Ommune IT Solutions: make or break

Monica Singhania and Syed Ashraf Husain

Monica Singhania and

Syed Ashraf Husain are
based in the Faculty of
Management Studies
(FMS), University of Delhi,
Delhi, India.

Prologue
Ommune IT Solutions[1], set up in late 2010, is known to offer an array of information
technology (IT) solutions like custom Web 2.0 based web site development, online branding,
search engine optimization (SEO), web marketing services, software development and
IT infrastructure services that are aimed at supporting businesses locally as well as globally.
As of January 2012, it is planning the commercial launch of a customer relationship
management (CRM) tool which is in its final testing phase. Santosh Singh Rathore, a computer
science engineer, who started the company, aspired to be an entrepreneur. Incidentally, over
the last 16 months, Santosh realized that the road to entrepreneurship, especially in a country
like India, is not going to be easy. After experiencing initial losses, he took the company in a
new direction by modifying its business model so as to offer outsourcing services for Indian
customers, setting up low cost web sites and SEO solutions. Though an extremely low margin
business model, at times especially for local customers, it guaranteed business to the
company.
However, Ommune was still experiencing problems with cash. The company was spending
more than it earned. Santosh kept the company going by working as an independent
consultant for IT companies and earning about INR 1,00,000-1,20,000 per month. This
amount was largely pumped into the company. To increase margins and enjoy stability of
revenues, the company invested in product development by building its first CRM tool. This
CRM tool currently is in a testing phase and needs a product evangelist[2].

The authors acknowledge the

support received from
Mr Santosh Singh Rathore, the
CEO and founder of the
company Ommune IT
Solutions. Also they are deeply
grateful for the ground work
done on this case by
Abhay Joshi a member of the
MBA Class of 2013, Faculty of
Management Studies (FMS),
University of Delhi, India and
Akhil Khanna, Investment
Planner, New Delhi.
Disclaimer. This case is written
solely for educational purposes
and is not intended to represent
successful or unsuccessful
managerial decision making.
The author/s may have
disguised names; financial and
other recognizable information
to protect confidentiality.

DOI 10.1108/20450621211311597

Ommune IT Solutions is one of the many IT startups yet to find a firm foothold in the crowded
Indian IT industry. Although the company has a potential winner with the CRM software, the
cash flows are the first and foremost problem of the company. A change in compensation
structure is also likely considering different modes of payments (fixed salary, fixed variable
or fully variable (Exhibit 1)). The company has fixed assets which are being contemplated to
be disposed off if necessary to improve the immediate cash flows. After looking at all options
and the opportunity cost of the CEO not working as a full time consultant nor working in any
other organization, Santosh while sipping lemonade at Hard Rock Cafe, was haunted by the
question should he continue to focus on building Ommune, the company of his dreams,
and if so, in which direction?

Background
The issue of cash flows with inherent uncertainties in the market is scary at times, yet
exciting. One may not like to trade it for anything. Ommune may well be on the edge of strong
growth having faced more than its share of issues over the past few months. For no amount
of innovation can match creating a business enterprise.

VOL. 2 NO. 8 2012, pp. 1-21, Q Emerald Group Publishing Limited, ISSN 2045-0621

EMERALD EMERGING MARKETS CASE STUDIES

PAGE 1

Santosh Singh Rathore, founder of Ommune IT Solutions, quit his secure job with Infosys[3],
an IT giant in India after working for two years, to start his own company. Being an engineer
with primarily technical experience, he had not been exposed to managerial issues, by his
own admission.
With a strong entrepreneurial urge and a desire to do something more meaningful not only
for himself but for others as well, made him set up his own company. The company initially
looked at focusing on web sites and forums based on niche skills. It started as a web site
with forums, focused on improving technical skills of engineering students through quizzes,
tutorials, paper presentations, games and workshops. However, these initiatives and two
other ideas that were tried on similar lines failed to take off primarily because of lack of an
adequate advertising budget. The investment loss on such initiatives was very limited (about
INR 1,00,000) which was funded mainly from Santoshs personal savings which had been
accumulated during his limited time with Infosys. Undeterred, he began to comprehensively
focus on alternative business models and focused on an outsourcing model. He realized that
there was just enough space for a small new player in the market.
Many successful startups adopt different business plans as cash flows from initial plans fail
to materialize. Info Edge India Ltd[4], that today runs multiple successful ventures such as
naukri.com, started as a set of two companies with different products. Creating a new
organization is never easy. Entrepreneurs face many challenges and hurdles especially
during the first year of a startups inception. In contrast, starting an enterprise is relatively
simple with founders having, in most cases, a very optimistic outlook. But soon, thereafter,
reality sets in when plans generally do not work out as expected. With such a back drop, plan
B of the strategy needs to be explored.

Entrepreneurial challenge in an emerging economy: Ommune IT Solutions

operations in India
India, being a developing country, has benefited immensely from the rising worldwide
phenomenon of outsourcing by multinational companies in developed countries. India has a
technology aware talent pool that leverages entrepreneurship skills, internet and technology to
become a major service provider to the world. Despite these strengths working in favor of India,
in its rise as an economic power in the world today, operating in a developing country has its own
set of disadvantages as well that are a major challenge for survival as far as small startups like
Ommune IT Solutions are concerned. India as a country is rich with talent and unique ideas but
local startups often fail due to the unfavorable circumstances of growing in a difficult
environment. The majority of difficulties faced by companies like Ommune in India include:

There is hardly any support from government for startups as the government of India has
much more pressing issues to tackle with India being a developing country.

Most investors or venture funds prefer to invest in the advanced stage of startup
operations as the risk involved is less compared to investing in fresh ideas which have a
higher risk of failure. The general population of developing countries like India have a high
savings rate due to the absence of well developed government financial support systems
for individuals. High levels of savings assist entrepreneurs to fund startups from personal
sources and realize their dreams and goals. In this way, most start ups like Ommune IT
Solutions depend on internal financial resources or funds they borrow from friends, family
or initial customers to fund initial startup costs which are essentially limited in scope.

Startups in India do not have access to seed funding, collaborative work spaces, access
to mentor base, dedicated business training, networking visibility as well as key hires with
built in technical expertise which are taken for granted in the case of startups in
developed countries like Silicon Valley.

Limited financial resources and fragmented retail and distribution in a developing country
like India force startup entrepreneurs to start their business with direct access to end
customers. This keeps the scope of their activities limited and prevents the startups from
vertical integration of the business.

PAGE 2 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

Another problem that startup entrepreneurs face in developing countries like India is lack
benefits of mentorship and apprenticeship which limits their strengths to specialized
fields of their own expertise. Santosh Singh Rathore, a software professional, with good
technical knowledge, started running his own company even though he had limited
exposure to the managerial skills needed to run a business enterprise.

These factors are a huge disadvantage to startups in India when compared to neighboring
countries like Singapore which already have a good number of angels and early stage funds in
their startup ecosystem and a government that openly supports technology ventures with
grants and friction reducing initiatives. Many entrepreneurs in India like Santosh Singh Rathore
of Ommune IT Solutions treat these constraints as a challenge and survive in such harsh
operating environment based purely on optimism and persistence. They use the advantages of
cost-effective manpower and lower operational expenses in India to efficiently use their limited
financial resources to keep afloat till the business models start generating profits.

Startups that reinvented themselves

Google, at one time, was searching for a stable revenue source. For quite a long period in its
existence, Google had no focused business model. After making marginally profitable
forays into selling search applications to businesses and its own search technology to other
search engines, Google radically changed course in 2003. The company launched its
AdWords program which allowed businesses to advertise to people while searching on
google.com. To this day, AdWords comprises a major share of Googles total revenue.
Incidentally, one of the largest online companies in India, naukri.com[5], did not have an internet
account, or even an internet connection, when it first began operations. Sanjeev Bikhchandani
founder of naukri.com saw a potential market for salary survey on what companies were paying
to fresh MBAs. For the first seven years, the company drifted as Sanjeev and other co-founders
tried various ideas such as databases, salary surveys, feasibility studies, training and
everything else that came their way, just to survive, and operated out of the servant quarter
above the garage at home. His drive to solve the problem and the belief that there is potential in
his idea, ensured that he did not give up even though there were many struggles, including not
being able to draw a salary, in the first six years. The support of his wife, a classmate from
business school and working with Nestle then, allowed Sanjeev the time and opportunity to
enjoy the thrill of following his dream. And just as they had tried half a dozen small ideas, naukri.
com was also seen as just another small idea as they launched themselves as the first online
jobsite in India. Naukri.com itself grew at a very slow rate and Sanjeev accepted outside funding
only when JobsAhead[6] came into the market. Then the dot com bust happened and at one
time the company was losing over INR 2.5 million per month. It was the combined efforts of
various teams that saw naukri.com pull ahead. Today naukri.com is among Indias better known
success stories in the internet space[7].

Competitor analysis
The industry in which Ommune IT Solutions operates is a highly competitive one with
numerous one man firms offering web site development and web solution services at very
low costs. Some of the competitors in Delhi/NCR with whom Ommune IT Solutions competes
for business are:
B

Benchmark Internet Group India[8] Pvt. Ltd. This Company offers services such as e-mail
marketing, SEO, pay per click (PPC) management and web site visitor traffic analysis. It
has a staff of 14. The functions and the key skill set that the company offers are in the
areas of call centre, system administration, linux content/copy writers, human resource
development, marketing/sales and other similar areas.

FC Net India[9] Pvt. Ltd. This is an India-based development arm of Fidelio Cruise Software,
the worldwide leader in Software solutions for the Cruise Industry. The ten member team of
the company offer special skill sets in the areas of Dot Net, Oracle and Visual Basic.

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 3

Initiative Technologies[10]. Since its inception, the company has provided a wide array of
innovative e-business solutions and services to provide complete business solutions to
organizations wanting to have a web presence. We align proven technical expertise with
business insight. It has a staff of ten employees.

Khushii IT Solutions[11] Pvt. Ltd. The group of eight people in this company provides
turnkey IT solutions and cutting edge products to companies, institutes and individuals.

Wiseassist Knowledge Solutions[12] Pvt. Ltd. The expertise of this company is in

spanning biometrics, mobile technologies, RFID and hand-held devices. It has a staff of
16 people.

There are thousands of such companies which have mushroomed in the last decade which
specialize in IT and internet-based services to individuals and corporations using less than 25
employees on their payroll due to low finance availability with the entrepreneur. Most of these
companies have been started by passionate entrepreneurs with specialisation in their fields
with little experience in business skills. These companies are low turnover startups that operate
from a small setup with access to high speed internet. The financial data of such companies is
unstructured and as these companies are usually not listed on the local stock exchange, the real
financial margins, turnover, profit and other such parameters are very difficult to compile.

Market growth rate vs market share

Within Ommune IT Solutions, the independent consulting earnings of Santosh Singh from
foreign clients are a valuable source of consistent cash flow to the company. Typically web
site setup and maintenance work from mom and pop stores is a low profit margin business.
Similar is the case with companies providing SEO solutions in developing countries where a
large number of startups such as Ommune fight for securing this business leading to lower
profitability. As far as the future is concerned, increasingly it is difficult for entrepreneurs to
develop accurate business forecasts considering the high variability in business secured
from one month to another particularly in Delhi/NCR. However, the CRM tool has the potential
to have a large market share and even enjoy a comparatively high market growth rate.

Business environment for achieving sustainable competitive advantage

Profit model. The profit model adopted by the Indian IT industry has been to acquire
overseas projects at low costs and then employing inexpensive Indian manpower to
execute those projects. The larger the scale adopted by the entrepreneur, the higher the
profitability of the company due to economies of scale. The excessive competition has led
to lower quality of services provided which has led to large Indian ITcompanies becoming
complete solution providers rather than just service providers. In this area, they are facing
stiff competition from both local companies as well as multinational companies who are
already experienced in this field.

Government support. The government of India has supported and encouraged the growth of
the IT industry by providing a ten year tax holiday. The companies operating from the special
economic zones (SEZs) enjoy a 15 year tax holiday as per the SEZ Act passed in 2005.

Skilled manpower. The key requirement of this industry is for skilled and educated
English-speaking manpower to provide efficient services at globally accepted standards.
Indian engineering colleges are producing software engineers at breathtaking speed but
the quality of education imparted and the soft skills (communication, language, grasping
levels and such other skills) of the majority of the graduates fall well below the levels
required for an industry to maintain its output levels.

Cost of operations. The increasing cost of operations in India due to high property prices,
the rapid rate of increasing labour costs due to prevalent high inflation in the economy,
poor infrastructure in terms of electricity and the connectivity network of the country is
weakening the Indian IT industrys position as a cheap alternative provider of services to
developed nations of the world. The cost of operations for the IT industry has increased
multi-fold in the last decade whereas increasing competition has kept the profit margins in

PAGE 4 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

check thereby reducing the profitability of companies. This is leading to the emergence of
other countries such as the Philippines and China as cheaper alternatives and a threat to
the Indian IT industry.
B

Global economic crisis. With fears of a global downturn looming large, the IT spend of
companies is likely to be affected. This will definitely lead to a lowering of demand for the
services provided by Indian IT companies. This also calls for a change in outlook of Indian
IT companies. They should concentrate on more products based revenue earning models
or concentrate on tapping the domestic IT services demand. For instance, the Indian
Government is allocating huge budgets to computerize tax revenue collections to try and
maximise tax collections and reduce the ongoing large-scale tax evasion.

Ommune: the new business model

Ommune adapted its business model to offer outsourcing services for Indian customers
such as setting up low cost web sites and SEO solutions. Since the company was very small
and had little capital to invest, the focus was on designing and maintaining web sites for local
and global businesses as well as institutions. Some of these contracts were piecemeal as
well. In addition, the company undertook the supply of other IT solutions to clients, on
demand. These were typically very small deals in terms of revenue with nearly 40 percent of
business clients being mom and pop owned stores wanting to have an online presence.
The deal size was in the margin of INR 8,000 to INR 15,000 for a local client with an average
of six to seven deals per month. The deal size was higher for clients based on a location
outside India.
As on January 2012, the companys why us[13] statement gave a very good idea of their
market segment:
Being a complete Customer and Technology Driven IT Outsourcing company in India, Ommune
IT Solutions Pvt. Ltd was known to offer an array of IT solutions like custom Web 2.0 based web
site development, online branding, SEO, web marketing services, software development and IT
Infrastructure services that are aimed at supporting businesses locally as well as globally.
The cost effective services to organizations that outsource their web site development, online
branding, web designing or SEO services, software development services, IT Infrastructure
services, etc. were sustained by their dedicated pool of IT professionals, relieving their clients
from high managing costs and manpower investments without compromising on quality.

While the company was making money on individual deals, it was still not making an overall
profit as the cash outflows were more than the cash inflows. The company tried brick and
mortar businesses as well. A commercial vehicle, purchased for about INR 6,00,000, kept
standing without being put to any use. There was a bank loan with INR 15,000 equated
monthly instalment (EMI) into its seventh month as of now, relating to the commercial vehicle.
The loan was for a two year period with a principal of INR 3,00,000. The value of the
commercial vehicle in the second hand market was estimated at INR 4,00,000 which was
equal to the amount that was owed to the bank (in case of prepayment of loan) after the
various EMIs that had been paid in the last two years. Although the amount was not large, for
a startup it may well forgo fixed assets which, although in the long term, may be useful but
which tend to create a cash crunch in the short term.
The company was staying afloat through cash flows by equity raised through independent
IT consulting by Santosh for foreign clients. The consulting was in the form of trouble
shooting and issue resolution. The consulting done by the founder brought in around INR
1,10,000 per month. This was being considered as a separate cash flow as the founder was
doing it to provide the necessary cash flows to the startup. This job was not being handled by
other employees of the company as only the CEO had the competency/required skill set to
handle such work. The primary issue that confronted Ommune was hiring of employees
skilled enough to handle ad hoc tasks independently. Over the last 12 months, the founder
estimated he had pumped in at least INR 12,00,000 into the company and still had to work as
a consultant to manage the cash flows.

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 5

As an interim measure, the company started recruitment of staff with dedicated personnel for
marketing and designing. The company now had a total strength of more than five people
and had no external equity, other than that of the founder. The core team comprised two
developers, one being the founder himself, a graphics designer and a general executive.
Because of a cash crunch and unstable revenues, the company was having difficulty in
hiring and retaining employees.
Realizing thin margins and the cut throat competition, the company felt the need to focus on
marketing for contracts in the Delhi/NCR.
For sales and marketing executives that the company wanted to hire, it proposed to pay a
fixed salary of INR 10,000 plus 15 percent of sales above INR 40,000 generated by them
(Exhibit 1). It estimated that each marketer can bring in business that will keep decreasing
as the number of marketers increases (Exhibit 2). The estimates are based on the
performance of the staff they already have. A healthy mix of telesales and site marketers
(who will go to customers and personally meet them) was needed. The company could only
service a limited number of clients without employing more developers. A developer in the
area of expertise that the company needed would cost at least INR 50,000 a month in terms
of salary.
Also, as the company is fairly new and had a small office space, sufficient only for the people
currently employed (excluding the CEO), it cannot accommodate more than eight
employees in any case.
To increase margins and stability of revenues, the company invested in product development.
The companys first product, a standalone CRM tool, was in testing phase and it was looking
for a product evangelist. For this product, the company was looking for product evangelists in
different locations. The CRM tool was built with significant development costs (Exhibit 3). The
company was contemplating the best model for remuneration to the product evangelist
(namely fixed pay or fixed pay plus incentive or entirely percentage of sales, see Exhibit 3).
To compute sales, it referred to sales directly pushed by the sales team or the online
evangelists, who were not full time employees of the company but were product affiliates in a
way and were working on commission basis. While the product had generated excitement in
the market, the CEO felt there were no reliable estimates for future sales once the product is
commercially released. He wanted an online product evangelist for different locations and
believed the different incentive models could directly influence sales. He felt (on the basis of
data from exclusive beta reviews of the product), that each product seller could drive sales
anywhere between INR 50,000 and INR 3,00,000 (Exhibit 4).
Based on past market research undertaken by the CEO, he assumed a different probability
for different level of sales (telecaller based). The market potential was estimated by
analyzing the sales of other companies dealing in similar products (Exhibit 4).
As of January 2012, the company had a monthly office rental of INR 25,000. The net assets of
the company in terms of equipment were approximately INR 2,50,000 with present market
value of an estimated INR 1,40,000 (depreciation on IT equipment is generally faster as
compared to other assets). The company was spending around INR 80,000 in salaries and
INR 40,000 in other expenditure for its existing employees. The CEO took a comparatively
smaller salary of INR 30,000 compared to his overall contribution to the company. He
estimated that if he was working all by himself as an independent consultant full time he
could earn up to INR 2,00,000 monthly (essentially what the CEO is presently doing part time
and earning approximately INR 1,10,000 per month). This estimate is based on income that
he is generating presently as an independent consultant.
While the CEO wanted to be an entrepreneur, he wonders if the returns from his business
justified the opportunity cost he was incurring. The company was presently earning monthly
revenues of around INR 1,00,000. This amount was highly variable and had seen a minimum
of INR 50,000 and a maximum of INR 1,80,000.
As per plan, the company stated the cost of supporting customers for different issues with
standard hourly rates, but these were negotiable (Exhibit 5).

PAGE 6 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

Final lap: lessons to be learnt

In the absence of structured MBA inputs in a business school, the CEO wondered what the
present situation meant for his company. Often his thoughts revolved around the future path
for Ommune IT Solutions. Was it the right time and did it make sense to focus on more
products? Alternately, the risks in product development made him wonder if the company
should move towards a complete outsourcing model jettisoning all independent product
development.
Santosh kept deliberating on these decisions and wondered if he needed a more detailed
analysis in order to reach a final decision to determine the ultimate fate of Ommune IT
Solutions.
Santosh did not take the risk factor into consideration while deciding the future course of
action for Ommune IT Solutions. By working part time, he was hedging his risk both in terms
of money and time. Had he invested the entire sum of money at time zero, he would have
incurred interest cost and the risk of going burst. By working as consultant, he gave time to
his business plans to nurture on one hand and buying time to understand the nuances of
business on the other. As Ommune IT Solutions was only 16 months old and still was
generating revenue, Santosh thought he should give more time to his dream by focusing on
new markets, new products and giving ownership to employees in the company instead of
giving them salary, a plan oriented towards reducing his immediate cash outflows.

Notes
1. http://ommune.com/
2. A technology evangelist is a person who attempts to build a critical mass of support for a given
technology in order to establish it as a technical standard in a market that is subject to network
effects http://en.wikipedia.org/wiki/Technology_evangelist
3. www.infosys.com/
4. www.infoedge.in/
5. www.naukri.com/ India
6. www.jobsahead.com/
7. Details sourced from: http://peoplematters.in/articles/cover-story/business-of-jobs

Keywords:
Business strategy,
Entrepreneurship,
Cost benefit analysis,
Financial management,
India,
Outsourcing,
Competitive strategy

8. www.benchmarkemail.com/
9. www.fcruise.com/
10. www.initiativetechnologies.com/
11. www.khushiiit.com/
12. www.wiseassist.com/
13. http://ommune.com/

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 7

Exhibit 1
Table EI Description sales and marketing executive
Designation: sales and marketing executive
Candidate profile
Candidate should have sales and marketing attitude. Who thinks she/he can
sell anything and everything to anyone
Candidate must have zeal to work hard for personal as well as companys
growth
Candidate must have excellent communication skills
Candidate must have basic understanding of the computer software terms
Work profile
Work involves marketing site development work of company to various
clients
Getting requirement from clients and selling web development products
Convert leads into sales by contacting clients and making business
relations
Generate business by various modes of communication and networking
Additional information
Telemarketers
Functional area
Sales/business development
Experience
One to two years
Location
Delhi, National Capital Region (NCR)
Company name
Ommune IT Solutions Pvt. Ltd
Salary and
INR 10,000 per month fixed 15 percent incentives after INR 40,000
compensations
business
Note: Interested folks can send their resume to the company

Exhibit 2
Table EII Estimate of revenues from hiring new staff
Number of marketers
or telecallers hired

Business targets
monthly (in INR)

Number of new
developers needed

70,000
65,000
60,000
55,000
48,000
44,000

0
0
1
1
2
2

1
2
3
4
5
6

Exhibit 3
Table EIII Estimate on upcoming CRM software
Estimated cost of developing the software
License type
Fixed amount incentive model

Variable plus fixed incentive model

Completely variable

PAGE 8 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

INR 16,00,000
Two machines (INR 15,000), up to six machines
(INR 30,000), unlimited (INR 1,00,000)
INR 30,000 if sales less than or equal to INR
1,50,000; else INR 50,000 above sales of INR
1,50,000
INR 15,000 fixed plus 12 percent of sales above
INR 50,000
18 percent of all sales

Exhibit 4
Table EIV
Total sales (in INR)

Probability

Upto 50,000
50,001-1,00,000
1,00,001-1,50,000
1,50,000-2,00,000
2,00,000-2,50,000
2,50,001-3,00,000

0.80
0.70
0.55
0.45
0.30
0.25

Exhibit 5
Table EV Ommunes pricing plans for clients
Plan name

Pricing

Elites

$30/h

Palladins

$25/h

Cavaliers

$20/h

Monks

$15/h

Features
3 years experienced dedicated resource
One of the best member of the team
24*7 availability on skype/gtalk/YMessenger/RBol/Windows Live
or any other messenger
Highly proficient soft skills
2 years experienced dedicated resource
Competent enough to ensure 100 percent client satisfaction
Available in IST (GMT 5:30) hours only
Highly proficient soft skills
An experienced resource/team of resources will be allocated. No
direct point of contact
Competent enough to ensure 100 percent client satisfaction
Available in IST (GMT 5:30) hours only
Highly proficient soft skills
For already existing customers
For the projects associated with us

About the authors

Dr Monica Singhania is Associate Professor, Faculty of Management Studies (FMS),
University of Delhi. She is a graduate from Shri Ram College of Commerce, post-graduate
from Delhi School of Economics and a Fellow Member (FCA) of the Institute of Chartered
Accountants of India. She has the distinction of being placed in the merit list of the
examinations conducted by both the University as well as the Institute. She has been awarded
a PhD in the area of corporate taxation from the University of Delhi. She is the author of five
books on direct tax laws and has had many research papers published in leading journals.
She teaches management accounting, management control systems, project management
and corporate taxation to MBA students at FMS. Monica Singhania is the corresponding
author and can be contacted at: monica@fms.edu
Syed Ashraf Husain belongs to the MBA Class of 2013, Faculty of Management Studies
(FMS), University of Delhi. He is a Computer Science Engineer from Pune University. He has
worked in the insurance and healthcare domain in information technology sector for nearly
three years. In 2012, he attended the international summer business program (ISBP) at IAE
Lyon, France. He was part of the team that represented India at the international finals of the
KPMG International Case Competition in Hong Kong in 2012. He has interests in finance and
strategy and in his free time loves to read.

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 9

Teaching notes
Monica Singhania and Syed Ashraf Husain

Subject area
The case provides valuable insights on emerging market challenges faced by small
entrepreneurial startups like Ommune by comprehensively providing the complete business
environment backdrop in sections such as emerging market challenges, Porters five forces
model, BCG matrix and competitor analysis. In addition, this case study looks at the strategy
of performing a cost benefit analysis to arrive at a decision on whether to go in for business
expansion by a relatively new company in the fast changing and competitive dynamics of
the internet and software industry. The case considers the various alternatives available to
the founder of the company with respect to the number of employees that can be added, the
additional sales likely to be generated and the cost of taking on additional employees.
It evaluates the combination of all the variables required for undertaking a comprehensive
analysis and aims at identifying the best possible level to which the business can be
expanded to maximize profits under the known constraints in which the business has to
operate.

Study level
The case can be used in the following courses:
B

Post-graduate program in entrepreneurship. Students can be introduced to different cost

concepts to be considered in cost benefit analysis while undertaking managerial decision
making.

Executive training program for middle and senior level employees to highlight the
concept of looking at various cost and revenue factors that influence the decision making
process and can be applied to new projects as well as projects not performing as per the
objectives of the organization.

MBA/post-graduate program in management in strategic management. It can be used to

introduce the concept of SWOT analysis, competitor analysis, Porters five forces model
and BCG matrix. In addition, students learn the technique of cost benefit analysis,
collection of relevant cost data, forecasting revenues and using them to arrive at a
decision aimed at meeting the companys objectives.

Case overview
Ommune Solutions was founded in late 2010 and is today focusing on providing Web 2.0
solutions to customers and at the same time developing a CRM tool which is in its final
testing phase. The Company was started by Santosh Singh Rathore a computer science
engineer who wanted to venture out on his own. After the initial losses, Santosh took the
company in a new direction that modified its business model to offer outsourcing services for
Indian customers, setting up low cost web sites and search engine optimization (SEO)
solutions. This was an extremely low margin business model at times especially for local
customers but guaranteed business to the company. However the entire cash flow was still
negative. The company was spending more that it was earning. The CEO generated more
revenues by working as an independent consultant to information technology (IT)
companies and earned approx. INR 1,10,000 per month which he pumped into the
company. To increase margins and stability of revenues, the company has also invested in
product development by building its first customer relationship management (CRM) tool
which currently is in testing phase and thus needs a product evangelist. The company is one
of the many IT startups that are yet to find a firm base in the industry. Although the company
does look like having success with the CRM software, the cash flow seems to be the first and
foremost problem of the company. It is also looking into the salary of the employees and
considering different modes of payments (fixed salary, fixed variable, fully variable). The
company also has fixed assets which it can consider disposing off, if required. After looking
at all these and the opportunity cost of him not working as a full time consultant or as part of
another organization, Santosh needs to decide should he continue to build the company
and, if so, in which direction?

Expected learning outcomes

B

Use of SWOT analysis to identify the strengths, weaknesses, opportunities and threats to
a company and use it as a tool to strategic decision making. Highlighting the importance

PAGE 10 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

of strategic tools such as Porter model and BCG matrix within an emerging economy
backdrop.
B

Use of cost benefit analysis as an effective tool for strategy deployment and achieving
organizational objectives. The methods by which the cost and revenue data can be used
to take financial decisions regarding the levels of business expansion and profit
maximization.

To illustrate the complexities involved in a strategic planning process of identifying costs

that can be cut, the additional revenue generation and the costs to be considered in order
to expand the business and maximize profitability.

Supplementary reading
Cost Accounting: A Managerial Emphasis, 14th ed., Charles T. Horngren, Srikant M. Datar
and Madhav Rajan, Publisher: Prentice-Hall, 2012.

Social implications
This case helps students realize the difficulties in realizing a strategic goal and keeping the
company on the path to achieve desired objectives despite adverse changes in business
environment. It introduces students to the concept of sustainability in the organization and
emerging global challenges.

Introduction
The audience should be asked to read about the changes in the internet based and software
industry in the last five years and try to identify as many reasons as they can as to why most
of the small and medium-sized companies in the industry have failed or are facing tough
times in generating revenues and profits. A look at the performance trends of these
companies over recent years would help them in their quest. The audience can then
proceed to identify the companies which have done exceptionally well like Google,
naukri.com and other such companies and list the right initiatives these companies have
undertaken to emerge as leaders in their respective areas despite the stiff competition and
changing dynamics faced by them as the rest of the industry. This would assist them to get
an idea of the business and the industry profile in which Ommune IT Solutions is operating.
Students have to thoroughly understand the nature of various fixed and variable costs in the
company, their nature and their effect on profits of the company under various levels of
operation.

Teaching plan/process
Method 1
Students should be told to read the case before coming to class and they should be given the
suggested reading of Horngren et al. (2012). Also, they should be given the assignment
questions as home work in order to have a full fledged discussion in class. The case can be
taught in the following manner (considering one 90-min class session with a 10-min break).
The students can be divided into groups of four or five and they can be made to present their
analysis of the case based on discussion questions. This will help them to become familiar
with the case so that they will be able to better discuss the analysis parts in class and each
group will give a different solution to the problems faced by Ommune IT Solutions which
would make a great way to exchange strategy formulating ideas. Considering a 90-min
session, we have the situation shown in Table I.
The entire analysis/discussion questions and topics can be taken from the set of the
questions given below in the discussion section. A thorough knowledge about the case is
necessary for a fruitful discussion.
Table I Session 1
Instruction

Time period

Group presentations
Discussion of analysis questions

Total time of 60 min

30 min

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 11

Discussion questions
1. Carry out a SWOT analysis and Porters five competitive forces analysis for Ommune IT
Solutions.
2. Develop a BCG matrix for Ommune IT Solutions.
3. What are the sources of revenues for the company?
4. What are the main problems being faced by Ommune IT Solutions?
5. Is the present cash flow of the company positive or negative?
6. What steps can the company take to improve its cash flow under the present
circumstances?
7. Should the revenue earned by the founder from consultancy services be considered as
revenue of the company for the purpose of decision making?
8. How many telecallers should be hired by the company for business expansion and why?
9. Can a better decision model be developed by assigning probabilities to different level of
sales likely to be generated?
10. Which model of remuneration would be suitable for Ommune (fixed, fixed variable or
variable)?
11. Should Santosh Singh Rathore continue with the company or start working as a full time
IT consultant?
12. Suggest any other strategy which can result in a better decision for Ommune IT
Solutions?

Suggested solutions to Ommune IT Solutions problems

SWOT analysis
Strengths
B

Santosh Singh has the expertise in technical know-how and is passionate about his
business.

Investment in research and development to develop the CRM.

Regular flow of business from mom and pop stores assured regular business.

Direct interaction with customers helps better understanding of needs and increases
efficiency by reducing response time. Helps in relationship selling.

Low overheads in business operations.

Weaknesses
B

Currently have a small customer base with few customers.

No other vertical market CRM tool is yet to be marketed and response

unknown.

Negative cash flow only being sustained by consulting work done by Santosh
Singh.

The financial capital required for marketing and expanding business is limited.

Lack of marketing and business experience.

Opportunities

The developed CRM has the potential to become a success.

Create an add on to existing products or services.

Offer consultancy and training.

PAGE 12 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

Threats
B

Highly competitive industry with similar web design competitors.

New technology changes due to which software products becoming obsolete within
a short period of time.

Price wars between Ommune IT Solutions and its competitors.

Porters five competitive forces model

Porters five competitive forces model[1] when applied to Ommune IT Solutions identifies the
following key areas:
1. Competition in industry. Indian IT industry acquires overseas projects at low costs and
then employs inexpensive Indian manpower to execute those projects. The larger the
scale adopted by the entrepreneur, the higher the profitability of the company due to
economies of scale. The excessive competition has led to lower quality of services
provided which has led to large Indian IT companies becoming complete solution
providers rather than just service providers. In this area, they are facing stiff competition
from both local companies as well as multinational companies who are already
experienced in this field.
2. Potential of new entrants into industry. Abundance of skilled manpower within the IT
sector, global economic turmoil leading to rise in unemployment, high population
and inflation in India and requirement of low fixed investment to begin with have all led to
a very high potential of new companies entering on an everyday basis within
this industry. The government of India has also supported and encouraged the growth
of the IT industry by providing a ten year tax holiday. The companies operating from
special economic zones (SEZs) enjoy a 15 year tax holiday as per the SEZ Act passed in
2005.
3. Power of suppliers. The industry in which Ommune IT Solutions operates is a highly
competitive one with numerous one man shows offering web site development and web
solution services at very low costs. This results in acute rivalry among competing
enterprises, thereby considerably reducing the power of such IT service providers. In
addition, with fears of a global downturn looming large, the IT spend of companies is
likely to be affected. This will definitely lead to lowering of demand for the services
provided by Indian IT companies. This also calls for a change in outlook of Indian IT
companies. They should concentrate on more products based revenue earning models
or concentrate on tapping domestic IT services demand. For instance, the Indian
Government is allocating huge budgets to computerize the tax revenue collections to try
and maximise tax collections and reduce the ongoing large scale tax evasion.
4. Power of customers. Customers seem to enjoy all powers since they have plenty of
choice in terms of selecting an IT service provider. Due to stiff competition, the
customer generally takes advantage of bargaining hard and in most cases tends to
get the work done at a fairly competitive price. However, the increasing cost of
operations in India due to high property prices, the rapid rate of increasing labour
costs due to prevalent high inflation in the economy, poor infrastructure in terms of
electricity and the connectivity network of the country is weakening the Indian IT
industrys position as a cheap alternative provider of services to developed nations of
the world. The cost of operations for the IT industry has increased multi-fold in the last
decade whereas the increasing competition has kept the profit margins in check
thereby reducing the profitability of companies. This is leading to emergence of other
countries such as the Philippines and China as cheaper alternatives and a threat to the
Indian IT industry.
5. Threat of substitute products. There is a high threat for all companies focusing on
providing Web 2.0 solutions to customers as essentially the end product delivered to
customers tends to be comparable and there is largely no novelty associated with
seeking services of any one particular company. The key requirement of this industry
is skilled and educated English-speaking manpower to provide efficient services at
globally accepted standards. Indian engineering colleges are producing software
engineers at breathtaking speed but the quality of education and the soft
skills (communication, language, grasping levels and such other skills) of the majority
of the graduates fall well below the levels required for an industry to maintain its output
levels.

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 13

BCG matrix
The market growth rate-market share matrix[2] analyzes different divisions within a
corporation and compares their growth rates and market shares with those of competitors. It
classifies business products or services into four categories namely star, question mark,
cash cow and dog (Figure 1).
Sources of revenue
There are three sources of revenue for the company:
1. Telemarketers and developers for the web site or the Web 2.0 solutions.
2. Potential sales from the newly developed CRM product.
3. CEOs contribution from independent consulting.
The main decisions to be made include:
B

Number of telemarketers and developers to be hired for sales in the web site
development area.

Model to be followed for product evangelists to push sales of CRM software across
different locations.

Future of the company.

The current revenue and expenditure details of the company are as shown in Table II.

Figure 1
Market Share

Market Growth Rate

High

Low

Low

High

Stars: (Potential to
have large market
share) Customer
Relationship
Management
(CRM) Tool

Question Mark: (Future

Uncertain)
Marketing contracts in the
Delhi/NCR region

Cash Cow:
(Consistent Cash
flow producing)
Consulting earnings
of Santosh Singh
from foreign clients

Dogs: (Small Market share

in mature industry)
Website setup
and maintenance work
from Mom and Pop
Stores, Search Engine
Optimization (SEO)
solutions

Table II
Monthly cash outflow (INR)
Rental
Salary
Other expenses
EMI (commercial vehicle)
CEO salary
Total cash outflow
Monthly cash inflow (INR)
From sales of Web 2.0 solutions
CEO consulting
Total cash inflow
Net cash profit

PAGE 14 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

25,000
80,000
40,000
15,000
30,000
1,90,000
1,00,000
1,10,000
2,10,000
20,000 (positive)

We will consider the data in Table II as the existing income (i.e. profit of INR 20,000) which will
remain constant as the hiring process progresses.
The companys net cash outflow is INR 1,90,000. The companys net cash inflow is INR
1,00,000. This leads to a net cash crunch of INR 90,000 (without considering the
independent consulting income of the CEO).
However, by adding the consulting income of the CEO, the net cash profit is INR 20,000.
But the operating loss is INR 90,000. The loss is something that is not unexpected as most of
the companies incur losses during the initial phase which the CEO hopes will change with
the introduction of the new CRM software.
However, it is suggested that the CEO sell his vehicle and payoff the outstanding loan of the
bank. This will improve the cash flow by INR 15,000. For a startup company, this kind of
unutilised depreciating asset can be avoided. This will lead to the following expenditure and
revenue detail (Table III).
Although the company seems to be making a profit of INR 20,000, it is actually incurring a
loss of INR 2,00,000 in the original scenario and INR 1,85,000 in the second scenario as we
look into the profit and loss statements (Table IV).
The fixed variable model of the marketers for the web solutions is as: **the fixed
component of telemarketers is INR 10,000 and the variable component is 15 percent of the
sales above INR 40,000; the cost of the developers will be included as the sales increase;
depending upon the number of the employees to be hired is fixed to a maximum of eight (six
marketers two developers) as the present office and market conditions do not allow us to
consider us more.
Fixed cost. Fixed costs are costs that do not change with an increase or decrease in the
amount of goods or services produced. Fixed costs are expenses that have to be paid by a
company, independent of any business activity. It is one of the two components of the total
cost of a good or service, along with variable cost.
Table III
Monthly expenses (INR)
Rental
Salary
Other expenses
CEO salary
Total cash outflow
Monthly revenues (INR)
From sales of Web 2.0 solutions
CEO consulting
Total cash inflow
Net cash profit

25,000
80,000
40,000
30,000
1,90,000
1,00,000
1,10,000
2,10,000
35,000 (positive)

Table IV
Profit and loss
Total income
Other income (consulting)
Total income
Employee cost (80,000 30,000)
Administrative cost
Rent
Total expenses
Operating profit/loss
Depreciation
EBIT
Interest
Profit/loss before tax

Year 1
(original scenario)
1,00,000
1,00,000
1,10,000
40,000
25,000
1,75,000
275,000
1,10,000
21,85,000
15,000
22,00,000 (loss)

Year 1
(consolidated considering CEOs income)
1,00,000
1,10,000
2,10,000
1,10,000
40,000
25,000
1,75,000
35,000
1,10,000
275,000
15,000
290,000 (loss)

Year 1
(if selling the vehicle)
1,00,000
1,00,000
1,10,000
40,000
25,000
1,75,000
275,000
1,10,000
21,85,000
21,85,000

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 15

Variable cost. Variable costs are corporate expenses that vary with the production output.
Variable costs are those costs that vary depending on a companys production volume; they
rise as production increases and fall as production decreases. Variable costs differ from
fixed costs such as rent, advertising, insurance and office supplies, which tend to remain the
same regardless of production output. Fixed costs and variable costs comprise total cost.
In our case, the fixed cost would include the sum of the cost being incurred in paying salaries
and rent being paid. The employees are being paid a fixed amount of salary irrespective of
the amount of sales.
The developers salary is fixed but at the time of counting sales it will be counted as a
variable as the number of developers will be different with different level of sales (number of
new developers would vary from 0 to 2).
A part of the salary is variable (15 percent of the sale above INR 40,000). At the time of
calculating the variable component percentage, the monthly sales target reduces with the
increase in the number of telesales. This is because of the limitation of the company
operating in a localized area where the total target customers are limited. Therefore, with the
increase in the number of telemarketers, the number of customers/telecallers would reduce
and this would also lead them to poach the others customers.
This, however, is not a limitation of the telecallers potential and actual sales. The CEO has
estimated it on the basis of data he has presently (Table V).
It is seen very clearly that the revenue maximization is seen at the hiring of four new
marketers and one developer on top of the current level of employees (net revenue INR
1,41,000). Which would still give us loss of INR 44,000 (1,85,000 2 1,41,000) but that is
offset by the money that the CEO is putting into the company.
Revenue calculation with respect to the CRM software
Similar to the concept of fixed and variable cost, the revenue is seen with respect to the three
models for the CRM software is seen as below:
1. Fully fixed.
2. Fixed variable.
3. Fully variable.
The fixed model has two different salary brackets:
1. Fixed salary of Rs 30,000 up to sales of INR 1,50,000.
2. Fixed salary of Rs 50,000 for sales above INR 1,50,000.
The fixed variable model has a fixed component of INR 15,000 and a variable payment of
12 percent of the sales in the bracket of INR 50,000, INR 1,00,000, INR 1,50,000, INR
2,00,000, INR 2,50,000 and INR 3,00,000.
The fully variable model has a complete variable payment of 18 percent of the sales in the
bracket of INR 50,000, INR 1,00,000, INR 1,50,000, INR 2,00,000, INR 2,50,000 and INR
3,00,000.
There are two things to be considered here:
1. There is no fixed estimate of sales; hence we have done an analysis of the gains in case of
different level of sales.
2. It is clearly seen that the 100 percent variable model delivers higher revenue to the
company with zero fixed cost at revenue levels of INR 2,50,000.
Since the sales cannot be predicted for a startup, it makes sense to keep the cost low and
make the salary payment more in the variable component which is directly linked to sales.
This should also act as a strong motivator for higher sales and at the same time keep the
revenue high at low sales for the company.
The fixed model is divided into two brackets: INR 30,000 for sales up to INR 2,00,000 and
INR 50,000 for sales above INR 2,00,000.
The fixed and variable mix model has INR 15,000 as fixed and 12 percent of sales as variable
payment.

PAGE 16 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 17

20,000
20,000
20,000
20,000
20,000
20,000

1
2
3
4
5
6

70,000
65,000
60,000
55,000
48,000
44,000

70,000
1,30,000
1,80,000
2,20,000
2,40,000
2,64,000

0
0
1
1
2
2

0
0
50,000
50,000
1,00,000
1,00,000

10,000
20,000
30,000
40,000
50,000
60,000

Fixed variable
Number of
Business
Number of
marketers telecallers targets
new
Existing
hired (over and
monthly/
Total
developers
Developers
Total fixed salary
income
above the existing) telecaller
revenues
needed
salary
(telecallers)
(1)
(2)
(3)
(4) (2) (3)
(5)
(6) (5) 50,000 (7) (2) 20,000

Table V

4,500
7,500
9,000
9,000
6,000
3,600

Variable component
(15 percent of sales
above 40,000)
(8) 15 percent of
(4) 2 40,000 (2)

14,500
27,500
39,000
49,000
56,000
63,600

75,500
1,22,500
1,11,000
1,41,000
1,04,000
1,20,400

Total salary
Net profit
paid (to
(business target 2
telemarketers)
total salary)
(9) (7) (8) (10) (1) (4) 2 (6) 2 (9)

PAGE 18 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

1
2
3
4
5
6

No. of people hired

Table VI

50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000

Total sales
30,000
30,000
30,000
50,000
50,000
50,000

Fixed payment
0
0
0
0
0
0

Fixed
Variable payment
20,000
70,000
1,20,000
1,50,000
2,00,000
2,50,000

Net profit
15,000
15,000
15,000
15,000
15,000
15,000

Fixed payment

0
12,000
18,000
24,000
30,000
36,000

Fixed variable
Variable payment

35,000
7,30,00
1,17,000
1,61,000
2,05,000
2,49,000

Net profit

0
0
0
0
0
0

9,000
18,000
27,000
36,000
45,000
54,000

41,000
82,000
1,23,000
1,64,000
2,05,000
2,46,000

100 percent variable (based on sales)

Fixed payment Variable payment Net profit

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 19

50,000
1,00,000
1,50,000
2,00,000
2,50,000
3,00,000

Total
sales

30,000
30,000
30,000
50,000
50,000
50,000

0
0
0
0
0
0

Fixed
Variable
payment payment
20,000
70,000
1,20,000
1,50,000
2,00,000
2,50,000

Net profit

Fixed

16,000
49,000
66,000
67,500
60,000
62,500

15,000
15,000
15,000
15,000
15,000
15,000

0
12,000
18,000
24,000
30,000
36,000

35,000
73,000
1,17,000
1,61,000
2,05,000
2,49,000

28,000
51,100
64,350
72,450
61,500
62,250

0
0
0
0
0
0

9,000
18,000
27,000
36,000
45,000
54,000

41,000
82,000
1,23,000
1,64,000
2,05,000
2,46,000

32,800
57,400
67,650
73,800
61,500
61,500

Fixed variable
100 percent variable (based on sales)
Expected
Expected
Expected
profit net
Fixed
Variable
profit net
Fixed
Variable
profit net
profit * probability payment payment Net profit profit * probability payment payment Net profit profit * probability

Note: *Assumption that the present telecallers make these sales over and above the work that they are doing and hence would be only be able to meet the lowest amount of sales/profit

0.8
0.7
0.55
0.45
0.3
0.25

Probability

Table VII

The 100 percent variable model has 18 percent of sales as variable model (Table VI).
For the convenience of calculating of fixed payment, we would assume that the telemarketer
would sell the higher bracket. For example, in the bracket of 1,00,000-1,50,000 he would be
able to bring in an order of INR 1,50,000.
The CEO by looking at the sales figure decides that up to the sales of 2,50,000 the most
profitable payment would be in the form of variable and between 2,50,000 and 3,00,000 the
payment will be in the form of fixed variable as it is most profitable in that range.
As per the future of the company, the sales and profit from the new product and regular
operations have the potential to be greater than the opportunity cost. Also, until the sales
from the product are very strong, it does not make financial sense to move away from
outsourcing contracts. Also, as products have higher profit margins and potential for
nonlinear growth, strategic products should continue to be developed irrespective of the
success of the about to be launched product, i.e. the CRM tool.
Assuming the probabilities at different point of sales, we get the expected profit by the CEO
at different point of sales (Table VII).
We see that the CEO can expect a maximum profit of INR 73,800 per telecaller at a sales
figure of INR 2,00,000 and the minimum profit of INR 32,800 at sales figure of INR 50,000.
By taking the worst case scenario, i.e. no other telecaller apart from the four telecallers
(which the CEO is going to hire as seen in the first analysis) in the office make the sales
(assuming minimum profit of INR 32,800 telecaller)
Total profit in the CRM software will be 4 32,800 INR 1,31,200
Total cost of the CRM software INR 16,00,000
BEP 16,00,000/1,31,200 12.19 months.
Notes
1. Michael E. Porter developed a model which identifies an industrys structure in order to
determine corporate strategy. This model identifies and analyzes five competitive forces
that shape every industry and helps determine an industrys weaknesses and strengths.
The five forces are competition in industry, potential of new entrants into industry, power of
suppliers, power of customers and threat of substitute products (Porter, 2008).
2. BCG matrix was developed by Boston Consulting Group.

References
Horngren, C.T., Datar, S.M. and Rajan, M. (2012), Cost Accounting: A Managerial Emphasis,
14th ed., Prentice-Hall, Englewood Cliffs, NJ.
Porter, M. (2008), The five competitive forces that shape strategy, Harvard Business
Review, Vol. 86 No. 1, pp. 78-93.

PAGE 20 EMERALD EMERGING MARKETS CASE STUDIES VOL. 2 NO. 8 2012

Abstract
Title Ommune IT Solutions: make or break.
Subject area Accounting and finance, entrepreneurship and business strategy.
Study level/applicability The case is suitable for the following courses: post graduate programs in
entrepreneurship; executive training programs for middle and senior level employees; and MBA/post
graduate programs in management in strategic management.
Case overview The case deals with an entrepreneurship venture whose initial business model
appeared to be faltering with the founder wondering about the future of the company. After Ommune
Solutions (founded 2010) initial business plan failed, the company started offering IT outsourcing
services to Indian customers. However, the company was spending more that it was earning and the
CEO generated additional revenues through independent consulting. By 2012 a customer relationship
management (CRM) tool was also ready for release. The company was another IT start up yet to find a
firm footing. The CEO wondered whether he should continue to build the company and, if so, in which
direction?
Expected learning outcomes These include: the use of SWOT analysis as a tool to aid strategic
decision making along with Porters five competitive forces model and the BCG matrix; using cost
benefit analysis for evaluating business decisions; understanding the complexities involved in a
strategic planning process; and identifying unnecessary cost and increasing revenue generation for
expansion and maximizing profitability.
Social implications The case provides insight on challenges faced by a venture at an early stage in
the business environment and the venture is analyzed in depth. It gives students a perspective on
decision making and adapting to scenarios where initial business plans appear not to have succeeded.
Supplementary materials Teaching notes are available for educators only. Please contact your library
to gain login details or email support@emeraldinsight.com to request teaching notes.

VOL. 2 NO. 8 2012 EMERALD EMERGING MARKETS CASE STUDIES PAGE 21