand careful calculation while the qualitative elements test understanding of consulting industry dynamics and implementation risks.

Estimated Time 36 minutes
Difficulty Hard
Source Duke
10 / 100
Your client “Impact Consulting” is a industry leader in Technology consulting globally. Over the last 3 years Impact consulting has grown its customer base but the overall profitability has reduced. The CFO has hired us to determine what factors are driving low profitability?

Clarifying Information

Client/Company information: It is a multinational company and mostly has office in US and UK

Product information: Impact Consulting provides consulting and implementation services primarily in Cloud Products (like Microsoft Azure, Amazon AWS, Google Cloud etc.), Customer Relationship Management Products (like those used in Walmart/Target etc.), and Enterprise productivity products (like implementing Office 365 for companies).

Revenue information: Revenue has been stagnant in the last 3 years.

Mock Interview
Interviewer

Your client "Impact Consulting" is a industry leader in Technology consulting globally. Over the last 3 years Impact consulting has grown its customer base but the overall profitability has reduced. The CFO has hired us to determine what factors are driving low profitability?

You

Thanks. Before analyzing, I'd like to clarify a few key questions...

Interviewer

Good question. Let me provide some background information...

You

Based on this, I suggest analyzing from these dimensions...

AI Score
Structure Analysis Communication Business Sense Quantitative
Practicing...
Score coming soon
Practice this case with AI Mock Interview

Impact Consulting, a tech consulting leader, has grown its customer base but profitability has declined with stagnant revenue. The analysis reveals that billability rates for consultants and project leads fall below industry standards (70% actual vs. 80% target for consultants; 60% vs. 80% for project leads). Reducing workforce to match industry billability standards saves $18.8M, with an additional $11.18M available through shifting 20% of staff to low-cost centers.

Key Insights:

  1. Billability gap analysis is critical in professional services profitability - comparing actual performance (70-60%) against industry benchmarks (80%) reveals $18.8M in potential savings
  2. Workforce reduction must be carefully phased to avoid disrupting existing client engagements and requires concurrent employee retraining
  3. Geographic arbitrage through low-cost center migration adds an incremental $11.18M in savings and represents a complementary strategy to billability improvement
  4. Low customer repeat rates signal deeper operational issues (quality, staffing, communication gaps, changing customer needs) that must be addressed alongside cost optimization